The U.S. Supreme Court this morning in Janus v. AFSCME (download here) reversed 40 years of labor law precedent and concluded that  requiring public employees to pay “agency fees” for labor unions that they don’t want to belong to violates the First Amendment of the U.S. Constitution.

Previously, prior cases have banned forcing public sector employees from joining a union and paying union dues. But a number of states permitted union contracts that required employees to still pay an “agency fee” to cover the costs of collective bargaining.

In its 5-4 decision, the U.S. Supreme Court rejected this — leaving public sector unions, particularly in states like Connecticut, to potentially lose significant funds from employees who say that they want no part of their salary to go towards unions.

Given that this blog covers more employment law than labor law, and focuses more on private-sector than public sector, I’m not going to do a deep-dive today into the case. The SCOTUSBlog is one good resource. 

But my labor law colleagues at my firm have spending the morning looking into this.  Here’s the quick recap posted this morning on the Employment Law Letter blog and the impact to Connecticut public-sector employers.:

The immediate effect of the Court’s decision is that agency fee (or “fair share” fee) provisions in collective bargaining agreements are invalid. The Court specifically states that agency fees and similar payments may not be deducted from an employee’s pay unless the employee has expressly consented to the deduction.

This statement suggests that employers should stop deducting agency fees unless and until an employee has affirmatively consented.

Because Connecticut law requires express employee consent for payroll deductions, Connecticut public sector employees have likely already consented to the deduction of agency fees.

However, public sector employers should be prepared for employees approaching them and requesting that the agency fee deductions be stopped, effectively withdrawing their consent.

Justice Alito’s decision is emphatic in this point and the significant dollars at stake:

We recognize that the loss of payments from nonmembers may cause unions to experience unpleasant transition costs in the short term, and may require unions to make adjustments in order to attract and retain members. But we must weigh these disadvantages against the considerable windfall that unions have received under Abood for the past 41 years. It is hard to estimate how many billions of dollars have been taken from nonmembers and transferred to public-sector unions in violation of the First Amendment. Those unconstitutional exactions cannot be allowed to continue indefinitely.

Watch my firm’s blog for more details on this critical decision in the public-sector.

robertsFirst things first. My favorite David Bowie song is “Heroes” (though I remember really being struck by its use in the 2001 movie, Moulin Rouge).

But the Bowie song that comes to mind today for various reasons is “Changes” and how it ties into another big story of the day — an oral argument before the U.S. Supreme Court in a case involving public employers.

At issue is whether public employees who do not want to be part of a union can still be required to pay an “agency fee”, which is typically the equivalent of the dues that union members pay as well.

The case is revisiting a 1977 case (the Abood case if you’re interested) which that requiring non-union members to pay fees for collective bargaining was constitutional.

The SCOTUSBlog sets up the argument on behalf of the non-union members like this:

Here is their logic: because unions cannot charge non-members for political activity and since non-members argue that everything a public-sector union does — even bargaining — is political in nature, it follows that any fees violate their First Amendment right not to pay for activity to which they object. Their target, in union parlance, is the “agency fee.”

The State of Connecticut has come out firmly on the side of upholding the current law.  In November 2015, it joined an amicus brief from New York urging the court to not change the current law and leave it to the state to determine the full scope.

It noted that 23 states permit these “agency fees” (also known as “fair share” fees) to “provide a mechanism for ensuring that represented employees contribute to  union costs germane to collective bargaining. The majority of these statutes make agency-fee requirements a permissible subject of bargaining and  authorize (but do not require) agency-fee provisions as part of public-sector collective-bargaining agreements.”
In the amicus brief, New York (and Connecticut) argue that the court should uphold the current scheme “recognizing that the government must have flexibility to manage its own internal operations, especially with respect to
matters affecting the delivery of government services.”

