Compelled Subsidization

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Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

It is to be expected that disputes will sometimes arise between an organization and some of its members regarding the organization’s messaging or expression. Of course, unless there is some governmental connection, there will be no federal constitutional application to any such controversy.1 But, in at least some instances, when government compels membership in an organization or in some manner lends its authority to such compulsion, there may be constitutional limitations arising from the First Amendment’s protections for speech and association.2 It does not always violate the constitution when compulsory fees are used to subsidize the speech of others.3 However, the Court has recognized constitutional limitations can arise, for example, in connection with union shop labor agreements permissible under the National Labor Relations Act and the Railway Labor Act.4 The Court has recognized in this context that “'compelled funding of the speech of other private speakers or groups’ presents the same dangers as compelled speech.” 5

In Railway Employees’ Dep’t v. Hanson, the Supreme Court upheld the constitutionality of a law authorizing private union shop agreements that required employees to join a union, noting that the record in the case did not indicate that union dues were being “used as a cover for forcing ideological conformity or other action in contravention of the First Amendment,” such as by being spent to support political candidates.6 In International Ass’n of Machinists v. Street, where union dues had been collected pursuant to a union shop agreement and had been spent to support political candidates, the Court avoided the First Amendment issue by construing the Railway Labor Act to prohibit the use of compulsory union dues for political causes.7

The Supreme Court held in Janus v. American Federation of State, County, & Municipal Employees, Council 31, that “public sector agency-shop arrangements violate the First Amendment,” 8 overruling a forty-year old precedent, Abood v. Detroit Board of Education, that had generally approved of such arrangements.9 However, even Abood itself had only permitted some aspects of compelled fee regimes,10 and the Court had, for years prior to Janus, signaled its growing discomfort with Abood.11 Understanding the historical course of the jurisprudence governing compelled agency fees is important to understand the ramifications of Janus.

In Abood v. Detroit Bd. of Education,12 the Court found Hanson and Street applicable to the public employment context.13 Recognizing that any system of compelled support restricted employees’ right not to associate and not to support, the Court nonetheless found the governmental interests served by an “agency shop” agreement14 —the promotion of labor peace and stability of employer-employee relations—to be of overriding importance and to justify the impact upon employee freedom.15 But the Court drew a different balance when it considered whether employees compelled to support the union were constitutionally entitled to object to the use of those exacted funds to support political candidates or to advance ideological causes not germane to the union’s duties as collective-bargaining representative. The Court believed that to compel one to expend funds in such a way is to violate his freedom of belief and the right to act on those beliefs just as much as if government prohibited him from acting to further his own beliefs.16 The Court’s remedy, however, was not to restrain the union from making non-collective bargaining related expenditures, but was to require that those funds come only from employees who do not object. Therefore, the lower courts were directed to oversee development of a system under which employees could object generally to such use of union funds and could obtain either a proportionate refund or a reduction of future exactions.17 Later, the Court further tightened the requirements. It concluded that a proportionate refund was inadequate because “even then the union obtains an involuntary loan for purposes to which the employee objects” ;18 an advance reduction of dues corrected the problem only if accompanied by sufficient information by which employees may gauge the propriety of the union’s fee.19 Therefore, the union procedure must also “provide for a reasonably prompt decision by an impartial decisionmaker.” 20

In Davenport v. Washington Education Ass’n,21 the Court noted that, although it had previously outlined the minimum “procedural requirements that public-sector unions collecting agency fees must observe in order to ensure that an objecting nonmember can prevent the use of his fees for impermissible purposes,” 22 it “never suggested that the First Amendment is implicated whenever governments place limitations on a union’s entitlement to agency fees above and beyond what Abood and Hudson require.” 23 Thus, the Court held in Davenport that the State of Washington could prohibit “expenditure of a nonmember’s agency fees for election-related purposes unless the nonmember affirmatively consents.” 24 The Court added that “Washington could have gone much further, restricting public-sector agency fees to the portion of union dues devoted to collective bargaining. Indeed, it is uncontested that it would be constitutional for Washington to eliminate agency fees entirely.” 25

In Knox v. Service Employees International Union,26 the Court suggested constitutional limits on a public union assessing political fees in an agency shop other than through a voluntary opt-in system. The union in Knox had proposed and implemented a special fee to fund political advocacy before providing formal notice with an opportunity for non-union employees to opt out. Five Justices characterized agency shop arrangements in the public sector as constitutionally problematic, and described the Court’s prior jurisprudence allowing opt-out provisions as anomalous, in the sense of the burdens it imposed on the constitutional rights of objecting nonmembers. The majority more specifically held that the Constitution required that separate notices be sent out for special political assessments that allowed non-union employees to opt in rather than requiring them to opt out.27

