May 2018 Newsletter – Community College Districts

The Future of Agency Fees: What Janus May Mean for Public Sector Bargaining

In California, the agency fee is part and parcel of public employee collective bargaining. For example, the Educational Employment Relations Act (EERA) established a uniform system of collective bargaining for K-12 school districts and community college districts. (Govt. Code § 3540 et seq.) Under the EERA, when an exclusive bargaining representative is selected, employees are prohibited from negotiating individually over terms and conditions of employment. Further, the EERA explicitly recognizes the rights of employee unions (“exclusive representatives”) to collect an “agency” or “fair share” fee from an employee who declines to become a member: 

An arrangement that requires an employee, as a condition of continued employment, either to join the recognized or certified employee organization, or to pay the organization a service fee in an amount not to exceed the standard initiation fee, periodic dues, and general assessments of the organization for the duration of the agreement, or a period of three years from the effective date of the agreement, whichever comes first.

(Govt. Code § 3540.1(i)(2).)

However, many experts and unions are predicting that this may change in anticipation of the United States Supreme Court’s decision in Janus v. American Federation of State, County, and Municipal Employees, Council 31, Docket No.16-466. The Janus case centers on a public employee from Illinois, Mark Janus, who declined to join the union and objected to the imposition of a “fair share” fee. Janus argues that his First Amendment rights are burdened by forced association and subsidization of the union, an organization he politically opposes.

The “fair share” fee arrangement finds its Constitutional underpinnings from the case of Abood v. Detroit Board of Education. (431 U.S. 209 (1977).) There, an “agency shop” arrangement between the local agency and employee union required non-union employees to pay a compulsory service charge as a condition of their employment. The Supreme Court ruled that the imposition of the fee was constitutional so long as the fee went to pay for collective bargaining, contract administration, and grievance adjustments. However, if any portion of the fee was used for political or ideological purposes unrelated to bargaining, the imposition of the fee would not be constitutional.

The Court soon revisited these ideals in Chicago Teachers Union, Local No. 1 v. Hudson, (1986) 475 U.S. 292, when non-union employees objected to the “fair share” fee and the procedures the union established to challenge it. The Supreme Court acknowledged, as in Abood, that requiring non-union employees to support the union has an impact on the employees First Amendment interest, and that doing so may interfere with the employee’s freedom to associate, or refrain from doing so, as they see fit. As recently as 2016, agency fee challenges to resolve this tension have resulted in a divided Court. (See Friedrichs v. California Teachers Association, (2016) 136 S.Ct. 1083.)

Longstanding sentiment holds that these “organizational security” or “agency fee” agreements prevent “free riders,” i.e., employees who receive the benefits of union representation but decline to contribute their “fair share” of financial support to the union. There is also the concern that the public employer would be forced to expend considerable resources bargaining with many individuals or organizations representing factions within their employee pools. On the other side, employees argue that they should be free to disassociate themselves with organizations that increasingly participate in political activities, including those staunchly opposed by the employee, outside the scope of representation.

If the Supreme Court sides with Janus, the immediate effect may be that statutory agency fee authorization, such as in the EERA, is null and void. The remainder of the EERA will not likely be in immediate danger, as the Legislature has included a severability clause providing that the remainder of the Act remains in effect if a portion of it is deemed invalid. (Govt. Code § 3549.3.) However, certain elements of bargaining, including provisions for exclusive representation and the duty of fair representation, will likely be challenged. In Illinois, at least one labor union has taken the offensive and argued that if Janus prevails on First Amendment grounds, then the corollary right applies to the union. (See Sweeney v. Rauner, No. 18-cv-01362 (N.D. Ill.).) In such a scenario, the organizations right to speech and to freely associate would permit the union to exclude non-members, invalidating the Illinois Public Labor Relations Act’s duty of fair representation. While Janus is unresolved, a court will likely dismiss such a claim for lack of standing. But if Janus prevails, similar challenges to the EERA and other public labor statutes in California will likely proliferate.

In California, public labor unions have also been taking the initiative on this. Specifically, clients of ours have received notices from CSEA, AFT, and CTA requesting contact information and status confirmation of “fee payers” within the bargaining unit. The communications have also included requests to Districts regarding the collection of fees and details about union plans to collaborate with “fee payers” to provide necessary refunds. At least one representative has also reminded us that public employers “shall not deter or discourage public employees from becoming or remaining members of an employee organization.” (Govt. Code § 3550.) Districts should carefully consider any communication with employees regarding the outcome of this case to balance information and facts without influencing the employee’s choice regarding representation.

Bargaining unit membership may see a dip as current members or recent hires opt-out of representation or withdraw their support over political differences, real and imagined. The actual impact is impossible to predict, but has been speculated to be between non-existent and catastrophic, depending on the source. An unintended consequence may see an increase in “social justice” oriented organizations (i.e. those more likely to speak and act on political matters outside the scope of representation) concentrate less on advocacy and more on the traditional “bread and butter” union activities that directly benefit their membership. And, as at least one amici before the Supreme Court interpreted available data between “fair share” and “right to work” states, there may be little difference in the long run.

As a result of the anticipated decision in Janus, districts should be prepared to immediately cease deducting agency fees. Districts should also be prepared to issue notices requiring that unions contact non-member fee-payers in order to issue refunds. Under current law, unions are entitled to the home addresses of fee-paying employees in order to provide notice of agency fee changes and calculations. (Govt. Code § 3546(f); Title 2 Cal. Code Regs § 32992.). Districts should also consult their Payroll and HR personnel to make sure their information is up-to-date and determine how quickly they will be able to respond to this anticipated change. Finally, once the decision in Janus is issued, legal counsel should be consulted to determine whether there are any other concerns to be addressed or steps that should be taken.

For more information regarding this article, please contact Joshua Taylor at jtaylor@ericksonlaw.com. For questions in general regarding this newsletter, please contact Kristina Limon at klimon@ericksonlaw.com.

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This publication was prepared solely for information purposes and should not be construed to be legal advice. If you would like further information on this matter, please contact our office.

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