In another significant workplace decision, the U.S. Supreme Court protected the right of agency-shop non-union public employees to refrain from funding the union’s political agenda. The effects of this decision could impact the amount of money unions have available to allocate to political causes.
In Knox v. Service Employees International Union, Local 1000 (SEIU), the SEIU represented a bargaining unit of California public employees under an agency shop arrangement. Under this arrangement, all bargaining unit employees were represented in the collective bargaining process by the union although some bargaining unit members chose not to join the union. To avoid a “free-rider” situation where non-union employees reaped the benefits of union representation without paying union dues, the union charged non-union employees for “chargeable expenses” – the portion of dues devoted to negotiating, administering and enforcing the collective bargaining agreement. The chargeable expenses portion of dues was set each year based on the union’s prior year audited accounting statements. Non-union employees could avoid non-chargeable expenses – expenses devoted to furthering the union’s political agenda – by annually opting out of contributions for those expenses.
In Knox, the SEIU provided its annual notice to bargaining unit employees regarding the right to opt out of non-chargeable expenses. Those opting-out owed approximately 56 percent of the full union dues as the portion devoted to chargeable expenses for the prior year. After the opt-out period, the SEIU advised the bargaining unit employees of an additional assessment to assist the union in opposing two statewide ballot measures that arose after the fact. The SEIU did not provide an opportunity to opt out of the special assessment, but did limit the contribution of those employees already opted out to 56 percent of the assessment amount. The non-union employees sued, claiming that because the special assessment was intended entirely for non-chargeable expenses, they should not be forced to contribute any amount to the special assessment.
The U.S. Supreme Court agreed. Relying on First Amendment considerations, the Court held that the SEIU should have provided an additional notice to bargaining unit employees regarding their right to refuse to contribute to the union’s political activities. The Court then went even further than the non-union employees asked by holding that the SEIU could deduct the special assessment only if bargaining unit employees affirmatively agreed to make the contributions – a so-called “opt-in” arrangement.
The majority’s holdings did not go without comment. Justices Sotomayor and Ginsburg agreed that the non-union employees should not be required to contribute in any proportion to the special assessment since it was marked for solely non-chargeable, political expenses. They disagreed, however, with the majority’s decision to upset the longstanding opt-out arrangement in exchange for an opt-in arrangement. Because this question was not before the Court and had not been argued by the parties, it was, in the concurrence’s view, unnecessary and ill-advised for the majority to rule on it.
Justices Breyer and Kagan dissented from the judgment altogether. As to the Court’s ruling on the opt-out/opt-in issue, they agreed with the concurrence. And as to the Court’s ruling regarding the special assessment, the dissent took the position that those contributions should be handled the same as regular contributions with any settling up to occur the following year. In other words, if non-union employees paid any chargeable expenses based on the special assessment, the monies would be returned to them the following year as a lower proportion of chargeable expenses. The majority rejected this position, stating that an employee who could not be forced to contribute to political activities should likewise not be forced to loan money to be used for political activities.
This opinion has commentators buzzing on topics as diverse as whether this represents an anti-union trend on the Court’s part to whether the concepts in the decision will be analogized to shareholder disagreement with corporate political action committee contributions. We will follow the dialogue and keep you posted.