Doubts on the constitutionality of mandatory union dues in the public sector intensified in Harris v. Quinn.28 Building on concerns outlined in Knox, the Court expressed reservations about Abood's central holding that the collection of an agency fee from public employees withstood First Amendment scrutiny because of the desirability of “labor peace” and the problem of “free ridership.” Specifically, the Court questioned (1) the scope of the precedents (like Hanson and Street) that the Abood Court relied on; (2) Abood's failure to appreciate the distinctly political context of public sector unions; and (3) Abood's dismissal of the administrative difficulties in distinguishing between public union expenditures for collective bargaining and expenditures for political purposes.29 Notwithstanding these concerns about Abood's core holding, the Court in Harris declined to overturn Abood outright. Instead, the Court focused on the peculiar status of the employees at issue in the case before it: home health care assistants subsidized by Medicaid. These “partial-public employees” were under the direction and control of their individual clients and not the state, had little direct interaction with state agencies or employees, and derived only limited benefits from the union.30 As a consequence, the Court concluded that Abood's rationale—the labor peace and free rider concerns—did not justify compelling dissenting home health care assistants to subsidize union speech.31

In Janus v. American Federation of State, County, & Municipal Employees, Council 31, the Supreme Court formally overruled Abood and held “that public sector agency-shop arrangements violate the First Amendment.” 32 The Court rejected the governmental interests said to justify the compelled fees in Abood, holding instead that labor peace can be achieved through less restrictive means and that the government does not have a “compelling interest” in avoiding free riders.33 The majority opinion criticized Abood's extension of Hanson and Street, saying neither of those cases “gave careful consideration to the First Amendment” and arguing that Abood's reliance on those cases led it to apply an overly deferential standard to analyze public-sector agency fee arrangements.34 In the Court’s view, granting too much deference to legislative judgments about the strength of asserted government interests or about whether the challenged action truly supports those interests “is inappropriate in deciding free speech issues.” 35 The Court also disagreed with additional justifications said to justify the agency-shop arrangements, notably holding that they could not be upheld under Pickering v. Board of Education,36 a case in which the Court acknowledged that public employers may sometimes place certain restrictions on employees’ speech.37 Accordingly, after Janus, “States and public-sector unions may no longer extract agency fees from nonconsenting employees.” 38

Turning to government restrictions on union support, in Ysursa v. Pocatello Education Ass’n,39 the Court upheld an Idaho statute that prohibited payroll deductions for union political activities. Because the statute did not restrict political speech, but merely declined to subsidize it by providing for payroll deductions, the state did not abridge the union’s First Amendment right and therefore could justify the ban merely by demonstrating a rational basis for it. The Court found that it was “justified by the State’s interest in avoiding the reality or appearance of government favoritism or entanglement with partisan politics.” 40

The Court has held that a labor relations body may not prevent a union member or employee represented exclusively by a union from speaking out at a public meeting on an issue of public concern, simply because the issue was a subject of collective bargaining between the union and the employer.41

