Supreme Court Rules Unions Can't Take Extra Fees Without Consent

The United States Supreme Court this week finally recognized the right of workers who are forced to pay agency fees to a union as a condition of employment to forgo paying for union activity they disagree with.

Perhaps most importantly, the decision in the SEIU v. Knox case portends an end to the system that requires dissenters to opt out of union political activity.

A long line of Supreme Court decisions have allowed provisions that favor unions that have a stranglehold in businesses in states that force every worker to pay dues to belong to the union, or be forced to pay fees to the union.

"Agency fees" are supposed to cover the cost of non-political union activity such as collective bargaining and grievance procedures. These are known as chargeable expenses. Over time and without much analysis, the Supreme Court has allowed a process by which the unions calculate what the chargeable expenses are and send a Hudson notice to members and those who wish to can "opt out" of paying non-chargeable, i.e. political, costs.

Knox concerned the Service Employee International Union’s charging of a "special assessment" to fight a ballot initiative in California. This assessment was on top of the normal dues or agency fee charged by the SEIU. The union did not provide a second Hudson notice with this special assessment.

The Supreme Court recognized that "compulsory fees constitute a form of compelled speech and association that imposes a significant impingement on First Amend­ment rights." The court noted that an opt-out system favors the union over the non-member:

[R]equiring objecting non-members to opt out of paying the non-chargeable portion of union dues — as opposed to exempting them from making such payments unless they opt in — represents a remarkable boon for unions. Courts “do not presume acquiescence in the loss of fundamental rights.” . . . Once it is recognized, as our cases have, that a non-member cannot be forced to fund a union’s political or ideological activi­ties, what is the justification for putting the burden on the non-member to opt out of making such a payment? Shouldn’t the default rule comport with the probable preferences of most non-members? And isn’t it likely that most employees who choose not to join the union that represents their bargaining unit prefer not to pay the full amount of union dues? An opt-out system creates a risk that the fees paid by non-members will be used to further political and ideological ends with which they do not agree.

The Supreme Court recognized that its prior cases had not considered this question carefully:

Although the difference between opt-out and opt-in schemes is important, our prior cases have given sur­prisingly little attention to this distinction. Indeed, ac­ceptance of the opt-out approach appears to have come about more as a historical accident than through the careful application of First Amendment principles.

The Supreme Court did not have to answer this broad question since Knox concerned only special assessments and not general agency fees. It did, however, hold that special assessments require an opt-in procedure.

The logic of this holding seems likely to apply to general agency fees in the near future and a long-standing "remarkable boon for unions" seems destined for the dust bin of history.