Porac and Ldf Lead Coalition to Preserve Unions’ Right to Collect Agency Fees from Nonmembers
MESSING ADAM & JASMINE LLP
The 2015—2016 term of the United States Supreme Court has opened in Washington, D.C. Among the most closely watched cases on the court’s docket this year will be Friedrichs v. California Teachers Association. This is a challenge by a group of California teachers to laws requiring that they contribute financially to the labor union that represents them, bargains for their increased wages and benefits, files grievances on their behalf, etc. The teachers behind the lawsuit are nonunion employees represented by the California Teachers Association (CTA), so their contributions are commonly known as “fair-share” or “agency” fees.
Agency fees have been permitted in the public sector since 1977, when the Supreme Court ruled, in Abood v. City of Detroit, that whereas closed shops (in which employees had to be a member of a union in order to be employed) were not constitutionally permitted in the public sector, agency fee agreements, which require nonmembers to pay a fee toward the costs of bargaining and representation, were.
In recent years, the conservative majority on the Supreme Court, especially Justice Samuel Alito, has increasingly signaled its intention to try to overturn Abood, declare agency fee agreements constitutionally prohibited and make right-to-work laws the law of the land. This threat comes notwithstanding the California Legislature’s recognition of the critical role that agency fee provisions play in achieving harmonious labor relations. So-called right-to-work states prohibit union security agreements, such as agency fee provisions, enabling “free-riding” as a means to reduce the membership and dilute the power of labor unions. Free-riding is when an employee is represented by a union, gets all the same negotiated wages and benefits, and has the right to have grievances (including disciplinary appeals if they are contractual) filed on his or her behalf, but does not contribute a dime toward the cost of these benefits. Exclusive bargaining representatives with a high percentage of nonmembers could suffer a crippling blow to have to support all of the nonmembers fairly under the legal duty of fair representation.
This time around, after several near misses, union supporters fear that Justice Alito has patched together a five-justice majority to invalidate agency fee agreements on the premise that they interfere with the First Amendment rights of nonmembers. In recent years, in Knox v. SEIU (2011) and then Harris v. Quinn (2014), in minority or concurring opinions (i.e., opinions supported by less than a majority of the court), members of the conservative wing of the court have aggressively laid out their case for why state collective bargaining laws that allow nonunion employees to be charged a fee for their labor representation purportedly violate such employees’ free speech rights.
The fact that the court has taken another agency fee case so quickly after Harris has union advocates convinced that mischief is afoot.
Agency Fee or Fair-Share Clauses
An agency fee or fair-share provision is a clause (usually appearing in a collective bargaining agreement) that allows a labor union that is the exclusive representative of a particular bargaining unit to charge a fee to nonmembers attributable to the cost to the union of bargaining for and representing nonmembers. Because an exclusive representative, such as a POA or DSA, has a duty of fair representation to both union members and nonmembers with respect to matters governed by the collective bargaining agreement, most collective bargaining laws, including all of California’s, permit the union to charge the nonmembers an amount for this burden. The law is well-developed on what expenditures may or may not be charged: Costs associated with collective bargaining and administering the collective bargaining agreement generally may be charged; costs associated with political activity on behalf of the union generally may not.
In terms of process, a union will base what it charges a nonmember on its expenditures in the prior year. Nonchargeable items (political expenditures primarily) will be separated from collective-bargaining-related expenditures. So, for example, if 75% of the union’s expenditures in 2013 were collective-bargaining-related, in 2014, a nonmember would be given the opportunity to opt out of paying the full rates paid by a member and instead only pay 75% of the member rate (i.e., the 2013 percentage). If the nonmember does not exercise her opt-out rights, she will be charged the same fee as a full member. Members who have a bona fide religious objection to contributing to labor unions can elect instead to pay their agency fee amount to a designated charity.
Under existing California law, a union has the power to prevent any represented employee from “free-riding” — enjoying the fruit of the union’s efforts (e.g., better wages and working conditions) without paying some amount for it in return.
PORAC, PORAC LDF and the Public Safety Coalition
PORAC and PORAC LDF played a significant role in helping to assemble a nearly half-million-member-strong coalition of public safety employees who filed an amicus curiae — or “friend of the court” — brief in the United States Supreme Court supporting the right of the California Teachers Association to collect fair-share fees from nonmembers. The other coalition members were the National Association of Police Organizations, CAL FIRE Local 2881, the California Correctional Peace Officers Association, the New York State Association of Police Benevolent Associations, the Detectives’ Endowment Association of the New York City Police Department, the California Statewide Law Enforcement Association, the Davis Professional Firefighters Association Local 3494, the Fresno Deputy Sheriff’s Association, the San Francisco Police Officers Association, the Deputy Sheriffs’ Association of Santa Clara County, and the Engineers and Architects Association.
