LEL Flash | Issue: June/July 2014

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Issue: June/July 2014

Special Feature

U.S. Supreme Court Strikes Down Agency Fees Required from Illinois In-Home Care Personal Assistants

The State of Illinois, like many other states, has programs administered by the Department of Human Services to provide in-home care for individuals who are disabled. This care consists of duties such as household tasks, shopping, providing personal care, performing incidental health care tasks and monitoring to ensure the health and safety of the client. The Home Services Program (also referred to as the "Rehabilitation Program"), run by the Division of Rehabilitation Services, and the Home Based Support Services Program (also referred to as the "Disability Program"), administered by the Division of Developmental Disabilities, are similar in that the care services are provided by personal assistants who are typically selected and trained by either the patient or a family member, but are compensated by the State at a fixed rate with funds from the Medicaid Program. In a number of cases, the personal assistant is the patient's parent or another family member.

After the enactment of the Illinois Public Labor Relations Act in the mid-1980s, the personal assistants in the Rehabilitation Program sought to unionize and bargain with the State. The Illinois Labor Relations Board, however, ruled that it lacked jurisdiction over the personal assistants because the State was not their sole employer. In 2003 the Act was amended to designate the personal assistants in the Home Services Program as State employees for the purposes of collective bargaining. Governor Blagojevich issued an executive order directing the State to recognize and bargain with an exclusive representative for the personal assistants should they designate one by majority vote. The personal assistants subsequently voted to designate SEIU Healthcare Illinois & Indiana as their bargaining agent. The union and the State then entered into a collective bargaining agreement which set rates of pay, created a health benefits fund and established a joint committee to develop training programs. The agreement, which covers more than 20,000 workers, also contains a union security clause requiring personal assistants who are not members of the union to pay a "fair share," i.e., their proportionate share of the costs of the collective bargaining process.

Governor Quinn, in 2009, issued a similar executive order directing the State to recognize and bargain with an exclusive representative for the Disabilities Program personal assistants should a majority so choose. SEIU Local 713 petitioned for an election and AFSCME Council 31 intervened as a rival candidate. A majority of the personal assistants in the Disabilities Program, though, rejected representation by either union.

In 2010, personal assistants from both groups initiated litigation against Governor Quinn and the three unions involved, seeking an injunction against enforcement of the fair share provision.1 The Rehabilitation Program plaintiffs asserted their First Amendment freedoms of association and speech were violated by being required to pay fair share fees. The Disabilities Program plaintiffs claimed they are harmed by the threat of an agreement that would require the payment of fair share fees in the event a union becomes the bargaining representative. The District Court for the Northern District of Illinois dismissed both claims, the first on the basis of the plaintiffs' failure to state a claim upon which relief could be granted, and the second for lack of subject matter jurisdiction because they did not have standing and their claims were not ripe.

Upon appeal to the Seventh Circuit, the dismissal of the claims by the Disabilities Program personal assistants was affirmed. With regard to the Rehabilitation Program plaintiffs, however, the court found it had jurisdiction. It first made a determination, independent of the Act's definition, that the personal assistants were joint employees of the State and the homecare patient. The court based its conclusion upon the fact that, while the patient makes the actual hiring selection, the State sets the qualifications and evaluates the patient's choice. The State exercises its control over the personal assistants by approving a mandatory service plan that lays out the job responsibilities and work conditions, and conducts an annual performance review. Additionally, it found the State controls all of the economic aspects of employment by setting salaries and work hours, paying for training, and paying wages after withholding federal and state taxes for the personal assistants. While the patient may fire a personal assistant, the court found the State may effectively do so by refusing to pay for services provided by personal assistants who do not meet the State's standards.

Having found the Rehabilitation Program personal assistants to be State employees, the court then ruled that the issue of mandatory agency fees was governed by Abood v. Detroit Bd. of Ed., 431 U.S. 209 (1977), which was based upon Railway Employees' Dep't. v. Hanson, 351 U.S. 225 (1961). The court affirmed the judgment of the district court "on the narrow grounds that Supreme Court precedent permits the State, as a joint employer, to compel fair share fees in the interest of stable labor relations." 656 F.3d 692 (7th Cir. 2011)

The Supreme Court granted certiorari in Pamela Harris, et al. v. Pat Quinn, Governor of Illinois, et. al., No. 11-681, and oral argument was heard on January 21, 2014. The Court issued its decision on June 30, 2014, 573 U.S. __ (2014). By a 5-4 majority,2 it reversed the Seventh Circuit's decision with regard to the Rehabilitation Program personal assistants, but affirmed the dismissal of the claims of the Disability Program personal assistants.3

