Michael Puppio Jr., Raffaele Puppio.

On June 27, the U.S. Supreme Court overruled more than 40 years of established precedent by handing down a decision in favor of nonunion member public employees. In Janus v. AFSCME, the court ruled that the First Amendment prohibits public employers, such as public school districts, from deducting fair share fees from the wages of nonunion members without their express consent. The following are the most important takeaways from that decision.

  • The First Amendment prohibits public employers from taking automatic fair share fee deductions from nonunion member wages.

Mark Janus, an Illinois state employee and nonunion member, objected to the regular deduction of agency fees (also called fair share fees) from his paycheck. An Illinois statute authorized the payment of an agency fee levied against nonunion members to the exclusive representative of the employee’s bargaining unit. The fee was used to support nonpolitical union activities on behalf of the bargaining unit, including lobbying; social and recreational activities; advertising; membership meetings and conventions; and litigation as well as other unspecified services. Janus opposed many of the union’s positions and filed suit asserting his right against compelled speech under the First Amendment. The district court dismissed Janus’ complaint in view of the U.S. Supreme Court’s decision in Abood v. Detroit Board of Education. The Abood court determined that agency fees were acceptable and fair, since nonmembers reaped the benefits of union activities on their behalf. The U.S. Court of Appeals for the Seventh Circuit affirmed.

Writing for the Supreme Court, Justice Samuel Alito examined the First Amendment implications of the Illinois law in the public employment context, and concluded that the agency fee arrangement, “violates the free speech rights of nonmembers by compelling them to subsidize private speech on matters of substantial public concern.” In particular, Justice Alito noted standard First Amendment principles of freedom to speak freely and to refrain from speaking; the right to eschew association; the right against compelled speech, and finally, the right against compelled subsidization of the speech of others. Finding the Illinois law impinged on these rights, the court then examined the level of scrutiny applied in similar matters, and settled on an exacting scrutiny, stating: “a compelled subsidy must ‘serve a compelling state interest that cannot be achieved through means significantly less restrictive of associational freedoms,’” see Knox v. Service Employees. Applying this standard, the court then turned to the state interests asserted by the Abood court: maintaining labor peace and avoiding free riders and found these concerns were unfounded.

  • The court overruled 41 years of precedent while avoiding the constraint of stare decisis.

Justice Alito called the Abood decision poorly reasoned, and accused it of leading to practical problems and abuse. The Janus court further identified the case as inconsistent with other First Amendment cases and noted that while Abood was previously questioned, the court fell short of actually overruling it. Justice Alito looked at the two rationales used to support the Abood decision: the need for labor peace, and to avoid free riders. Justice Alito looked back over the past 41 years and determined that those fears had not come to fruition in the federal government or state arenas where agency fees are not mandated. Further, the majority writer found that labor peace can be attained through less restrictive means. Finally, the court rejected the fear of free riders expressed in Abood as unrealized.

The court also discussed the disposal of standing precedent, and while acknowledging the reverence toward stare decisis, it pointed out that “this court has not hesitated to overrule decisions offensive to the First Amendment.” Specifically, the decision applied five factors to be considered when deciding to overrule a past decision, including: the quality of the reasoning; the workability of the rule the precedent established; the case’s consistency with other related decisions; developments since the decision; and reliance on the decision. Applying these factors, the court concluded that Abood should be overruled.

  • Pennsylvania law allowing fair share fees without employee consent is unconstitutional after Janus.

Pennsylvania’s Public Employee Fair Share Fee Law contains critical elements similar to the Illinois law found unconstitutional by the Janus court. Under the Pennsylvania statute, the union, as exclusive representative, provides the employer with the name of each nonmember obligated to pay a fair share fee, the amount of the fee, and a reasonable schedule for deducting the amount from the salary or wages of the nonmember. The public employer is then required to deduct the fee in accordance with the schedule and promptly transmit the amount deducted to the union. The law also requires the union to provide annual notice to nonmembers of the fee, along with sufficient information to allow nonmembers to gauge the propriety of the amount of the fee. The statute provides a procedure through which the nonmembers can object to the fee based on either the propriety of the fee or religious grounds. Henceforth, the provisions of this law are unconstitutional as applied to employees who do not expressly consent to the fair share fee deduction.

  • The decision only applies to nonunion members.

It is important to recognize that the court was only considering the First Amendment implications as they pertain to nonmember employees. Union member fees are unaffected. Many collective bargaining agreements contain “maintenance of membership” clauses that require members to remain in the union during the term of the collective bargaining agreement but allow a window of time to opt out of membership prior to the end of the contract term. The court did not address maintenance of membership provisions.

The practical implication of the court’s conclusion comes with its direction that public employers must immediately stop collecting agency fees from nonunion members. The court expressly stated that such action violates the Constitution unless the employer has clear written direction from the nonmember employee prior to such deduction. By allowing the deduction, a nonunion employee waives his First Amendment rights, thus the waiver must be knowing and clear. Public employers should consider engaging in open communications with their unions to determine the means and mode of obtaining that consent. An authorization form can be created by either the employer or union, but should be approved by both prior to distribution. Ideally, both management and labor will cooperate in the distribution and collection of completed authorizations, so that any clear waivers may be implemented.

As the Janus opinion was issued on June 27, it is clear that no automatic deductions may be made after that date. The court did not require employers or unions to recover agency fees remitted prior to that date. Thus, it appears there is no duty to provide any sort of refund of fees collected prior to the court’s ruling.

  • Exclusive representation still applies.

Exclusive representation is not eliminated. The Public Employe Relations Act (PERA) allows public employers to recognize employee representatives for collective bargaining purposes, provided the parties request and receive certification of such from the Pennsylvania Labor Relations Board.

“Representatives selected by public employees in a unit appropriate for collective bargaining purposes shall be the exclusive representative of all the employees in such unit to bargain on wages, hours, terms and conditions of employment …”

The Janus court did not invalidate these arrangements, but instead recognized the benefits both unions and employers obtain by maintaining the union as the sole representative of a particular bargaining unit.

Michael V. Puppio Jr., a founding partner of Raffaele Puppio, concentrates his practice in the areas of education law, municipal law, municipal finance and litigation. He is the solicitor for many school districts and municipalities throughout southeast Pennsylvania.