Tuesday, January 12, 2016

The Demise of Public-Sector Fair Share

The Supreme Court heard oral arguments yesterday in Friedrichs v. California Teachers Ass'n, the case testing whether a state's public-sector union fair-share requirement violates the First Amendment.

Answer: Almost certainly yes.

Few cases are predictable as this one, given the Court's lead-ups in Harris and Knox (both sharply criticizing Abood, the 40-year-old case upholding fair-share requirements against a First Amendment challenge). And few oral arguments foretell the Court's and the dissent's analyses and split so clearly as yesterday's argument.

The conservative justices, including Kennedy, have made up their minds against fair share (and in favor of overruling Abood). The progressives have made up their minds in favor of fair share (and keeping Abood on the books). Both sides rehearsed the arguments that we'll see when the opinion comes out later this year.

All this made the oral arguments seem unnecessary. And maybe they were. After all, those opposing fair-share didn't seem at all troubled by the absence of a factual record in this case--even though some amici briefed significant practical labor-relations problems that arose without fair share. Instead, those opposing fair share seemed perfectly willing to rely on their own intuition about how public-sector labor relations work.

The facts don't really matter, so why should the legal arguments, when everybody's minds are made up, anyway?

Some of the early discussion focused on the extent of fair-share opponents' First Amendment claim: does it apply only to public-sector unions, or also to private-sector unions? Michael Carvin, attorney for the fair-share opponents, was clear: it only applies to public-sector unions. That's because collective bargaining for public-sector unions inevitably involves public issues--so a fair-share requirement compels non-union-members to pay for public advocacy (with which they disagree). (Private-sector collective bargaining, in contrast, involves only private employment issues.) Moreover, Carvin said that it's not always so easy to sort out what union speech goes to collective bargaining issues, and what goes to other public advocacy--a problem administering Abood that goes to its stare decisis staying power (see below).

And that leads to Carvin's next point, a clever twist on the concern about free-riders: fair-share requirements don't serve the interest of avoiding free-riders (as conventional wisdom and Abood would have it); instead, fair-share requirements let the union free ride on non-members' fair-share contributions. Carvin turned the traditional free-rider concern on its head.

And the conservatives, including Justice Kennedy, accepted all this. (Chief Justice Roberts even added at one point that if unions are so popular, the traditional concern about free riders is "insignificant.") Indeed, Justice Kennedy stated the opponents' case as clearly (and certainly as concisely) as anyone yesterday:

But it's almost axiomatic. When you are dealing with a governmental agency, many critical points are matters of public concern. And is it not true that many teachers are -- strongly, strongly disagree with the union position on teacher tenure, on merit pay, on merit promotion, on classroom size?

And you -- the term is free rider. The union basically is making these teachers compelled riders for issues on which they strongly disagree.

Many teachers think that they are devoted to the future of America, to the future of our young people, and that the union is equally devoted to that but that the union is absolutely wrong in some of its positions. And agency fees require, as I understand it -- correct me if I'm wrong -- agency fees require that employees and teachers who disagree with those positions must nevertheless subsidize the union on those very points.

The progressives pushed back with stare decisis: shouldn't the Court give some weight to Abood? Carvin said that overruling Abood would actually better square the jurisprudence. But that didn't sit well with Justice Kagan:

So really what your argument comes down to is two very recent cases, which is Harris and Knox. And there you might say that Harris and Knox gave indications that the Court was not friendly to Abood. But those were two extremely recent cases, and they were both cases that actually were decided within the Abood framework. . . .

So taking two extremely recent cases, which admittedly expressed some frustration with Abood, but also specifically decided not to overrule Abood, I mean, just seems like it's nothing of the kind that we usually say when we usually say that a precedent has to be overturned because it's come into conflict with an entire body of case law.

Some on the left also wondered whether striking Abood also mean striking mandatory bar fees and mandatory student fees (previously upheld by the Court), and whether it would disrupt reliance interests (in the form of the thousands of public-sector union contracts that rely on it).

