Supreme Court: Non-Members May Opt-out of Union Agency Fees That Subsidize Political Speech

by Labor Management Relations Practice Group on June 25, 2012

By Jacqueline Phipps Polito and Gregory Brown

Supreme Court Building.jpgIn a ruling that will affect how unions conduct business and collect fees, the U.S. Supreme Court held that non-member employees represented by a public-sector union cannot be compelled to fund the union’s political and social speech without proper notice. Knox et al. v. Service Employees International Union, Local 1000, slip op. No. 10-1121 (June 20, 2012). A central issue in the case was what notice was required to be given to non-members by unions as to how their money would be spent. The Supreme Court previously held that unions are required to issue notices to non-members as to how their dues would be spent, to allow them to opt-out of non-collective bargaining activities. These are often referred to as “Hudson Notices” based on their decision in Teachers v. Hudson, 475 U.S. 292 (1986).

In this case, Service Employees International Union, Local 1000 (SEIU) gave initial notice allowing an opt-out.  Shortly thereafter, the union issued an additional 25% special assessment for political and social endeavors, for which it did not provide another opt-out notice. The Supreme Court held this practice to be a violation of notice provisions. Acknowledging that public-sector unions have a First Amendment right to express their views on political and social issues, the Court nevertheless concluded that an individual could not be compelled to subsidize the union’s speech. Consequently, a union leveling a special fee assessment or unexpected fee increase must provide objecting non-members a fresh opportunity to opt-out of the percentage of the fee earmarked for the union’s political or social mission, and may not charge nonmembers any fees without their “affirmative consent.”

Supreme Court to Decide Constitutionality of Public Sector Union's Assessment of Fees on Non-Members to Fund Political Activity

by Jack Lambremont on June 29, 2011

Supreme_Court_of_the_United_States.jpgThe U.S. Supreme Court has agreed to resolve (pdf) two constitutional challenges stemming from a public sector union’s temporary imposition of increased dues and fees to fund political activity. In Knox v. Service Employees International Union Local 1000, the SEIU imposed a union fee increase after it issued its annual notice – known as a Hudson notice – informing non-members as to what percentage of their dues and fees is allocated to functions associated with union representation and how much is unrelated to the union’s representational function. After receiving the information set forth in the Hudson notice, non-members may opt out of paying amounts associated with the latter category. In Knox, the SEIU imposed the increased fee without issuing a second Hudson notice and charged non-members who objected to the increase in fee 56.35% of the total increase, the percentage set forth in the initial Hudson notice as the amount associated with union representation. In a class action lawsuit brought by nonunion state employees challenging this practice, the Ninth Circuit ultimately decided (pdf) that a second notice was not required. The class appealed, and the Supreme Court agreed to examine the following questions:

May a State, consistent with the First and Fourteenth Amendments, condition employment on the payment of a special union assessment intended solely for political and ideological expenditures without first providing a Hudson notice that includes information about that assessment and provides an opportunity to object to its exaction? And

May a State, consistent with the First and Fourteenth Amendments, condition continued public employment on the payment of union agency fees for purposes of financing political expenditures for ballot measures?

Continue Reading

U.S. Supreme Court Refuses to Require Arbitration Over Date of Formation of Collective Bargaining Agreement, Remands Federal Claim Against the International Union

by Jack Lambremont on June 25, 2010

On June 24, 2010, the U.S. Supreme Court issued a pro-employer opinion in Granite Rock, Inc. v. International Brotherhood of Teamsters, et al., (pdf) providing valuable guidance on the arbitrability of disputes over the timing of the formation of collective bargaining agreements.

The Court (7-2) held that the question of exactly when the parties formed an agreement to arbitrate certain disputes was not itself subject to resolution through arbitration. The Court also declined to recognize Granite Rock’s cause of action under Section 301 of the Labor Management Relations Act (LMRA) against the International Brotherhood of Teamsters’ (IBT) for tortious interference with a collective bargaining agreement. The Court remanded the case to the lower court to allow Granite Rock to proceed against the International on the theory that the local union was acting as the IBT’s agent when it refused to abide by the no-strike clause of the parties’ collective bargaining agreement.

Continue Reading

NLRB Cannot Act with Only Two Members, Supreme Court Holds

by Labor Management Relations Practice Group on June 17, 2010

Potentially invalidating hundreds of National Labor Relations Board (NLRB or “Board”) decisions, the U.S. Supreme Court has held that the National Labor Relations Act (NLRA) requires that the NLRB must operate with at least three members in order to exercise its full authority. In New Process Steel v. NLRB, (pdf) the Court rejected the argument that the NLRA’s delegation and quorum clauses enable the Board to act with only two members, which it had done from January 2008 through March of this year when President Obama used the recess appointment process to add members Craig Becker and Mark Pearce to the two-member panel.

Continue Reading