Jun 29, 2012 - 11:18am

Supreme Court ‘Knox’ Down SEIU Dues-for-Politics System


Senior Vice President, Employment Policy Division

6/29/2012

On June 21, the Supreme Court issued a decision in Knox v. SEIU Local 1000 At the heart of the case is whether the union, which represents state government employees in California, deprived non-members (known as agency fee payers) of their ability to object to payment of a “special assessment” above and beyond regular annual dues.  By a 7-2 majority, the Court ruled that the union had done exactly that, which violated workers’ First Amendment rights. 

The majority opinion, however, went a bit further, and said that non-members shouldn’t just have the right to “opt-out” of paying special assessments and dues increases, but rather that public sector unions have to ensure that workers affirmatively “opt-in” before such assessments can be collected.   In other words, the union can’t just take the money and see if anyone asks for it back; they now have to make sure workers consent or they can’t take the money at all.  This new opt-in standard is now required any time a public sector union seeks to levy special assessments or dues increases.

Going still further, the opinion openly questioned whether an opt-out system for the collection of even regular dues that might be used for political purposes could withstand First Amendment scrutiny.  The Court hinted strongly that it does not.

The case began in 2005, when SEIU Local 1000 issued a notice to the workers it represented that it would require them to pay a special assessment to fight several California ballot initiatives.   To understand the significance of the notice, we must remember that California is not a right-to-work state.  Thus, at a unionized workplace, workers are compelled to either belong to the union and pay dues, or, in the case of those who choose not to join, make payments to the union — what are called agency fees — as a condition of keeping their job.  

Under the Supreme Court’s 1986 Hudson decision, a public sector union like SEIU Local 1000 must annually notify workers it represents of the percentage of dues that are chargeable or non-chargeable.  Chargeable expenses typically include the work of negotiating a contract or processing grievances, what might be considered basic representational activities.  All employees in the bargaining unit must pay for these.  Non-chargeable expenses are largely those related to a union’s political activities.  Non-members in the bargaining unit can object to these expenses and “opt out” if they file the proper paperwork with the union.

The Court concluded that by not providing a new Hudson notice for the special assessment, the SEIU had deprived workers of their right to opt-out:

 “There is no justification for the SEIU’s failure to provide a fresh Hudson notice…The SEIU’s procedure cannot be considered to have met Hudson’s requirement that fee-collection procedures be carefully tailored to minimize impingement on First Amendment rights.”

It then set a new opt-in standard for collecting special assessments or dues increases used for any purpose, not just for non-chargeable expenses:

“Therefore, when a public-sector union imposes a special assessment or dues increase, the union must provide a fresh Hudson notice and may not exact any funds from nonmembers without their affirmative consent.”

Ironically, one of the ballot initiatives SEIU opposed in 2005 would have required unions to get affirmative consent from non-members to use their dues for political purposes.  This was not lost on the Court:

 “If Proposition 75 had passed, nonmembers would have been exempt from paying for the SEIU’s extensive political projects unless they affirmatively consented.  Thus, the effect of the SEIU’s procedure was to force many nonmembers to subsidize a political effort designed to restrict their own rights.”

The Court then went on to suggest that even regular dues payments covering non-chargeable expenses might require workers to affirmatively opt-in:

“Similarly, requiring objecting nonmembers to opt out of paying the nonchargeable portion of union dues — as opposed to   exempting them from making such payments unless they opt in — represents a remarkable boon for unions.  Courts ‘do not presume acquiescence in the loss of fundamental rights.’  Once it is recognized, as our cases have, that a nonmember cannot be forced to fund a union’s political or ideological activities, what is the justification for putting the burden on a nonmember to opt out of making such a payment?  Shouldn’t the default rule comport with the probable preferences of most nonmembers?  And isn’t it likely that most employees who choose not to join the union that represents their bargaining unit prefer not to pay the full amount of union dues?  An opt-out system creates a risk that the fees paid by nonmembers will be used to further political and ideological ends with which they do not agree.”

This is a significant case for public sector unions.  First, they now must observe an opt-in requirement for special assessments or dues increases, which is likely to decrease the amount collected by such levies.  Second, it is probable that a future case will seek to require an opt-in standard for the non-chargeable portion of all dues payments, which will almost assuredly reduce funds collected for unions’ political activities.  SEIU’s response to the case: “[W]e can make the narrow adjustments the court requires on our dues system” doesn’t quite seem to capture its gravity.


1- In a concurring opinion, two Justices dissented from this portion of the ruling.

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Senior Vice President, Employment Policy Division

Glenn Spencer is senior vice president of the Employment Policy division at the U.S. Chamber of Commerce.