US Supreme Court_2.jpgCalifornians will remember the special election called by former Governor Schwarzenegger in 2005 on eight ballot propositions he endorsed.  The initiative measures covered diverse issues including teacher tenure, abortions, government finance and legislative redistricting. One proposition dealt with public employee union dues and would have prohibited unions from using dues for political contributions without obtaining annual employee consent. Another would have allowed the Governor to act unilaterally in some situations to reduce public employee compensation. The Governor’s efforts to enact these measures failed as all eight propositions were defeated.

SEIU Local 1000, which represented almost 100,000 State employees, adopted a 25% temporary dues increase to raise money to wage a campaign against the Governor’s propositions.  A group of employees who paid only “agency fees,” having opted out from being union members and paying full dues, brought suit against Local 1000 asserting that the Union had violated the Meyers Milias Brown Act which imposes requirements on unions in dealing with bargaining unit members who pay the service fees. In Knox v. SEIU Local 1000, the U.S. Supreme Court held that the Union had acted unlawfully in adopting this dues increase for use in this political campaign.

MMBA, at Government Code section 3502.5, allows adoption of an “agency shop” arrangement whereby all members of a represented bargaining unit must join the Union and pay dues as a condition of continued public employment.  There are two exceptions to the mandatory membership requirement.  One exception is for those with religious objections to joining a union or providing a union with financial support.  The other exception, which was the subject of this case, allows those employees who object to providing financial support to a union’s political activities, to pay only an “agency fee” as opposed to full union dues.  The agency fee is intended to cover only the union’s costs of providing representational services to the employees so that non-members do not get a “free ride” from a union who represents them in their relationships with their employers. 

In this case, Local 1000 not only adopted the 25% dues increase but also attempted to impose the increase on the agency fee payers as well as on its regular full dues paying members.  The plaintiffs objected, not wanting any of their money to be used by the Union to fight the Governor’s propositions.  The plaintiffs contended that the Union should have given the normal annual notice and given the agency shop payers the opportunity to advise the Union that they did not want any of their money used for this political war chest.  The Union opposed these assertions, and took the position that the objectors could file for a refund. 

The Supreme Court invalidated the Union’s action, agreeing with the plaintiffs that Local 1000 could not lawfully impose this dues increase without going through the normal notice procedure dictated by MMBA. The Court held that the Union was in essence compelling employees against their will to fund political activities with which they did not necessarily agree. Further, the Court noted, one of the ballot initiatives, the one prohibiting union political contributions, would actually have strengthened the rights of agency fee payers.

The Court also rejected the Union’s contention that allowing nonmembers to opt out and seek refunds was an adequate safeguard. Rather, the Court held, the Union was required to give notice in advance of adopting the dues increase and exempt agency fee payers from making the payment unless they affirmatively opted in. The Court majority held that the Union should have sent out a new notice and allowed nonmembers the opportunity to opt in to paying the temporary increase rather than requiring them to opt out.

At the end of the day, and specifically the day of the 2005 special election, every one of these controversial ballot propositions went down to defeat. So, although Local 1000 may have lost this battle before the Supreme Court, it clearly won the war with the Governor.