When the MMBA first took effect in 1968, there was no provision for the financial support of employee organizations or unions. Many employee organizations had few ways to convince employees to join the organization and support it with member dues. Thus, the concept of an “agency shop” was born. Agency shop arrangements require employees, as a condition of continued employment, to either join the union or pay a service fee. The fee distributes the cost of collective bargaining and representation among all those who benefit in the bargaining unit, counteracting any incentive for employees to become “free riders” who do not contribute to the union while obtaining the benefits of representation.
In 1981, the California Legislature passed AB 1693 permitting unions and public agencies to negotiate an agency shop arrangement. Notably, however, employers were not obligated to actually implement an agency shop. Further, if negotiations for an agency shop arrangement failed, the status quo would continue. Then, in 2000, SB 739 added Government Code Section 3502.5 to the MMBA. Section 3502.5 permits the establishment of an agency shop arrangement following negotiations or, if negotiations fail, through approval by a simple voting majority of unit employees.
In Orange County Water District (2015) PERB upheld an ALJ’s decision that employers were precluded from withholding their approval of an agency shop arrangement, even if the arrangement permitted free riders to benefit at the cost of other employees. In that case, the Association proposed establishing a “modified agency shop,” which would only apply to new District employees hired on or after a future date, and would exempt current employees. The District declined to bargain such an arrangement or to participate in the statutory voting process with State Mediation and Conciliation Services (SMCS). The District explained that the proposed modified agency shop was not authorized under Section 3502.5 because it would permit current employees to “free ride,” violating the very principle courts have relied on in finding agency shop to be a valid form of organizational security.
Although the District correctly identified that there is no California or federal law authorizing a modified agency shop, PERB stated that neither could the District identify any California or federal law expressly invalidating such arrangements. PERB seized on the language of Section 3502.5, defining agency shop as an “arrangement that requires an employee, as a condition of continued employment, either to join the [union] or to pay the organization a service fee.” Citing a 2003 California Attorney General opinion, PERB held that an agency shop arrangement does not require all unit employees to join the union or pay a service fee because the statute does not refer to “all” employees, but only to “an” employee.
The District argued that it was not required to participate in an election that would circumvent the statutory purpose of agency shop arrangements, but PERB determined that the District’s refusal constituted an unfair practice. PERB characterized the District’s position as one “that would empower the District to undermine fundamental principles of organizational security.” Although agency shop agreements were intended to address the problem of “free riders,” PERB found that SB 739’s amendments to Section 3502.5 were intended to reduce employer control over whether to adopt agency shop by refusing to bargain such arrangements. Consequently, by refusing to participate in the election, PERB determined that the District unilaterally prevented an agency shop election in violation of the MMBA.
The ALJ and the Board felt that the District was arguing that it could lawfully prevent an agency shop election by refusing to participate in the SMCS voting process. It seems more likely, however, that the District was concerned that the Association did not have a right to circumvent the legislative intent behind agency shop arrangements. The District was not attempting to carve away employees’ rights to lawfully elect an agency shop arrangement. Its argument is more accurately characterized as the Association did not have a right to, nor did the District have to participate in, an agency shop election in violation of the MMBA.
It will be interesting to see whether employee organizations take advantage of this ruling. If a bargaining unit’s current employees are reluctant to enact an agency shop, why wouldn’t the union propose a modified agency shop? Current employees may be more likely to vote for an agency shop if it will not affect them. And since it is more difficult to rescind an agency shop arrangement, than it is to implement one, unions may be willing to propose a modified agency shop in order to secure guaranteed financial support in the future.
The Board’s decision here, however, could very well be impacted by Friedrichs v. California Teachers Association, a case making its way through the U.S. Supreme Court. We’ve previously written about this case and its potential to invalidate or modify agency shop arrangements. We will continue to monitor this case and update you as it proceeds.