The U.S. Supreme Court refused to require Medicaid home health service personal assistants in Illinois to pay “agency fees” to a public-sector union certified to represent those employees in collective bargaining with the state. While technically a defeat for labor organizations, the high court stopped just short of overruling the 37-year-old precedent established in Abood v. Detroit Board of Education, 431 U.S. 209 (1977), which allows a state to require a non-member public employee to pay a fee for collective bargaining and related services to the union designated to represent this class of employees.

The loss of the ability to collect agency fees would deal a significant blow to the influence that public-sector unions have through the millions of dollars that they are able to spend to influence government action. Even though public-sector union leaders may be able to breathe a little easier, opponents of agency fees will find a great deal of encouragement in the majority opinion authored by Justice Samuel Alito in Harris v. Quinn, 573 U.S. ___ (June 30, 2014).

Under the Supreme Court’s ruling in Abood, a public-sector collective bargaining agreement may contain an “Agency Shop” clause that requires employees who are not union members to financially support the union’s collective bargaining, contract administration, grievance-adjustment procedures, and other relevant activities. Id. at 232, 235. While Abood and its progeny allow non-member employees to object to being compelled to fund union political activity, as a practical matter, it is extremely difficult for an employee to succeed in contesting that a union expenditure is:

• Not germane to collective-bargaining activity
• Not justified by the government’s vital policy interest in labor peace and avoiding free riders
• Not a significant additional burden on employee free speech inherent in an agency shop (Lehnert v. Ferris Faculty Association, 500 U. S. 507, 519 (1991))

As a result, public-sector unions, particularly teacher unions, are a powerful political force, thanks, in part, to their regular influx of employee dues and contributions. It is estimated that public-sector unions spend over $150 million a year on political activity at the state level plus tens of millions more at the federal level. Therefore, any change in the Abood standard may weaken the political influence of public-sector unions and have significant ramifications on the balance of power in American politics. 

Harris involved a challenge by home health care workers in Illinois who are employed by Medicaid recipients as “personal assistants,” providing homecare services tailored to the recipient’s needs. The goal of the program is to avoid the unnecessary institution of certain patient populations by funding personal care services in private homes. In most instances, these personal assistants are hired directly by the Medicaid recipient, and often these assistants are relatives of the person receiving care and provide the services in the assistant’s own home. A collective bargaining agreement between the State of Illinois and the Service Employees International Union Healthcare Illinois and Indiana requires all personal assistants under this Medicaid program who are not union members to pay a “fair share” of the union dues.

A putative class action on behalf of all personal assistants was commenced on the ground that the required Agency Fee contributions violated the First Amendment rights of non-member personal assistants. Relying on Abood, both the District Court and the Seventh Circuit Court of Appeals in Harris ruled against the personal assistants. Writing for the court in a 5–4 decision on June 30, Justice Alito cited “Abood’s questionable foundations” as well as the differences between Medicaid personal assistants and full­-fledged public employees for the Supreme Court’s decision barring the requirement for non-member personal assistants to pay agency fees to the union.

Noting that Justice Alito spent nearly four pages of the opinion “taking potshots at Abood,” Justice Elena Kagan, writing for the four dissenting justices, declares that the failure to overrule Abood “is cause for satisfaction, though hardly applause.” Opponents of agency fees will no doubt scour Justice Alito’s attacks on Abood to find the next opportunity to attack this precedent.

On the state level, activists continue to campaign for public employee paycheck protection legislation, which would make it illegal for a state to take certain automatic deductions from a public employee’s paycheck, such as deductions for union dues, agency fees, or union political action committee contributions. On June 23, the Pennsylvania House State Government Committee approved amended paycheck protection legislation along party lines. Losing automatic dues deduction through the adoption of such legislation could make it unnecessary to overturn Abood, as a practical matter. Without automatic payroll deductions, unions would be deprived of the most effective manner in which they collect contributions from member and non-member employees alike.

If you have questions about how this decision may impact your business, please contact:

• Sean P. Beiter (716.566.5409; sbeiter@goldbergsegalla.com)
• Caroline J. Berdzik (609.986.1314; cberdzik@goldbergsegalla.com)
• Matthew C. Van Vessem (716.566.5476; mvanvessem@goldbergsegalla.com)
• Or another member of the Goldberg Segalla Labor and Employment Practice Group.