Supreme Court Deals Blow to Unions by Rejecting Mandatory Fees

(Bloomberg) -- A divided U.S. Supreme Court said government employees have a constitutional right not to pay union fees in a ruling that affects 5 million workers and deals a heavy blow to the labor movement.

The 5-4 decision overturns a 1977 Supreme Court ruling that had let public-sector unions collect so-called agency fees from non-members to help cover the cost of collective bargaining. The court’s newest member, Neil Gorsuch, joined his conservative colleagues in the majority.

Writing for the court an Illinois case, Justice Samuel Alito said mandatory fees violated the free speech rights of workers who disagree with the union’s positions.

"It is hard to estimate how many billions of dollars have been taken from nonmembers and transferred to public-sector unions in violation of the First Amendment," Alito wrote. "Those unconstitutional exactions cannot be allowed to continue indefinitely."

The case split the court along ideological lines. Justices Ruth Bader Ginsburg, Elena Kagan, Stephen Breyer and Sonia Sotomayor dissented.

"There is no sugarcoating today’s opinion," Kagan wrote for the group. "The majority overthrows a decision entrenched in this nation’s law -- and in its economic life -- for over 40 years. As a result, it prevents the American people, acting through their state and local officials, from making important choices about workplace governance."

About half of the states had authorized public employee unions to collect agency fees from nonmembers.

President Donald Trump, on Twitter, called the ruling a "Big loss for the coffers of the Democrats!"

The ruling came on the final opinion day of a Supreme Court term that featured a series of 5-4 victories for conservatives, including Tuesday’s decision upholding Trump’s travel ban.

Scalia’s Death

The ruling was years in the making for right-to-work advocates and the court’s conservative wing. In 2016 the court had appeared poised to overturn the 1977 ruling, but Justice Antonin Scalia’s unexpected death left the conservatives one vote short.

The 1977 ruling, Abood v. Detroit Board of Education, said states could let public-sector unions demand agency fees, as long as the money covered representational work like collective bargaining and not ideological or political activities like lobbying.

The Abood court said agency fees could promote "labor peace" by buttressing a union’s status as the exclusive representative of a workforce.

Alito said the line created by Abood "has proved to be impossible to draw with precision."

Alito said unions take positions on disputed matters of public concern. He pointed to Illinois’ budget problems and disagreements between the government and public-sector unions about whether to cut spending.

"The union speech at issue in this case is overwhelmingly of public concern," he wrote.

The clash was as much about the value of unions as it is about constitutional rights. Union leaders said the ultimate goal of those pressing the case was to undermine the clout of the labor movement.

“Today’s radical decision by the Supreme Court is a blatant slap in the face for educators, nurses, firefighters, police officers and all public servants who make our communities strong and safe," said Lily Eskelsen Garcia, president of the National Education Association.

Membership Could Shrink

Public-sector unions could now see their ranks shrink. The nonprofit Illinois Economic Policy Institute estimated before the ruling that membership among state and local government employees would decline by 8 percent, while others say the number is likely to be higher. Unionization levels in states with right-to-work laws have been less than half what they are in the rest of the country.

Right-to-work groups, backed by the Trump administration, contended that public-sector unions are engaging in political speech when they negotiate with the government. The groups said workers have a constitutional right not to associate themselves with that speech.

“Today’s decision is a landmark victory for rights of public-sector employees coast-to-coast that will free millions of teachers, police officers, firefighters and other public employees from mandatory union payments," said Mark Mix, president of the National Right to Work Legal Defense Foundation, which challenged the fees on behalf of Illinois government worker Mark Janus.

Supporters of agency fees said they ensure employees don’t become "free riders," benefiting from collective bargaining without paying for it.

Alito rejected that argument, saying the effort to avoid free riders wasn’t important enough to override the speech rights of dissenting workers.

Managing the Workplace

"The First Amendment does not permit the government to compel a person to pay for another party’s speech just because the government thinks that the speech furthers the interests of the person who does not want to pay," he wrote.

Kagan said mandatory fees were a legitimate way for a government to manage its workplaces, helping ensure that public employers can bargain with a single employee representative.

"Public employee unions will lose a secure source of financial support," she wrote. "Across the country, the relationships of public employees and employers will alter in both predictable and wholly unexpected ways."

Alito said agency fees and the union’s status as the exclusive representative aren’t "inextricably linked."

Also, he said, "By agreeing to pay, nonmembers are waiving their First Amendment rights, and such a waiver cannot be presumed."

He said that in federal workplaces, unions are barred from charging agency fees but can be the exclusive representative.

Kagan said federal workplaces are different because collective bargaining doesn’t cover wages and benefits.

The case involved only government unions, not those in the private sector. During arguments in February, U.S. Solicitor General Noel Francisco, the Trump administration’s top Supreme Court lawyer, said he didn’t think the case would affect private-sector unions.

The First Amendment limits the government’s power to regulate speech but doesn’t constrain private employers.

The case is Janus v. American Federation of State, County and Municipal Employees, Council 31, 16-1466.

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