Supreme Court Strikes Down Public Sector Union Agency Fees

In a highly anticipated decision (at least among labor law attorneys), the U.S. Supreme Court held that public sector unions cannot require nonmembers to pay "agency fees." (Janus v. AFSCME , U.S., No. 16-1466, 6/27/18).

What is an "agency fee?" If a majority of the employees in a bargaining unit vote to be represented by a union, that union is designated as the exclusive representative of all the employees, even those who do not join. Only the union may engage in collective bargaining; individual employees may not be represented by another agent or negotiate directly with their employer. Nonmembers are required to pay what is generally called an "agency fee," i.e., a percentage of the full union dues.

In a 5-4 decision, written by Justice Alito, the U.S Supreme Court held that neither a public sector union nor state law can require a non-consenting employees to pay agency fees because the First Amendment is violated when money is taken from nonconsenting employees for a public-sector union; employees must choose to support the union before anything is taken from them. Accordingly, neither an agency fee nor any other form of payment to a public-sector union may be deducted from an employee, nor may any other attempt be made to collect such a payment, unless the employee affirmatively consents to pay.

The Court rejected arguments by the union that all employees should help subsidize union activities, such as collective bargaining and grievance resolution, because those activities benefit all employees. The Court also expressly overruled Abood v. Detroit Bd. of Ed., 431 U. S. 209 (1977), which had upheld the assessment of agency fees.

This decision is expected to have a substantial financial impact on public sector unions; some estimate that they could lose tens of millions of dollars from the loss of agency fees. The loss of money could also result in a loss of effectiveness and political power. At present, a larger percentage of public sector employees belong to unions than private sector employees: unions represent about 34 percent of government workers, compared with about 6 percent of private sector employees.