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After Oral Argument: Public Sector “Fair Share Fees” on Thin Ice

Labor & Employment Publications

As we previously reported, on July 2015, the United States Supreme Court decided to consider the legality of “fair share” fees for public employees. Fair share fees are those fees that are proportionate to the union’s costs associated with collective bargaining, contract administration, and other activities related to the union’s role as the collective bargaining representative. Public-sector unions cannot use fair share fees toward their political activities, but objectors contend that political activity is inherently intertwined with public sector collective bargaining. Illinois and twenty other states currently have state laws that allow unions to collect fair share fees from public employees who choose to opt-out of union membership.

The Supreme Court was poised to hear an appeal by a class of plaintiff teachers in Friedrichs v. California Teachers Association who challenged the constitutionality of a California law allowing for fair share fees. Given recent Supreme Court decisions eroding its precedent in this arena, many predicted that the Court’s conservative majority would overturn Abood v. Detroit Board of Education, its 1977 decision holding that state laws may require public sector employees to pay fees to unions for the union’s non-political work. However, with the unexpected death of Justice Scalia, the Court was left with a 4-4 split and no tie-breaking vote.  This highly contentious case was resolved unceremoniously by an equally divided Supreme Court on March 29, 2016 in a single sentence, leaving the decision of the Ninth Circuit upholding the California fair share fee law to stand. /frontcenter-Rauner_Fair_Share.html

As we also previously reported, with the appointment of conservative Supreme Court Justice Neil Gorsuch, the fair share fees issue has again surfaced, with the Supreme Court granting certiorari to hear the case of Janus v. AFSCME on September 29, 2017.

The Janus case emerges from litigation involving Illinois public sector unions and a challenge to the provision in the Illinois Public Labor Relations Act allowing for fair share fees. On March 21, 2017, the Seventh Circuit Court of Appeals upheld a district court’s ruling that, until the Supreme Court overrules Abood, state law may continue to require public sector employees to pay fair share fees to unions for non-political activities. On September 28, 2017, the Supreme Court granted certiorari in Janus to determine the continuing viability of fair share fees under Abood.

Oral argument took place before the Supreme Court on February 26, 2018. Justices Alito and Kennedy appeared steadfast in the position that fair share fees are unconstitutional. One notable exchange took place between Justice Kennedy and Mr. David Frederick, counsel for AFSCME Council 31:

Justice Kennedy: “I’m asking you whether or not in your view if you do not prevail in this case, the unions will have less political influence; yes or no?”

Mr. Frederick: “Yes, they will have less political influence.”

Justice Kennedy: “Isn’t that the end of this case?”

Chief Justice Roberts also expressed skepticism of the constitutionality of fair share fees. He noted that public employee unions negotiate wages that affect the state budget and also engage in advocacy with respect to the state budget, which, in turn, has an impact on the available wages to be negotiated. Meanwhile, although Justices Thomas and Gorsich remained silent during oral argument, it is widely expected that Justice Thomas will side with Chief Justice Roberts and Justices Alito and Kennedy, leaving Justice Gorsich as the swing vote. While it is impossible to predict, most legal scholars expect that Justice Gorsuch will vote to overrule the constitutionality of public sector union fair share fees.

We anticipate the Supreme Court’s decision in June. In the event the Court finds fair share fees unconstitutional, public employers likely will find themselves back at the bargaining table, with demands from public sector unions to engage either in mid-term negotiations over the elimination of existing contractual fair share fee provisions or responding to proposals for specific, “members only” benefits. Additionally, public employers face uncertainty regarding the procedural steps necessary to address current fair share fee payers in the event those fees are deemed unconstitutional.

We will continue to monitor future developments and will update accordingly.

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