Ullico | Supreme Court Ruling
Ullico Bulletin


Since a U.S. Supreme Court ruling in 1977, public-sector unions have been permitted to collect agency fees from nonmembers for the purpose of covering expenses associated with collective bargaining and representation. That decision was recently overturned by the Court in a ruling on the case Janus v. American Federation of State, County, and Municipal Employees, Council 31 (AFSCME), which held that 'fair share' agreements violate free association and freedom of speech protections.

"The meat of the decision is that it is unlawful for public sector unions to charge these fees unless the nonmember affirmatively consents to pay," said Kerianne Steele, attorney at Weinberg, Roger & Rosenfeld. "Now opponents of organized labor are making a political argument... saying that existing membership cards that had been signed prior to the June 27 decision are somehow invalid because the alternative the individual had at the moment they signed prior to the decision was to pay a compulsory agency fee."

During an educational webinar hosted by Ullico Casualty Group, Steele said that those arguments shouldn't be entertained. She pointed out that Attorneys General in many states have already issued general advisories that affirm union rights and obligations in public workplaces, because the Janus decision does not affect arrangements between unions and union members. "The case is not about membership. It is not about membership cards," said Steele. "That political argument by opponents of organized labor should have no success."

The Prospect of Back-Fee Litigation

Justice Alito, writing for the conservative majority of the court, described the fees as a 'windfall' for unions, which Steele flatly rejected as an unfair characterization. "Those fees have been used by public sector unions to benefit both members and nonmembers, because they cover the costs associated with collective bargaining, grievance handling and other protections and advancements in the workplace that benefited everybody in the workplace, not just members," she said.

However, Justice Alito's remarks have inspired back-fee litigation. Through putative class-action lawsuits, opponents of labor claim an entitlement for nonmembers to reimbursement of all agency fees previously paid. While a union liability policy generally provides coverage for claims brought by members and nonmembers, whether and to what extent a particular loss is covered depends on the facts and circumstances of the loss and the terms and conditions of the policy or policies as issued.

Steele emphasized the importance of communication between unions as the lawsuits evolve. "This issue is calling for a high degree of coordination among unions," she said. "They're exchanging their best ideas, and that should apply to the back-fee litigation ... The best approach is to be open about litigation, and share good defense strategies that could work for all of them."

To watch the hour long webinar, please visit: ULLICO.COM/JANUS

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