1: The Labor Management Reporting and Disclosure Act of 1959, 73 Stat. 537 (codified at 29 U.S.C. §§ 411–413), enacted a bill of rights for union members, designed to protect, among other things, freedom of speech and assembly and the right to participate in union meetings on political and economic subjects.
2: This essay discusses the free speech aspects of these cases. For a discussion of the free association aspects, see Amdt1.8.4.1 Union Membership and Fees.
3: For instance, the Court has said that the First Amendment did not preclude a public university from charging its students an activity fee used to support student organizations that engage in extracurricular speech, provided that the money was allocated to those groups by use of viewpoint-neutral criteria. Bd. of Regents of the Univ. of Wisc. System v. Southworth, 529 U.S. 217 (2000) (upholding fee except to the extent a student referendum substituted majority determinations for viewpoint neutrality in allocating funds). Nor did the First Amendment preclude the government from “compel[ling] financial contributions that are used to fund advertising,” provided that such contributions did not finance “political or ideological” views. Glickman v. Wileman Bros. & Elliott, Inc., 521 U.S. 457, 471, 472 (1997) (upholding Secretary of Agriculture’s marketing orders that assessed fruit producers to cover the expenses of generic advertising of California fruit). But the Court has emphasized that the advertising funded by compelled financial contributions in Glickman was “ancillary to a more comprehensive program restricting marketing autonomy” and not “the principal object of the regulatory scheme.” United States v. United Foods, Inc., 533 U.S. 405, 411, 412 (2001) (striking down Secretary of Agriculture’s mandatory assessments, used for advertising, upon handlers of fresh mushrooms). The Court held that the First Amendment, however, was not violated when the government compelled financial contributions to fund government speech, even though the contributions were raised through a targeted assessment rather than through general taxes. Johanns v. Livestock Mktg. Ass’n, 544 U.S. 550 (2005).
4: The Labor-Management Relations Act of 1947 § 8(a)(3), 61 Stat. 140 (codified as amended at 29 U.S.C. § 158(a)(3)), permits the negotiation of union shop agreements. Such agreements, however, may be outlawed by state “right to work” laws.Id. at § 14(b), 61 Stat. 151 (codified as amended at 29 U.S.C. § 164(b)). See Lincoln Fed. Lab. Union v. Nw. Iron & Metal Co., 335 U.S. 525 (1949); AFL v. Am. Sash & Door Co., 335 U.S. 538 (1949). In industries covered by the Railway Labor Act, union shop agreements may be negotiated regardless of contrary state laws. 64 Stat. 1238 (codified as amended at 45 U.S.C. § 152), Eleventh; see R. Emps.’ Dep’t v. Hanson, 351 U.S. 225 (1956).
5: Harris v. Quinn, 573 U.S. 616, 647 (2014) (quoting Knox v. SEIU, Local 1000, 567 U.S. 298, 309 (2012)).
6: 351 U.S. 225, 238 (1956).
7: 367 U.S. 740, 749–50 (1961). Justices William O. Douglas, Hugo Black, Felix Frankfurter, and John Harlan would have reached the constitutional issue, with differing results. On the same day that it decided Street, the Court, in Lathrop v. Donohue, 367 U.S. 820 (1961), declined to reach the constitutional issues presented by roughly the same fact situation in a suit by lawyers compelled to join an “integrated bar.” These issues, however, were faced squarely in Keller v. State Bar of Cal., 496 U.S. 1, 14 (1990), which held that an integrated state bar may not, against a members’ wishes, devote compulsory dues to ideological or other political activities not “necessarily or reasonably related to the purpose of regulating the legal profession or improving the quality of legal service available to the people of the State.”
8: No. 16-1466, slip op. at 33 (U.S. June 2018).
9: 431 U.S. 209, 229 (1977).
10: Id. at 235.
11: See, e.g., Harris v. Quinn, 573 U.S. 616 (2014). In Friedrichs v. Cal. Teachers Ass’n the Court was equally divided on the question of whether to overrule Abood. 578 U.S. 1, 1 (2016).
12: 431 U.S. 209 (1977).
13: That a public entity was the employer and the employees consequently were public employees was deemed constitutionally immaterial for the application of the principles of Hanson and Street, id. at 226–32, but, in a concurring opinion joined by Chief Justice Warren Burger and Justice Harry Blackmun, Justice Lewis Powell found the distinction between public and private employment crucial. Id. at 244.
14: An agency shop agreement requires all employees, regardless of union membership, to pay a fee to the union that reflects the union’s efforts in obtaining employment benefits through collective bargaining. The Court in Abood noted that it is the “practical equivalent” of a union shop agreement. Id. at 217 n.10.
15: Id. at 217–23. For a similar argument over the issue of corporate political contributions and shareholder rights, see First National Bank v. Bellotti, 435 U.S. 765, 792–95 (1978), and id. at 802, 812–21 (White, J., dissenting).
16: 431 U.S. at 232–37.
17: 431 U.S. at 237–42. On the other hand, the Court ruled that nonmembers could be charged for such general union expenses as contributions to state and national affiliates, expenses of sending delegates to state and national union conventions, and costs of a union newsletter. Lehnert v. Ferris Faculty Ass’n, 500 U.S. 507 (1991). The Court said a local union could also charge nonmembers a fee that went to the national union to pay for litigation expenses incurred on behalf of other local units, but only if (1) the litigation is related to collective bargaining rather than political activity, and (2) the litigation charge is reciprocal in nature, that is, other locals contribute similarly. Locke v. Karass, 555 U.S. 207, 210 (2009).
18: Ellis v. Brotherhood of R., Airline & S.S. Clerks, 466 U.S. 435, 444 (1984).
19: Chi. Teachers Union v. Hudson, 475 U.S. 292 (1986).
20: Id. at 309.
21: 551 U.S. 177 (2007).
22: Id. at 181, citing 475 U.S. 292, 302, 304–310 (1986).
23: 551 U.S. at 185, quoting Keller v. State Bar of Cal., 496 U.S. 1, 17 (1990), and adding emphasis.
24: 551 U.S. at 184.
25: Id. at 184 (citations omitted).
26: 567 U.S. 298 (2012).
27: Id. (Alito, J., joined by Roberts, C.J., Scalia, Kennedy, and Thomas, JJ.).
28: 573 U.S. 616 (2014).
29: Id. at 8–20.
30: Id. at 24–27.
31: Id. at 27.
32: No. 16-1466, slip op. at 33 (U.S. June 2018).
33: Id. at 12–13.
34: Id. at 36.
35: Id. at 37.
36: 391 U.S. 563 (1968). See Amdt1.7.9.4 Pickering Balancing Test for Government Employee Speech.
37: Janus, slip op. at 26.
38: Id. at 48.
39: 555 U.S. 353 (2009).
40: 555 U.S. at 358. The unions had argued that, even if the limitation was valid as applied at the state level, it violated their First Amendment rights when applied to local public employers. The Court held that a political subdivision, “created by the state for the better ordering of government, has no privileges or immunities under the federal constitution which it may invoke in opposition to the will of its creator.” Id. at 1101, quoting Williams v. Mayor of Baltimore, 289 U.S. 36, 40 (1933).
41: Madison Sch. Dist. v. WERC, 429 U.S. 167 (1977).