Oral argument was held today before the United State Supreme Court (Court) in Friedrichs v. California Teachers Association (Friedrichs). According to news reports, it seems almost a certainty that the Court will overturn its 1977 decision Abood v. Detroit Board of Education and hold that compulsory “agency shop” or “fair share” fees are unconstitutional. Justice Kennedy, a deciding vote in many close cases, reportedly led much of the criticism against California’s agency fee law. In response to the argument that agency fees are necessary to avoid “free riders,” Justice Kennedy replied that compulsory agency fees allow unions to make employees “compelled riders.” There was also some hope that Justice Scalia might be a surprise vote in favor of keeping Abood. But according to early news reports, he was just as hostile to agency fees as Justice Kennedy. “Everything that is collectively bargained with the government is within the political sphere, almost by definition,” said Justice Scalia. Chief Justice Roberts and Justice Alito also made comments that appeared to be hostile to agency fees. As usual Justice Thomas was silent but it’s hard to imagine that he would be in favor of agency fees. Thus, it appears that there are five votes firmly in favor of overturning Abood.
Even worse for the plaintiffs, at one point during the argument Justice Kennedy used the words “compelling interest” in a brief quip about what the state must demonstrate in order to justify entering into an agreement that provides for agency fees. You can’t read too much into it, but those words are one prong of the “strict scrutiny” test used when the state has to demonstrate a “compelling interest” in order to impair a constitutional right. That’s significant because there are two questions being considered by the Court: 1) Whether public-sector agency shop agreements violate the First Amendment’s protections for freedom of speech and assembly, and 2) Whether the First Amendment prohibits requiring public employees to affirmatively opt out of subsidizing non-chargeable speech rather than to affirmatively opt in. If indeed the Court applies a strict scrutiny test, it’s hard to imagine the Court will allow an opt-out, as opposed to opt-in, system for fees going forward.
What will be the effect if Abood is overturned?
That’s the question everyone is asking right now. The answer is that any effect will vary depending on the union. Take, for example, the California Teachers Association (CTA) which is the union at issue in Friedrichs. According to one report, agency fee payers represent approximately 10% of the 325,000 teachers represented by CTA. They each pay $641 per year. That’s roughly $20 million per year. Let’s say CTA can convince 20% of those agency fee payers to join as members, that’s still a loss of $16 million a year. Given CTA’s size, it can easily weather such a loss but it’s still not de minimis.
However, other unions will be affected much more. I know that with some public employee unions, the percentage of agency fee payers exceeds 60%. Even if some of those employees can be convinced to voluntarily pay fees, that’s still a loss of approximately 50% of a union’s income. That would be devastating for any union.
But apart finances, there is also the question of whether Friedrichs will spawn even more attacks on public sector collective bargaining. One article I read asked the question, “if the money is the problem, why isn’t the underlying speech also the problem?” In other words, depending on what the Court holds in Friedrichs, the next argument may be that collective bargaining itself poses constitutional problems because it violates the rights of dissenters.
What Should Public Employers Be Doing?
A decision in Friedrichs is expected no later than the end of the current term on June 30, 2016. If Abood is overturned—as appears likely—it will mean that the California statutes allowing compulsory agency fees (e.g. MMBA section 3502.5) will be unconstitutional. The big question then will be whether an opt-out system is permissible or if employees will have to opt-in. Even if the Court allows an opt-out system, a public agency presumably could propose only an opt-in system. Would that decision be negotiable? Potentially, yes. But much depends on the language in Friedrichs decision.
And there would also be a question of whether a public agency will be required to stop collecting agency fees, or perhaps place them in escrow, until a new system (either opt-in or opt-out) is negotiated and/or in place. Again, the answer will largely depend on the language of the Friedrichs decision but these are issues that public agencies should begin thinking about in the next few months.