Saturday, June 23, 2012

It Hasn't Been a Good Month for Public Employee Unions

The Supreme Court yesterday delivered another blow to public employee unions by limiting their use of mandatory member dues for political purposes. Following on the heels of the Wisconsin recall campaign, which featured copious amounts of mandatory union dues used in to support various unions' political ends, and resulted in a significant hit to public employee unions' bottom lines, it's been a rough first part of June for public-sector, collective-bargaining.

This case comes out of California, the land of powerful and well-heeled public employee unions. California law permits public-sector employees to create so-called "agency shops" in which all employees are represented by a union, and nonmember employees are required to pay an annual fee for "chargeable expenses". Chargeable expenses in this setting are fees required to support non-political union activities related to collective-bargaining. In order to properly collect chargeable expenses, public unions are required to provide employees with so-called Hudson notices, that advise the nonmembers of how much of their dues payments go to political activities, and allowing the nonmembers to opt out of paying for non-chargeable costs.

Of course, the unions do not want people to opt out of paying non-chargeable political costs. Much of the public employees' political influence comes from the ability of their unions to amass significant war chests to fund campaign contributions and political advertising on behalf of candidates who will then support public-sector pay increases.

In the circumstances here, the SEIU sent out the requisite Hudson notice to the members of a bargaining unit, estimating that approximately 56% of its total dues requirements would be chargeable. Nonmembers had 30 days to object to the full payment of dues, but were on the hook for the chargeable costs, nonetheless. A month after sending out the Hudson notices (after the time to object had expired), the union announced a temporary 25% increase in dues and the elimination of a dues contribution cap, in order to increase political funding for the November 2006 election. Nonunion employees were not given a choice as to whether they would pay in to the fund, and in fact the union indicated that all of the 25% increase would go to pay for political operations.

The plaintiffs in this case were a group of employees who did not like having their dues co-opted for political purposes to which they did not subscribe. They prevailed and got their money back at the trial court level, but the Ninth Circuit ruled for the union, setting up the appeal.

The Supreme Court, as is its normal practice, reversed the Ninth Circuit, finding that what the union did with respect to public employees constituted a violation of their First Amendment rights of free association and free speech. Specifically, the Court determined that the union should have provided a fresh Hudson notice advising employees of their right to opt out of the increase, and allowing them to do so. The Court said that a public entity effectively compelling the funding of the speech of individual speakers or groups is virtually the same as a public entity compelling speech and association. Mandatory subsidies from a public employee group for private speech are subject to exacting First Amendment scrutiny and those subsidies cannot be sustained unless there is a comprehensive regulatory scheme involving a mandated association among those who are required to pay the subsidy.

What this means is that public employee unions will have to be more careful about how they spend their money, how they account for the money, and how they give notice to their workforce. Public sector unions may not use nonmember dues for political purposes, without those employees' consent. This case sends a relatively clear message that the Court is looking carefully at the coercive practices of unions, especially in the public sector.

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