Employment Law Daily Trump DOJ reverses course on public sector ‘agency fees’
Tuesday, December 12, 2017

Trump DOJ reverses course on public sector ‘agency fees’

By Pamela Wolf, J.D.

In its most recent reversal of course on the labor scene, the Trump Justice Department has flipped its position on whether the First Amendment bars government employers from compelling their employees to pay “agency fees” to the unions that represent them, noting in an amicus brief that, “As the nation’s largest public employer, the United States has a substantial interest in the resolution of that question.” The brief supporting the employee in Janus v. American Federation of State, County, and Municipal Employees, Council 31 (16-1466), takes the opposite position from DOJ’s amicus brief filed two years earlier, in Friedrichs v California Teachers Association (14-915), to argue that it is time to overturn Abood v. Detroit Board of Education, Supreme Court precedent permitting public-sector agency fee arrangements.

Another shot at the issue. The High Court once again has a chance to reconsider Abood, an opportunity lost last term when, due to a vacancy left by Justice Scalia’s unexpected death in March 2016, the equally split court let the Ninth Circuit’s decision below stand. The seat remained vacant because the Republican-controlled Senate refused to take up consideration of President Obama’s nomination of Merrick Garland to fill the spot.

Foreshadowing. The path to the outcome for which the Justice Department is now advocating was cleared by the Supreme Court’s June 2014 Harris v. Quinn ruling. That case questioned the foundation for the precedent established in Abood, but let it stand in the face of a case involving workers who were not “full-fledged” state employees and thus to whom Abood did not apply. And Harris involved the Illinois Public Labor Relations Act (PLRA), which is also at issue in Janus.

Perfect test case. Janus seems a perfect test case. Below, the Seventh Circuit held that a district court had properly rejected a challenge brought by two Illinois state workers hoping to bar their unions from collecting “fair share” fees from nonmembers. The PLRA allows for such fees and the First Amendment does too, according to Abood, the appeals court held.

Under the PLRA, a union representing public employees can collect fair share fees from public employees who are not union members but who benefit from the union’s bargaining efforts and its role in administering the contract. Illinois Governor Bruce Rauner filed suit in 2015 in a move aimed at halting the practice. He argued that by allowing the union to levy these fees, the statute violates the First Amendment in that it compels employees to provide financial support to an organization of which they disapprove.

The district court found Rauner lacked standing to sue and dismissed his complaint. But two public employees had moved to intervene. Despite the procedural improprieties of allowing intervenors to join a defunct lawsuit, the district court granted their motion for expediency’s sake. Their ultimate goal was to overrule the Supreme Court’s Abood decision and its precedent permitting public unions to collect fair share fees.

“Of course, only the Supreme Court has the power, if it so chooses, to overrule Abood,” Judge Richard Posner wrote, acknowledging, as the plaintiffs did, that the district court and appeals court were simply hurdles to clear before they could seek High Court review. The lower court’s dismissal, and the Seventh Circuit’s affirmance of that dismissal, were really just formalities.

Obama DOJ supports agency fees. Two years ago, in Friederichs, the Obama Administration’s Justice Department argued against overruling Abood. Much of the DOJ’s change of heart under the Trump Administration revolves around the First Amendment and what level of scrutiny should be applied to the question before the Court.

The Obama DOJ argued that the petitioner’s attack on Abood was based on the fundamental legal error that “conditions of public employment that advance a public agency’s interest as an employer are subject to ‘exacting’ scrutiny under the First Amendment.” The DOJ argued the Court has never held that to be the case. Moreover, in “an array of contexts, including the political-affiliation cases on which petitioners rely, this Court has afforded public employers broad leeway to establish ‘reasonable’ or ‘appropriate’ conditions that advance the government’s interest as an employer, while remaining vigilant to ensure that the government does not leverage the employment relationship to stifle employees’ broader expressive activities as citizens.”

Obama’s Justice Department also asserted that the “Founding generation” would be astonished by the attempt “to demolish this Court’s settled framework for analyzing conditions of public employment,” and that to do so “would stamp out the State-by-State variation in public-employment structures that has been the hallmark of this Court’s First Amendment jurisprudence for decades.”

Trump’s DOJ reverses course. Fast-forward to the Trump Administration: The Justice Department has now flip-flopped, arguing in favor of overruling Abood. In the public sector, “speech in collective bargaining is necessarily speech about public issues,” the new DOJ position argues. Virtually all matters at stake in a public-sector labor agreement impact the public fisc, and thus, are matters of public policy concerning all citizens. Issues such as tenure for state employees, merit pay, and the size of the state workforce concern more than money; “they concern no less than the proper structure and operation of government.”

Among other things, the Trump DOJ faults Abood for approving compulsory public-sector agency fees “without applying any heightened scrutiny.” While Abood may have recognized the inherently political nature of public-sector bargaining, it nonetheless saw the constitutionality of public-sector agency fees as controlled by private-sector precedents that did not involve the same First Amendment concerns.

Moreover, Abood relied on the empirical assumption that exclusive representation in the public sector requires mandatory agency fees. The Supreme Court has since expressly rejected that notion, according to the Trump DOJ. Abood also “failed to apply to collective bargaining the principles of free expression and free association that it properly held prohibit coerced financial support for political candidates,” according to the DOJ’s new position. “Abood thus ultimately endorsed precisely what it simultaneously prohibited: compelled subsidization of union speech for political or ideological causes.”

Earlier flip-flop on class arbitration waivers. This is not the Trump DOJ’s first flip-flop on labor-related issues. In June, the DOJ not only withdrew its representation of the National Labor Relations Board in a case pending before the Supreme Court, it also opposed the Board’s position in an amicus brief filed in NLRB v. Murphy Oil USA, Inc. (No. 16-307), along with two other cases, Epic Systems Corporation v. Lewis (No. 16-285) and Ernst and Young LLP v. Morris (No. 16-300). Those cases address whether arbitration agreements that bar employees from pursuing work-related claims on a collective or class basis in any forum violate the NLRA.

The solicitor general represented the NLRB in October 2016 in its petition for certiorari and in November 2016 its reply to Murphy Oil’s response, arguing in favor of the Board’s position that such arbitration agreements violate the NLRA. In the subsequent amicus brief filed under the Trump Administration in June 2017, however, the solicitor general is now arguing against the Board in Murphy Oil, and in support of the employers in Ernst & Young and Epic Systems.

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