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New York’s Taylor Law requires public employers to engage in collective bargaining with unions that represent employees. It also makes it mandatory that individual employees who benefit from collective bargaining either pay membership dues or a nonmember service charge – called an agency fee – to the union which represents them. However, there is a possibility that the U.S. Supreme Court may declare the compulsory collection of “agency fees” to be unconstitutional. Such a ruling would dramatically change labor relations in New York and the nation.

How Justice Scalia’s death derailed a legal freight train

During its 2015-16 term, the U.S. Supreme Court was scheduled to issue a highly-anticipated decision that dealt with agency fee in Friedrichs v. California Teachers Association. The Friedrichs plaintiffs were public school teachers who challenged the constitutionality of agency fee required by California’s equivalent of the Taylor Law.

But after Justice Antonin Scalia died in his sleep on Feb. 13, 2016, the remaining eight justices were evenly split on Friedrichs. The deadlocked court issued a per curiam order that maintained the status quo, without analysis or explanation. The order left intact a ruling by the Ninth Circuit Court of Appeals that upheld the constitutionality of agency fee.

 On Feb. 6, 2017, a new lawsuit challenging California’s agency shop law was filed by the same lawyers who represented the plaintiff teachers in Friedrichs. In Yohn et al. v. California Teachers Associationthe plaintiffs are hoping for either a favorable ruling in this California case or a second shot at the U.S. Supreme Court.

Neil Gorsuch, the newest member of the Supreme Court and Justice Scalia’s replacement, could become the crucial fifth vote as the plaintiffs seek to strike down agency fee. Meanwhile, a similar lawsuit challenging agency fee, Janus et al. v. AFSCME Council 31 has been fi led by state employees in Illinois.

The issue of the constitutionality of agency fee is hardly settled. Other pillars of public sector collective bargaining, such as “exclusive representation” and the duty of fair representation, also hang in the balance due to the symbiotic relationship between such principles and agency fee.

Justice Alito opens a door to change

The lawsuits mentioned above seek to overturn the U.S. Supreme Court’s seminal holding in Abood v. Detroit Board of Education. The teachers in Abood opposed the various political and ideological activities of their union and sought to declare the agency shop provision of their collective bargaining agreement invalid under the U.S. Constitution as a deprivation of the teachers’ freedom of association. The Supreme Court saw the teachers’ point regarding political and ideological activities, but agreed with the union that the teachers benefited from the union’s role in collective bargaining. Ultimately, the court ruled that non-union members who are part of the collective bargaining unit can be compelled to pay agency fees that represent a share of the collective bargaining costs. The court also held that non-members were not required to subsidize expenditures made by the union which aided activities considered political or ideological in nature.

As a quid pro quo for exclusive representation of all members of a given collective bargaining unit, a union is required by Abood to “fairly and equitably” represent all members of the bargaining unit – regardless of whether they are dues-paying union members or fee-paying non-members. The court determined that agency fee was justified by the need to prevent “free riding” on the union’s collective bargaining activity which benefited non-union members, as well as the need to preserve “labor peace” by preventing dissension among competing unions.

 In recent years, the Supreme Court has issued rulings that chip away at agency fee requirements. The biggest blow to unions came in the form of Justice Samuel Alito’s majority opinion in Harris v. Quinn.

In Harris, employees called “personal assistants” who provided home healthcare services as part of a statewide program challenged the agency fee provision in their collective bargaining agreement on constitutional grounds. The court narrowly held that the state’s only role was to provide compensation to the personal assistants; hence, they were considered “partial public employees” to which the agency shop provision was inapplicable.

The significance of the Harris decision lies not in the court’s failure to extend Abood to this particular class of workers, but Justice Alito’s bold attack on the reasoning underlying Abood. In the opinion, Justice Alito viewed union demands as akin to the union petitioning government. He further reasoned that petitioning government is speech under the First Amendment. Therefore, non-union bargaining unit members who disagree with the union are unconstitutionally required to pay money to an organization espousing positions contrary to their own beliefs.

The Harris opinion provided a legal avenue for public employees to challenge Abood. Citing Harris, they can claim that a compulsory agency fee is prohibited under the First Amendment. Indeed, several pending cases make this assertion.

 How could this affect New York?

If any of the above mentioned cases reach the U.S. Supreme Court, it could determine that a compelled agency fee is unconstitutional. If that happens, certain pro- visions of the Taylor Law would no longer be enforceable. New York would resemble the twenty-eight (28) “right-to-work” states where laws prohibit unions from collecting agency fees from non-members. This could result in a decline in union membership. After Wisconsin passed legislation in 2011 that significantly limited collective bargain- ing from nearly all public-sector unions and right-to-work legislation in 2015, public and private union membership in the state collapsed.

 On the other hand, New York has longstanding ties to the labor movement. Since the Triangle Shirtwaist Factory fire in New York City in 1911, New Yorkers have a long history of supporting unions to fight for worker safety and fair wages. In 2016, 23.6 percent of New York’s wage and salary workers were union members and more than 95 percent of the teachers in New York’s public schools are unionized.

Another element of the Taylor Law that could be affected by a future U.S. Supreme Court ruling is the principle of exclusive representation, which was borrowed from the National Labor Relations Act. According to the unanimous decision written by Justice Potter Stewart in Abood, it is desirable to have a single representative for all members of a labor unit to (1) avoid confusion in enforcing various terms and conditions of employment, (2) “prevent inter-union rivalries from creating dissension within the work force,” and (3) “free the employer from the possibility of facing conflicting demands from different unions.”

If Abood is overruled and agency fee is declared unconstitutional by the Supreme Court, unions in New York may lose the right to exclusive representation. This means school boards may find themselves negotiating with small splinter unions, e.g. the Social Studies Teachers Union or the Arts and Science Teachers Union. This could lead to a never-ending cycle of negotiations with various unions.

A related legal issue involves each union’s duty of fair representation – the obligation of a union to equally, and in good faith, represent every employee in a bargaining unit, regardless of whether that employee is a union member or not. This duty of fair representation was created first by the courts, then codified in legislation including New York’s Taylor Law as a corollary to the right of exclusive representation. However, if exclusive representation is eliminated, what then happens to the duty of fair representation? Arguably, one cannot exist without the other.

If we enter a new era in which multiple unions represent public employees, school districts may experience what Justice Potter Stewart sought to avoid in Abood – rivalries among unions, dissension among employees and conflicting demands in collective bargaining.

Finally, it is worth noting that the recently passed 2018 state budget includes a provision which increases the amount of itemized deductions from a taxpayer’s adjusted gross income by the amount of union dues and agency fees paid during the taxable year, subject to certain conditions. Accordingly, if agency fee is nullified, this provision may incentivize union members to retain their membership and non-members to join in order to receive this potential tax benefit. It is possible that with this tax break unit members who pay agency fees instead of union dues may be incentivized to choose to continue to pay fees to the union, even though the “tax break” will not equal in dollars the union/agency fee amount.

Members of the New York State Association of School Attorneys represent school boards and school districts. This article was written by John H. Gross and Mary-Ann P. Czak of Ingerman Smith LLP. Gross Czak In 1911, 146 garment workers lost their lives in the Triangle Shirtwaist Factory fire in New York City. Factory owners had locked the doors to the stairwells and exits to prevent theft and unauthorized breaks. The event spurred the spread of unionism in the United States.