US public sector bargaining – union fees no longer mandatory

On June 27, 2018, the U.S. Supreme Court handed down an important decision on collective bargaining in the public sector. The decision, Janus v. AFSCME, struck down an Illinois law that required government workers who chose not to join a union to pay “agency fees.”

The premise of an agency fee is that even employees who are not members of a union will benefit from the collective bargaining of the union. Sometimes referred to as “fair share fees,” agency fees are used so that each employee pays their “fair share” of the benefits obtained by the union’s work.

The union in this particular case had argued that without mandatory agency fees, there would be a massive free-rider problem-- many public employees would benefit from the work of the union without actually paying for its services. With this recent decision, the Supreme Court overturned a 40-year-old precedent by holding that the monthly agency fees were akin to forcing independent individuals to endorse ideas they may find objectionable. The Court also rejected the union’s arguments about the free-rider problem, because unions could find less restrictive means to tackle the free riders.

This recent Supreme Court decision will directly be felt by public employees and employers. Public unions must now receive affirmative support from workers, and cannot collect any payments unless employees voluntarily consent. As a result, such unions may become much smaller, as agency fees were typically 80% of normal union dues.

Though this most recent decision certainly may impact public unions’ finances and membership numbers, it remains to be seen how they will respond. While this recent Supreme Court decision focused on public unions, there may also soon be spill over into the private sector as arguments similar to those in this decision may be used in a renewed push to ban agency fees in the private sector as well.