Supreme Court Clarifies Union Fees For Non-Members

Author:Fisher & Philips LLP
Profession:Fisher & Phillips LLP
 
FREE EXCERPT

Today the U.S. Supreme Court handed a victory to employees who choose not to join a union, but who are nevertheless required to pay a fee to the union. Unions are already required to provide a notice to such employees spelling out the specific uses the fees will be put to, and allowing the employee to opt out of paying some of them.

This new ruling holds that a union must provide non-union employees a second notice within the same year should the union choose to issue a supplemental assessment. The Court also determined that the union must provide non-union members the opportunity to object to the supplemental assessment. Knox v. Service Employees International Union, Local 1000.

Background

In non-right-to-work states, employees must either join the union representing them, or if they choose not to join, must pay a fee which is the "equivalent" of union dues. This is usually referred to as an "agency fee," or "fair charge" fee, and is intended to cover the expenses incurred related to the union's exclusive collective bargaining duties.

Prior to imposing the fee the union must, on an annual basis, provide the nonmember employees a notice which includes an adequate explanation of the basis for the fee, a reasonably prompt opportunity to challenge the amount of the fee before an impartial decision-maker, and an escrow for the amounts reasonably in dispute while such challenges are pending. This is referred to as a Hudson notice, after the name of the case which established the requirement, Chicago Teachers Union v. Hudson.

How This Case Arose

The Service Employees International Union (SEIU), Local 1000 is the exclusive bargaining agent for California state employees. Any state employees in the applicable bargaining units who do not join the union must pay a "fair share" fee to the union for its representational collective bargaining efforts.

The union issues the constitutionally-required Hudson notice to all nonmembers every June. The notice provides nonmembers the requisite explanation as to the basis of the agency fee. It provides information regarding the union's expenditures from the most recently audited prior year, broken down by major category of expense and then, within each category, allocated between "chargeable" and "non-chargeable" classifications. "Chargeable" expenses are those that are germane to the union's representational functions, and can be charged to all nonmembers of the union. "Non-chargeable" expenses are those unrelated to the union's...

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