The United States Supreme Court’s decision in Janus v. American Federation of State, County and Municipal Employees (AFSCME) makes clear that agency fee agreements in the public sector are unconstitutional under the First Amendment. Although Janus dealt with government employees, the potential impact on private sector employers also demands careful consideration.

The Decision

In Janus, the plaintiff, an Illinois state employee, challenged the requirement that he pay “agency fees” to a union of which he was not a member. The theory for the agency fee charges was that although the plaintiff was not a member, he benefited from the union’s collective bargaining activities on employees’ behalves. The plaintiff argued that having to pay the fees violates the First Amendment. The Court agreed with the plaintiff.

Today’s decision directly overrules the Court’s 1977 holding in Abood v. Detroit Board of Education, which upheld public sector agency fees. There, the Court pointed to the state’s interest in “labor peace” and in avoiding the problem of “free riders” – people who reap the benefits of union representation without paying for them.

While the Court has previously held that agency fees cannot be used to fund unions’ political activities, plaintiff successfully argued that union activities are inherently political. Consequently, compelling non-union members to subsidize political speech with which they disagree amounts to compelled speech in violation of the First Amendment.

In so ruling, the Court invalidated agency fee laws in 22 states. Now, bargaining fees in the public sector need only be paid on a voluntary basis; employees must “opt-in” before wages can be deducted.

Private Sector Impact

While the Supreme Court’s decision was technically limited to public sector unions, ripples may be felt throughout all unionized (and would-be unionized) workplaces. Likely implications include:

  • Spread of “Right to Work” movement: More states may move to ban the negotiation of contracts requiring all members who benefit from the union contract to contribute to the costs of union representation. 28 states already have such laws.
  • Union destabilization: The Janus decision is a significant blow to unions. If the elimination of mandatory agency fees spreads further within the private sector, union funding and membership may further deteriorate. Unions will lose revenue previously collected from non-union members, and existing union members may consider resignation to avoid agency fee withdrawal. Relatedly, unions may see a decrease in political influence and bargaining power.
  • Revitalized and refocused union activism: Nevertheless, the Janus decision’s threat to public sector unions may light a fire under all union activists, and may encourage organizing efforts outside the public sector.

In light of Janus, employers should evaluate the state of their relationships with any current unions, analyze potential stimulants of unions, and prepare for a potentially volatile uptick in union activity.

Reed Smith Summer Associate Coco Arima also contributed to this post.