Governor Rauner Issues Order Eliminating Fair Share Fees
February 10, 2015
Yesterday, Governor Bruce Rauner signed Executive Order 15-13 eliminating “fair share” fees paid by state employees who choose not to join a union. At the same time, Rauner filed a complaint in federal court seeking a declaration that fair share provisions in collective bargaining agreements to which the State of Illinois is a party violate the First Amendment by forcing State employees to engage in political speech. The Order and simultaneous lawsuit signal Rauner’s intent to battle labor unions and eliminate what he refers to as the “corrupt bargain” inherent in public sector labor unions engaging in political activities.
Executive Order 15-13
The Illinois Public Labor Relations Act and the Illinois Educational Labor Relations Act both require labor unions and public employers to negotiate over the payment of fees paid to a labor union by employees who are included in bargaining units represented by a labor union but who choose not to be “members” of that union. Under so-called “fair share” provisions, non-union member employees must pay their fair share—or rather, fees to the union that are proportionate to the union’s costs associated with collective bargaining, contract administration, and other activities germane to the union’s duties as collective bargaining representative. Fair share arrangements are designed to address the “free rider” problem by preventing non-union member employees from enjoying the benefits of collective bargaining without paying for those benefits. But because public employment implicates First Amendment interests, unions are prohibited from utilizing the fees paid by non-members for ideological or “political” purposes. Of the State’s approximately 48,000 employees, 6,500 pay fair share fees in lieu of joining a union.
Executive Order 15-13 orders the Department of Central Management Services (CMS) and all State agencies to immediately cease enforcement of fair share provisions in the State’s currently effective collective bargaining agreements. In addition, CMS and State agencies must place all fair share deductions from non-union member employees into an escrow account. CMS and each agency must keep an accounting of the deductions in escrow so that the funds can be distributed upon a determination by the courts that fair share provisions are unconstitutional.
Federal Lawsuit: Seeking to Overturn Abood?
At the same time, Rauner filed a federal lawsuit seeking a declaratory judgment that the State collective bargaining agreements’ fair share provisions suspended by Executive Order 15-13 are unconstitutional. Named defendants include AFSCME Council 31, the labor union which represents the largest number of State employees, and the Service Employees International Union, among others. The lawsuit seeks to overturn the Supreme Court’s ruling in Abood v. Detroit Board of Education, 431 U.S. 209 (1977), in which the Court held that fair share provisions in public sector collective bargaining agreements do not violate free speech and association interests protected by the First Amendment because of the interest in preventing “free riders”.
This summer, the Supreme Court, in a 5-4 opinion, sharply criticized Abood but did not overturn its holding. Instead, in Harris v. Quinn, the Court found that Abood does not apply in the narrow context of “partial public employees,” such as home healthcare workers who delivered in-home care to disabled individuals as part of Illinois’ Medicaid-funded Rehabilitation Program. Referencing the Court’s discussion of Abood in Harris, Rauner essentially requests that the federal courts overrule Abood. Seizing upon language in Justice Alito’s majority opinion in Harris, the complaint asserts that public sector unions, in the process of bargaining for increased wages and benefits, necessarily obligate the State to shift scarce resources to those ends and away from other programs or services that the State might otherwise desire to provide, and this impact on the allocation of State resources is inherently “political”. Therefore, according to Rauner, compelled fair share payments to support traditional collective bargaining in the public sector constitute coerced political speech. According to the complaint, “[t]here is no justification, much less a compelling one, for mandating that the nonmembers support the [u]nions, which are some of the most powerful and politically active organizations in the State.”
Impact on Collective Bargaining
At the moment, Rauner’s complaint is pending before the Northern District of Illinois and the legal process could be drawn out over months, if not years. The Seventh Circuit Court of Appeals has repeatedly upheld the constitutionality of properly crafted fair share provisions. However, two weeks ago a petition for certiorari was filed in the Supreme Court by the Center for Individual Rights in a case arising in California, Friedrichs v. California Teachers Association. In that petition the Center asks the Court to hold that fair share provisions are unconstitutional under the First Amendment. The Court has not yet decided to accept the appeal, but if it does, it could set the stage for a conclusive determination of the legality of fair share provisions.
The federal court action aside, labor unions are certainly likely take action to prohibit the enforcement of Executive Order 15-13, such as filing unfair labor practice charges with the Illinois Labor Relations Board and seeking injunctive relief against implementation of the Order. AFSCME Council 31 has branded the order a “blatantly illegal use of power,” and Senate President John Cullerton said his legal staff is reviewing the legality of the Governor’s order.
Meanwhile, Rauner’s order and complaint could have major repercussions for the collective bargaining process between the State and AFSCME. The “Master Agreement” between the State and AFSCME expires on June 30, 2015. In addition to the AFSCME contract, the State is party to dozens of additional collective bargaining agreements with labor unions representing smaller bargaining units. Rauner’s actions yesterday demonstrate his willingness to battle labor unions he has criticized for engaging in “corrupt bargaining that is crushing taxpayers.” Although the State employees have never gone on strike, Governor Rauner’s actions set an ominous tone for the upcoming negotiations.
Finally, it should be noted that the Governor’s Order affects only collective bargaining agreements to which the State is a party. It does not, by its terms, affect collective bargaining agreements with other public employers in the state of Illinois or with educational employers. However, any judicial determination that fair share provisions in State collective bargaining agreements are unconstitutional obviously will have a significant impact on other public employers.