Look for all these points in the opinion, when it comes down. And look for the conventional 5-4, conservative-progressive split. If the result in this case wasn't clear going into arguments yesterday (though it was), then arguments yesterday certainly clarified it.

(The second question in the case--whether non-chargeable expenses need to follow an opt-in rule, instead of an opt-out rule, got very little attention. This issue, too, is all but decided, by the same split: the Court will almost certainly require opt-in.)


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The argument that teachers “strongly disagree with the union position on teacher tenure, on merit pay, on merit promotion, on classroom size,” and thus that making them fund advocacy for those positions violates free speech, should apply to private as well as public sector unions. After all, it is not only speech directed towards the government that is protected; if a factory worker has a strong political opposition to the concept of collective bargaining because it violates individual “freedom of contract,” or to, for example, seniority vs. merit retention systems, why should she be forced to use her money to argue in favor of something she opposes simply because her employer is a private corporation? The 1st Amendment applies only when the government/state actors are the restrictors of speech, but the government need not also be the focus of that speech.

To be clear, I actually favor mandatory agency fee laws and believe that they are constitutional; I just don’t see how their unconstitutionality can consistently be limited to the public sector.

In any case, given which way the wind is blowing, union advocates should start looking for alternative solutions to the free-riding problem. One approach might be through an adapted tax system. Employees could choose between either paying the agency fee to the union, or paying an equivalent “free-rider” tax to the state. That way, if they choose the tax, the money will not be used to fund speech with which they disagree (other than in the sense that tax money can always be used by the government for any legitimate purposes, regardless of taxpayer feelings). In fact, the tax will help support cash-strapped governments, which apparently is one of the objectives of the petitioners in this case. At the same time, the free-rider problem will be avoided.

Some might believe the tax presents its own constitutional problems, and might characterize it as a “tax on free speech”; however, the tax would not compel speech, since it would provide no financial incentive either way. Those who paid the tax would be no better or worse off financially than those who instead opted to pay the union fee, but they would also not have to subsidize speech they disagree with. I believe that, given the nexus and proportionality between such a tax and the free-riding problem it would be addressing, it would fall well within the limits of the Supreme Court’s permissible constitutional conditions jurisprudence. Similar “incentive” taxes have been upheld as constitutional, such as the ACA’s individual mandate, which Justice Roberts affirmed as a tax. Just as that tax helped avoid the “free-rider” issue of people not purchasing insurance and then relying on the state to pick up the bill when unaffordable emergency care eventually became necessary, this tax would address the free-rider issue of public employees taking advantage of union-negotiated benefits without paying the costs.

Another alternative would be to reduce employee salaries across the board by the amount that would normally have been paid to the union, and then to use the money recaptured by the salary cuts to give a state tax credit for union contributions. Tax credits are a legitimate way to promote conduct, even speech, that the government considers desirable, so why not utilize them here? The only difference between the mandatory agency fee laws and the payment of tax revenue to support unionization is whether the money paid goes directly to a private organization, or first is channeled through the state. In either case, the state is supporting what it considers to be a public benefit (and if the state had directly subsidized the unions, there would be no more legitimate challenge than when, for example, the federal government subsidizes the farm industry to the tune of $20 billion annually, despite the complicated feelings many American taxpayers have about various segments of that industry).

Looked at from one perspective, the mandatory agency fees address two issues; (1) they help fund collective bargaining activity, and (2) they stop employees from free-riding on the unions. Why not separate the funding objective from the prevention of free-riding objective, and thus eliminate the 1st Amendment issue while, practically speaking, preserving the viability of unions by eliminating the financial incentive to withhold support? If employees still do not want to give money to the union, their motivations are more likely ideological and their 1st Amendment case is much stronger.

Posted by: Josh | Jan 13, 2016 9:20:08 AM

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