This post was authored by Erik M. Cuadros.

Public-sector employers and unions anxiously await the outcome of Janus v. AFSCME Council 31, a case currently pending before the United States Supreme Court. Janus challenges agency shop arrangements and public sector unions’ right to collect what are known as “service” or “fair share” fees.  In an agency shop arrangement, all employees in a particular bargaining unit are required – as a condition of their continued employment – to become union members or, alternatively, pay mandatory service fees, regardless of whether the employee agrees with the union’s positions.  In theory, the service fees cover the local union’s collective bargaining and representation costs.

Court observers anticipate that the U.S. Supreme Court will strike down the practice of requiring non-members to pay service fees. If the U.S. Supreme Court holds that agency shop service fees are unconstitutional, public agencies will not have the authority to continue deducting those service fees.  Rather, they would likely be obligated to discontinue deducting and transmitting service fees upon the effective date of the decision or as otherwise indicated by the Court.

Liebert Cassidy Whitmore anticipates that the U.S. Supreme Court will issue its Janus decision in June 2018.  Although it is impossible to forecast the results with absolute certainty, LCW recommends that all public agencies, their employees, and unions be prepared to immediately respond to the decision.  The following strategies will better prepare public agencies to comply with Janus’ anticipated ruling and to fulfill their duties to meet and confer in good faith should any changes to their bargaining agreements, policies, and practices be necessary.

  1. Identify Janus’ Potential Scope of Impact Upon Your Agency

Public agencies can begin by identifying the potential scope of impact of the Janus decision.  More specifically, your agency must first review each collective bargaining agreement to determine whether any of the agreements include an agency shop or other wage deduction arrangement.  If your MOU’s do not include agency shop, it is less likely that your agency will be immediately impacted by Janus.  If one or more of your MOU’s includes such provisions, you will want to focus on those bargaining units because additional preparation will be required.

For those MOU’s that include agency shop, you should review all relevant provisions, including those related to processing service fee wage deductions. Unions typically collect both union dues and service fees through wage deductions via the agency’s Payroll Department.  Therefore, while Janus may impact unions on a greater scale, agencies with agency shop will likely be required to make administrative changes to their payroll practices.  For example, you should familiarize yourself with the amount, timing, and frequency of when your agency’s service fees are deducted.  Depending on Janus’ effective date, public agencies may not have sufficient time to notify and meet and confer with affected unions over any changes.  Your agency should be ready to both immediately implement any Court-mandated changes, if any, and to notify and meet and confer with any impacted unions regarding negotiable impacts of the changes as soon as possible.

2. Identify Contract Provisions Possibly Subject to Effects Bargaining

After this initial review, you may find it helpful to create union-specific spreadsheets or tables identifying all relevant provisions in your MOU’s, particularly if your agency has different agency shop arrangements with multiple unions. If the U.S. Supreme Court rules that agency shop is unconstitutional, your agency should be prepared to bargain over any negotiable effects of the decision.

The unions may identify various effects associated with discontinuing service fee deductions. For example, they may ask to negotiate MOU side letters or amendments regarding how or when bargaining unit employees are notified of any deduction changes, whether service fee payers should be given authorizations to participate in voluntary wage deductions, etc.

In preparation for these negotiations, we recommend that you review the impacted MOU’s to familiarize yourself with any additional release time, union access, and employee orientation benefits. Under the MMBA, release time is only permitted for negotiations and not for employees to prepare for negotiations over Janus or to meet with union membership to rally support for union causes.  Although you are not obligated to provide any more release time than otherwise required by law, your MOU may provide additional release time benefits.  On a related note, the Human Resources Department should also review its access rules and employee orientation agreements with impacted department heads and supervisors to ensure that the entire agency follows these policies consistently.

Finally, you may also wish to review any management rights, zipper, reopener, and/or severability clauses to determine whether any of these provisions apply. Once the U.S. Supreme Court issues its decision, your next steps will be more effective if you have already determined which actions are necessary to amend or eliminate MOU provisions contrary to the anticipated Janus decision.

3. Identify the Agency’s Union Dues, Service Fee, and Religious or Conscientious Objector Payers

After identifying the unions who have agency shop, your agency should develop a spreadsheet identifying each union’s members, service fee payers, and religious or conscientious objectors. This will be both the most labor intensive and absolutely critical element of your Janus preparation.

Janus will not directly impact union member employees because they are voluntarily paying union dues. However, if the U.S. Supreme Court rules that mandatory agency shops are unconstitutional, the decision will directly impact the agency’s service fee payers and any bargaining unit members who have a religious objection but are required to donate their wage deductions to a charitable organization.  To determine which category each bargaining unit member falls within, you should review the election forms in each employee’s personnel file.  Alternatively, you may review your payroll records but only if the Payroll Department uses separate deduction codes for each bargaining unit member category.  If the Payroll Department uses a master code without differentiating between the three categories or other employee donations related to union benefits, you could inadvertently misclassify an employee’s bargaining unit status.

On Janus’ effective date, your agency may be required to immediately cease all deductions from service payer and religious objector wages.  Therefore, once you identify your employee categories, you must work with the Payroll Department to establish an action plan if the U.S. Supreme Court’s decision is as anticipated.  Your Human Resources Director should send the Finance Director an official notice advising him or her of the Janus case and the potential cessation of specific deductions.  The notice should also ask that the Payroll Department identify any payroll cutoff deadlines so that your agency may plan for any potential contingencies.  Thereafter, the agency should develop an administrative plan to instantaneously modify the payroll program, including any internal procedures or plans to contact external payroll vendors.  If the Payroll Department identifies all three categories of employees under a master payroll code, it should prepare to turn off each applicable employee’s deduction on an individual basis.  Alternatively, if the Payroll Department utilizes separate payroll codes for each category of employee, this process will be easier.

4. Conclusion

Public agencies should take all advance steps within their control to plan for the immediate cessation of periodic service and religious objector fee deductions to the extent Janus requires.  They must also be prepared to immediately engage in any necessary effects bargaining.  By taking these proactive internal steps, your agency will be better prepared to address any mandatory changes to its bargaining agreements after the U.S. Supreme Court publishes its Janus decision.

We remind you, however, that while the U.S. Supreme Court is anticipated to declare agency shop arrangements unconstitutional, our analysis and advice is provided prior to publication of the Janus decision.  The final consideration of these issues ultimately depends on what the Janus decision holds and we caution public agencies against making any dramatic changes in anticipation of Janus for this reason.

Liebert Cassidy Whitmore will continue to monitor this important case and will be publishing guidance on Janus as soon as the U.S. Supreme Court issues its anticipated decision.  In the meantime, we stand ready to help guide our clients through their agency-specific preparations for Janus.  Please contact us immediately if we can be of any assistance.