In a close decision earlier this week, the U.S. Supreme Court dealt a blow to unions representing government employees. The case, Harris v. Quinn, dealt with an effort in Illinois to permit unions to organize a group of individuals who provide services to those who are unable to live in their own homes without assistance. Under the federal Medicaid program, states can establish programs that provide services to those who would otherwise have to be institutionalized. The programs pay for individuals who provide services to individual customers pursuant to a personal care plan that is unique to that customer. Many of these care providers are relatives of the person receiving the care.

Through actions of both then-Governor Rod Blagojevich (D), and later the legislature, the state permitted a union to organize the personal care providers. The Service Employees International Union (“SEIU”) did so successfully, and ultimately entered into a collective bargaining agreement that included an “agency fee” provision. An agency fee is similar to union dues, and the agency fee provision here was authorized by state law.

 

A group of personal care providers objected to paying a mandatory fee to the SEIU because they did not want to support the SEIU. They sued the governor and the union alleging a violation of their First Amendment rights. They lost in the lower courts based on a 1970’s ruling in a case called Abood v. Detroit Board of Education, which the lower courts interpreted as permitting the assessment of a mandatory fee payable to a union by public employees whom the union represents for purposes of collective bargaining.

 

In its decision, however, the Court rejected the Abood case as controlling. That case, the Court said, involved public employees. The personal care providers here were not public employees because the customer — the person receiving the care — controlled the significant aspects of their employment, and the state’s control was very narrow. Thus, the state was not the employer of the personal care providers.

 

Rather than apply Abood, the Court determined that the agency fee provision did not serve a “compelling state interest that cannot be achieved through means significantly less restrictive of associational freedoms.” The agency fee did not serve the goals of “labor peace” or the promotion of the welfare of the personal care assistants. Thus, the agency fee couldn’t survive the constitutional challenge.

 

The dissenting justices disagreed strongly on the question of whether Abood applied. Those justices held that it did, based on the “joint employer” doctrine. That is, the state and the customer were both the employer given that they both exercised authority over different aspects of the personal care providers’ “employment.” For these and other reasons, the dissent would have found the agency fee provision constitutional.

 

For the labor professional, especially in the public sector, the case is quite significant:

  • The Court’s questioning of Abood all but invites a challenge by a government worker to an agency fee provision. According to the Bureau of Labor Statistics, there are 7.3 million employees in the public sector who belong to a union.  Agency fee statutes exist in a number of different states and surely a significant percentage of these public sector employees have been required to pay money to a union that engages in collective bargaining on their behalf.
  • According to some reports, the SEIU could lose millions of dollars in revenue as a result of this decision. Other unions who have organized workers similar to the personal care providers may face similar revenue losses. Organizing activity could, as a result, pick up as these unions seek to make up lost revenue.
  • It will be interesting to see whether the Court’s treatment of the joint employer issue in this case finds its way into private sector cases. As previously reported on this blog, the NLRB recently solicited briefs on the question of whether to overturn 30 years of precedent in the private sector on the joint employer standard.