Agency Fees: Familiar Item on Court's Docket

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Late last month, the Chicago affiliate of the American Federation of Teachers asked the U.S. Supreme Court to review a federal appeals court's nullification of the agency-shop agreement that the union negotiated with the city's school board in 1982.

That petition marked the sixth time that the Court has been asked to examine the issue since it began its current session last October.

Thus far, the Court has turned down five of the six requests, handing victories to the unions involved in the cases. Union officials involved in the Chicago case say they are hoping that the Justices will overturn the appeals court's ruling without a hearing and send the case back for another trial, giving the labor movement a perfect record for the year on the issue.

Unions Hopeful

If past is prelude, the union officials would appear to have a reasonably good chance of having their way. The Court has been generally supportive of the unions' arguments in defense of the agency-shop concept and the structures they have devised to implement such contract provisions.

But on the other hand, the Court has indicated twice in the past year its willingness to hear the other side. Last April, for example, the Justices ruled that unions could not spend agency fees collected from nonmembers on union organizing or on litigation unrelated to the maintenance of collective-bargaining agreements.

And last October the Court decided 6 to 3 not to hear the case of a dismissed Michigan teacher who claimed he had a right to withhold agency fees from his local union until after a judge had reviewed how the union determined the percentage of union dues earmarked for political and ideological activities. If one more Justice had wanted to consider Jibson v. White Cloud Education Association, the case would have been accepted and scheduled for argument, as it takes only four Justices to accept a case.

Concept's Background

According to experts in labor law and economics, the agency-fee concept emerged in the late 1940's following the passage of the Taft-Hartley Act amendments to the National Labor Relations Act of 1935. Among other things, the 1935 law permitted unions in the private sector to negotiate "closed-shop" contracts requiring workers in a given bargaining unit to join the union as a condition of being hired.

The Taft-Hartley Act outlawed the closed shop and permitted states to ban more limited "union-shop" agreements, which require workers to join the union after they are hired, by passing so called "right-to-work" laws.

According to Leo Troy, a labor economist at Rutgers University, private-sector unions responded to the passage of right-to-work laws with the agency shop, which requires workers who choose not to join unions to pay for the benefits that unions win for all employees in their bargaining units.

"As public-sector unions began taking off in the 1960's, many states would not permit their unionized public employees to get compulsory-membership arrangements," Mr. Troy continued. "So they brought the agency shop into the public sector as a way to get around restrictions on compulsory dues and membership."

Detroit Case

The Supreme Court handed down its first ruling on the constitutionality of agency-shop agreements in the public sector in a 1977 case involving public-school teachers in Detroit.

The Court acknowledged in Abood v. Detroit Board of Education that compulsory fees had an impact on dissenting teachers' First Amendment rights: "To be required to help finance the union as a collective-bargaining agent might well be thought ... to interfere in some way with an employee's freedom to associate for the advancement of ideas, or to refrain from doing so, as he sees fit."

Nevertheless, it found that earlier decisions involving private-sector unions indicated "that such interference as it exists is constitutionally justified by the legislative assessment of the important contribution of the union shop to the system of labor relations established by Congress."

"Insofar as the [agency fee] is used to finance expenditures by the union for the purposes of collective bargaining, contract administration, and grievance adjustment, [the earlier decisions] appear to require validation of the agency-shop agreement before us," the Court said.

Dissenting Opinions

Although all of the Justices concurred in the result reached by the majority in Abood, four of the Court's members took issue with the majority's conclusion that the teachers' rights to freedom of speech and association could be justifiably abridged.

"Compelling a government employee to give financial support to a union in the public sector--regardless of the uses to which the union puts the contribution--impinges seriously upon interests in free speech and association protected by the First Amendment," said three of the Justices. In a separate concurring opinion, Associate Justice William H. Rehnquist added, "I am unable to see a constitutional distinction between a governmentally imposed requirement that a public employee be a Democrat or a Republican or else lose his job, and a similar requirement that a public employee contribute to the collective-bargaining expenses of a labor union."

The majority in Abood anticipat-ed that there would be "difficult problems in drawing lines between collective-bargaining activities for which contributions may be compelled and ideological activities unrelated to collective bargaining for which such compulsion is prohibited." However, it declined at that time "to try to define such a dividing line."

Last year, in Ellis v. Brotherhood of Railway, Airline, and Steamship Clerks, the Court attempted to make that line a little clearer. Union expenditures are constitutional, the Court said, when those expenditures "are necessarily or reasonably incurred for the purpose of performing the duties of an exclusive representative of the employees in dealing with the employer on labor-management issues."

Applying that test, the Court ruled that it was proper for unions to use revenue derived from nonmembers' agency fees to cover the costs of conventions, social activities, and those portions of union publications not devoted to politics. The Court, however, said that nonmembers'6fees could not be used for union organizing or for litigation not related to the negotiation and enforcement of labor contracts.

The Court also invalidated the union's use of a rebate program to reimburse objecting employees for the portions of their dues spent on political activities. "By exacting full dues, then refunding months later the portion that it was not allowed to exact in the first place, the union effectively charges the employees for activities that are outside the scope of the statutory authorization," the Court said. Such payments, it continued, constitute an unconstitutional "involuntary loan."

Rebate Procedure

The constitutionality of the Chicago Teachers Union's rebate procedure is at issue in Chicago Teachers Union v. Hudson (Case No. 84-1503), which the Court was asked on March 22 to review.

Under a contract negotiated by the the union and the city school board in 1982, nonunion teachers were required to pay an agency fee equal to 95 percent of union dues, which totaled $208 annually that year. Teachers who were dissatisfied with the agency fee were allowed to appeal first to an internal union review board and then to an arbitrator appointed by the union president from a list of arbitrators kept by the state board of education. If still dissatisfied, the teachers could take their cases to the state courts.

Last September, the U.S. Court of Appeals for the Seventh Circuit struck down the procedure, saying that it lacked reasonable protections for nonunion employees, "mak[ing] it likely that some of the money collected from them will be used to support political objectives not germane to the union's function in the collective-bargaining process."

The appeals court said the most objectionable feature of the rebate procedure is that "from start to finish it is entirely controlled by the union."

"The procedure that the defendants adopted in this case is constitutionally inadequate, and they must go back to the drawing board," the court said. "We suggest that the constitutional minimum would be fair notice, a prompt administrative hearing before the board of education or some other state or local agency, and a right of judicial review of the agency's decision."

In papers filed with the Supreme Court, the Chicago union, an aft local, argued that the appeals court's decision should be overturned because it "imposes burdensome, unworkable, and unnecessary requirements on school boards and other public employees."

The union also claimed that the appeals court conferred upon the nonunion teachers an unprecedented "liberty interest" when it ruled that forcing such employees to support a union deprives them of their liberty to associate with others as they wish within the meaning of the 14th Amendment.

Previous Supreme Court decisions, the union argued, find that "the compelling governmental interest in promoting labor peace and eliminating 'free riders' justifies any arguable impact on First Amendment interests that may result from providing that employees who do not choose to be union members are to pay [agency fees]."--tm

Vol. 04, Issue 31

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