Today, as expected, the U.S. Supreme Court held that agency shop provisions in labor contracts constitute “compelled speech,” and therefore violate the First Amendment. The bottom line of the decision is that employers with agency shop arrangements should immediately discontinue agency fee deductions from employees’ paychecks but continue to process deductions for voluntary membership dues. For reasons discussed below, effectuating the Janus decision may trigger other obligations under California state law.
For over 40 years, “agency shop” provisions of collective bargaining agreements have been upheld pursuant to the Supreme Court’s landmark decision in Abood v. Detroit Board of Education. Agency shop provisions are an employment arrangement in which employees must either join the union and pay membership dues, or otherwise pay a service or “agency” fee to the union.
Agency shop provisions have been targeted for years by various citizen groups asserting they violate the First Amendment. The central argument is that it is unconstitutional to force an employee to contribute to a cause or association with which the employee disagrees. In 2016, the Supreme Court took up the question in Friedrichs v. California Teachers Association, but the Court deadlocked 4-4 because of the death of Justice Antonin Scalia, and the lower court’s decision following Abood was effectively upheld.
Illinois public employee Mark Janus sought to overturn Abood again. On Wednesday, June 27, 2018, the United States Supreme Court released its decision in Janus v. American Federation of State, County, and Municipal Employees, Council 31, reversing Abood in its entirety.
THE JANUS DECISION
In a written opinion by Justice Samuel Alito, the Supreme Court held that Abood should be overturned in its entirety on First Amendment grounds. Specifically, the Court held that an agency fee arrangement “violates the free speech rights of nonmembers by compelling them to subsidize private speech on matters of substantial public concern.” Four justices dissented.
Although 18 states filed a brief arguing that agency shop provisions were unconstitutional, California was among the states that supported agency shop arrangements. Over the last year, the California Legislature has passed a number of laws designed to diminish the effect of the Janus decision on unions and maximize the likelihood that employees will agree to voluntary dues deductions.
On June 27, 2017, Governor Jerry Brown signed AB 119, which guarantees access of union representatives to all public sector new employee orientations. This bill does not change any requirements for union membership but ensures that public-sector unions have a captive audience to solicit new employees to become members. (Govt. Code § 3556.). Among other things, under AB 119 employers must:
- Provide exclusive representatives contact information, including home addresses, for all new employees within 30 days of hire (Govt. Code § 3558);
- Provide exclusive representatives 10 days’ notice of new employee orientations (Govt. Code § 3556);
- Provide union access to orientation sessions (Govt. Code § 3556);
- Negotiate with exclusive representatives over the “structure, time and manner” of access to orientations (Govt. Code § 3557(a));
- Arbitrate over terms of access if there is no agreement reached within 45 days of the first negotiation or 60 days of the request (Govt. Code § 3557(b)).
Governor Brown signed SB 285 on October 7, 2017. This bill expressly states that “a public employer shall not deter or discourage public employees from becoming or remaining members of an employee organization.” The law also confers jurisdiction on the Public Employee Relations Board (“PERB”) to enforce this law. (Govt. Code § 3550.)
Lastly, on June 18, 2018, the Legislature passed SB 866, a bill that was crafted behind closed doors and which was substantially amended at the very end of the legislative session. SB 866 is currently on Governor Brown’s desk and he is expected to sign it. All of its provisions would go into effect immediately upon the Governor’s signature. SB 866 is a major bill that affects numerous aspects of public employment law, but the most notable changes include:
- The requirement that public employers not deter or discourage membership in unions now applies to job applicants (Govt. Code § 3550);
- The ban on discouraging union membership is now extended to public transit agencies not subject to the Meyers-Milias-Brown Act (Govt. Code § 3552(b));
- The requirement that a public employer must meet and confer with unions when it proposes to send a “mass communication” to public employees or applicants regarding encouraging or discouraging the right to join an employee organization (Govt. Code § 3553(b));
- The requirement that, if no agreement is reached in meet and confer over such communications, the public employer must simultaneously send employees, in addition to its own communication, a “comparable” communication from the exclusive representative (Govt. Code § 3553(c));
- A curious requirement that the date, time, and location of new employee orientations be kept confidential. Public employers may make this information available only to the employees, exclusive representatives, and any vendors who provide services for the orientation (Govt. Code § 3556);
- A strongly-worded requirement that public employers must honor unions’ deduction requests. (Govt. Code § 1152(a).)
- Unions that maintain individual employee dues authorizations are no longer required to provide copies of the authorizations to the employer unless a dispute arises about its existence or terms. (Govt. Code § 1157.10(b).)
The bill covers virtually all public employers in California. We emphasize that this bill has not been signed by the Governor as of 10:00 this morning, but it is highly likely he will sign it shortly.
BEST PRACTICES FOR COMPLIANCE
Given Janus and the new state legislative requirements, what should employers do immediately? Here are some suggestions:
- The most important requirement of all public-sector employers is that they are no longer permitted to deduct “fair share” or agency service fees, unless employees “clearly and affirmatively consent” to the deductions. This requirement goes into effect immediately. If you have not done so already, identify all of your employees who currently pay agency fees versus voluntary dues deductions. Incorporate designation of voluntary dues payers into your payroll, bookkeeping and accounting practices immediately.
- Ensure that you are only stopping payment of agency fees, and not voluntary dues deductions.
- Examine your applicable MOUs for meet-and-confer requirements within severability clauses. Even though the Supreme Court found agency shop provisions to be unconstitutional, your MOUs may require you to meet and confer with the unions in order to negotiate “alternative” provisions.
- Be cautious not to violate SB 866 when communicating with workers about the Janus decision. The safest initial course may be to contact affected union representatives, and to propose a very limited letter to employees that explains Janus; states that the agency will be terminating agency fee deductions; and advises that the union may be contacting employees to discuss voluntary dues deductions. You should expect that unions will ask for their own letter to be circulated pursuant to SB 866.
- Amend your communications and employee relations policies in accordance with the new state legislation.
- Be prepared to immediately meet and confer with your unions regarding the effects of Janus to the extent required by your MOUs, or as required by SB 866.
The Janus decision and the related California legislation have significantly changed the landscape for labor unions to generate revenue. While there will undoubtedly be vigorous debate about how this decision will affect public sector bargaining in the long run, in the short run we anticipate that it will lead to strong organizing drives—particularly for non-safety unions—and, perhaps, increasing labor tension accompanying those drives.