The brief was crafted by Gary Messing and Gregg Adam of Messing Adam & Jasmine LLP, together with the Stanford Law School Supreme Court Litigation Clinic and Stanford Law School professor and esteemed Supreme Court practitioner Pamela S. Karlan. This team worked in close coordination with the AFL-CIO and the National Education Association to style a brief that emphasized the unique role that agency fees play in public safety unions.
The full brief may be viewed at
https://goo.gl/oIYUYl. PORAC’s brief stresses how public safety unions play a vital role in ensuring that the employees they represent can protect the public. This ranges from improving employee safety and training, to fostering solidarity among safety workers, to improving recruitment and retention of high-quality public safety employees. PORAC explains how much importance the California Legislature has attached to agency fees in all of its labor-relations statutes, how California has structured its collective bargaining model around robust unions representing public safety employees, and how the elimination of agency fees would threaten public safety by undermining the role of public safety unions. The brief emphasizes the need for solidarity between employees working in paramilitary-type organizations who depend upon one another for their safety and lives. The brief (uniquely among all the briefs filed) illustrates how, where someone is working next to a free-rider and carrying that person’s freight, the potential for undermining solidarity exists and threatens to fracture working relations within the public safety entity.
The Public Safety Coalition was in good company: Among the other groups filing amicus briefs in support of the California Teachers Association were the U.S. government, constitutional law scholars, more than 20 states, multiple employer school districts, the National Women’s Law Center, the IAFF, corporate and labor law professor groups, current and former Republican members of state legislatures and Congress, and the AFL-CIO
Why This Matters to You
At a base level, this matters because the idea of some employees getting the benefit of better wages, benefits and working conditions, but relying on you to foot the bill for achieving them, is morally objectionable. This “free-riding” is particularly problematic in the tightly knit public safety workplace. Public safety unions have traditionally enjoyed extremely high levels of voluntary membership, usually upwards of 95%; however, where the option is paying 75% of the cost as a nonmember versus paying 100% of the cost as a member, the economic incentive to leave is narrower as compared to — if Friedrichs prohibits agency fees — 100% versus 0%. As our brief asserts, “This risks setting in motion a union ‘death spiral’: as membership drops, the union will have to increase dues to cover its expenses, which will create further incentives for additional workers to quit the union.”
But going beyond that, lest anyone doubt that this is a critical issue for labor unions, including POAs and DSAs, the Economic Pay Institute — contemplating a post-Friedrichs world where fair-share fee provisions are declared unconstitutional — has concluded in a recent study that eliminating fair-share fees and making public employment right-to-work would increase what it calls the “pay penalty” for working in state and local government. In other words, if agency fees are invalidated, the economic data strongly suggests that peace officer pay will decrease significantly over time.
The Economic Pay Institute’s study made five key findings:
- State and local government employees earn less than similar private-sector workers, even though their education level (the most important predictor of earnings) is higher; however,
they receive better health benefits
- Public-sector unions raise wages of public employees compared with similar nonunion public employees by 5% to 8%, which helps to narrow the private-public wage gap in those unionized sectors.
- However, public-employee unions in full collective bargaining states that permit union security (i.e., agency-shop clauses) raise total compensation to competitive market standards set by the private sector. In other words, only public employees in states with full collective bargaining make as much as their private-sector peers.
- If the Supreme Court renders agency-shop clauses unenforceable for public employees, it will shrink union membership because more people will try to gain services without paying for them (the “free-rider” problem).
- If the court renders agency-shop clauses unenforceable for public employees, it will ultimately reduce public-employee compensation by up to 9%.
These are daunting long-term prospects.
While an adverse decision will likely have less of an immediate impact on public safety unions, due to the high level of voluntary membership they maintain, the blow to other unions will be significant and will inevitably reduce the overall effectiveness of all unions nationwide. It can only be hoped that the presence of the Public Safety Coalition, led by PORAC and PORAC LDF, among the many voices supporting agency shops will cause the conservative majority on the Supreme Court some pause before turning public-sector labor relations upside down.
Authors’ note: As this issue goes to print, oral argument has since been set for Monday, January 11, 2016, before the Supreme Court of the United States.
About the Authors
Gary Messing and Gregg Adam of Messing Adam & Jasmine LLP are PORAC LDF panel attorneys. In April 2015, after practicing at Carroll, Burdick & McDonough for many decades, they formed a new law firm predominately representing public safety unions and their members in their labor relations.