Why is this important, according to the states? A few things:

A lack of adequate funding can reduce a union’s ability to maintain the staff expertise necessary to perform collective-bargaining functions. Eliminating agency fees as a secure funding mechanism may require unions to focus disproportionate effort on recruiting members and collecting fees, thereby diverting attention from bargaining and contract-administration responsibilities. Moreover, the absence of secure funding may create skewed incentives for unions to make excessive bargaining demands or disparage management as antagonistic to labor, in order to encourage employees to give financial support.

Notably, a separate amicus brief filed by 18 other states argue the opposite.

It is time to abandon the meaningless distinction between collective bargaining and other political activity.  In the public sector, core collective bargaining topics such as wages, pensions, and benefits inherently implicate public policy, and in ways that matter.

Like lobbyists, public sector unions obtain binding agreements from the government that have enormous public impact — all without the natural counterweight of a financial market that exists in the private sector. In the public sector, it is taxpayers, not business owners and consumers, who foot the bill — and the bill is often steep.

Some pundits predict that the court will strike down agency fees.  Consistent with my post lack week, I won’t make any such predictions, but this case has significant implications obviously for public employers and it’ll be interesting to watch whether there will be any impact on private employers as well.

In any event, stay tuned and be sure to listen to some David Bowie in the meantime.

We’re just a few weeks away from my firm’s Public Sector legal update.  (If you haven’t signed up yet, do so now because it’s getting close to capacity!)

So it seems appropriate to bring up a sore point for some: Arbitration Decisions That Leave You Scratching Your Head.

Today, I’ve asked my colleagues Saranne Murray and Jarad Lucan to tackle a new decision that we can add to that category.

When finding cases to talk about, we like to pick ones that will have an impact on employers.

But truth be told, it’s kind of tough to say that about an arbitration decision.

Why? Because Connecticut courts have held that one arbitration award doesn’t have to be followed by other arbitrators.  (In legal terms, an award isn’t “precedent”.)

But we cannot resist sharing a case that has been making headlines for a while in Connecticut.

Remember the awful story of the young boy in Windsor Locks who was killed while he was riding his bicycle and was hit by the car of an off-duty police officer?

Well, in what some considered “guilt by association” and others thought was a molestation of process, the Windsor Locks Police Commission fired the officer’s father (Robert Koistinen), who was a Sergeant in the Department and the first one to arrive at the scene of the accident.

The Commission gave a bunch of reasons for Sergeant Koistinen’s firing including that he failed to exercise any control over the crime scene to avoid the destruction of evidence, and that he left the scene twice with his son in the back seat of his SUV.

Ultimately, the issue of the termination was decided through the arbitration process last week.

The Town faced a number of obstacles in the arbitration.

First, the firm hired by the Town to do an independent investigation after the accident found that Sergeant Koistinen’s actions “did not appear to produce any negative impact on the overall investigation.”  The report went on to state that “we also do not take issue with the action taken of putting Michael Koistinen, the operator, in his SUV vehicle.”

Second, Sergeant Koistinen had 34 years of unblemished service with the Town.

In the end, the arbitration panel (download the decision here) found that there was not “just cause” for the discharge.  Instead it reduced the termination to a one-year suspension.

While this may seem like a reasonable outcome to some, it is the kind of arbitration award that drives management lawyers and employers crazy.  It’s fair to ask:  “If what the person did was bad enough for a full year’s suspension, why wasn’t it enough to fire him?  And who are these arbitrators to decide what is best for our workplace?”

But these types of arbitration decisions are difficult to challenge.  Why? Because when the issue presented to the arbitrators is whether there was just cause for discharge of the employee, that is a so-called “unrestricted” issue meaning the judgment of the arbitrators is also “unrestricted”.

In other words, give the arbitrator a broad issue and the arbitrator will end up having broad discretion to decide it.

That doesn’t mean it’s not worth trying. It remains to be seen whether Windsor Locks will try to overcome these odds and ask a court to vacate the award.  Stay tuned, since they have to make that decision within 30 days.