The Court reviewed the history of cases involving union security provisions, beginning with Hanson, which pitted the provision in the Railway Labor Act authorizing union shop agreements against the Nebraska Constitution banning adverse employment actions because of a refusal to join or affiliate with a labor organization. Under the Commerce Clause, the RLA provision prevailed because the Court found it "stabilized labor-management relations" and furthered "industrial peace." While a First Amendment argument was made in Hanson, the Court dismissed it, saying there was no more an infringement of First Amendment rights than the requirement that a lawyer be a member of an integrated bar. In Machinists v. Street, 367 U.S. 740 (1961), another case under the RLA, the Court denied the union, over an employee's objection, the power to use dues to support political causes which the employee opposes. The Court did not reach the constitutional question in Street.

In Abood, the Court moved to the public sector and addressed the agency shop clause in the collective bargaining agreement between the Detroit Federation of Teachers and the Detroit Board of Education. The plaintiffs, dissenting to the union, objected to the payment of dues to fund union activities and programs "which are economic, political, professional, scientific and religious in nature" of which they did not approve and would have no voice. The Court found a relationship between agency shop provisions and the principle of exclusive union representation, adopting the rationale from Hanson and Street that all employees represented by the union must share in the costs of bargaining, contract administration, grievance adjustment procedures and other activities germane to the union's duties as the collective bargaining representative.

The majority in Harris characterized the Illinois action as an attempt to expand Abood to others who are deemed to be public employees solely for the purpose of unionization and the collection of an agency fee. It conducted its own analysis of the employment relationship between the personal assistants and the State, starting with the Legislature specifying that they are public employees solely for the purpose of collective bargaining. It enumerated all of the benefits and programs to which personal assistants are not entitled, such as the State Employees Group Insurance Act of 1971, the State Employee Vacation Time Act, the State Employee Indemnification Act and the Illinois Whistleblower Act. It further noted that the scope of bargaining is limited to "terms and conditions of employment that are within the State's control," and does not include subjects that are traditionally mandatory under federal and state labor law, such as days and hours of work, lunch breaks, holidays, vacations and termination. The majority posits that a personal assistant could be discharged by a customer because the assistant shows no interest in the customer's favorite daytime television shows. The union would not be able to file a grievance on behalf of the assistant. Finding that "the personal assistants are quite different from full-fledged public employees," the majority refused to apply Abood. If it did, it said it would be hard to see where to draw the line with regard to other workers who receive payments from a governmental entity.

With Abood out of the picture, the Court was free to analyze the case strictly from a First Amendment perspective. The majority referred to its decision two years ago in Knox v. SEIU, Local 1000, 567 U.S. (2012), where it held that "[t]he government may not prohibit the dissemination of ideas that it disfavors, nor compel the endorsement of ideas that it approves," and raised the same concerns about "compelled funding of the speech of other private speakers or groups." In Knox, the Court deemed agency fee provisions as imposing a significant impingement on First Amendment rights that cannot be tolerated unless they pass "exacting First Amendment scrutiny."

The majority decided that the agency fee provision does not serve a compelling state interest that cannot be achieved through means that are significantly less restrictive of the petitioners' freedom of association. Because they are not seeking the right to form a rival union or challenging the union's status as the exclusive representative, the majority did not find it necessary to charge an agency fee in order to promote labor peace. It compared this case to federal employee unions where members of the bargaining unit are not required to join the union or pay a fee, thereby refuting the linkage between the union's status as the exclusive bargaining agent and the right to collect a fee from non-members. It further discounted the threat to labor peace because the personal assistants do not share a common work site. The majority cited Section 2(3) of the National Labor Relations Act, which exempts persons employed in domestic service at a person's home from coverage under the Act, to show that the organization of household workers does not further the interest of labor peace. Finally, it noted that the union's limited scope of bargaining makes it unlikely there would be conflicting demands by personal assistants.

The majority considered the respondents' argument that the personal assistants, because of unionization, were able to achieve substantial improvement to their wages and benefits. It did not find evidence, though, that such improvements could not have been obtained without fees paid by non-members. It suggests the State was already highly receptive to suggestions for increased wages and benefits. Many groups, says the majority, successfully advocate on behalf of persons falling within an occupational group relying upon voluntary contributions.

The majority also rejected respondents' argument that it apply a balancing test derived from Pickering v. Board of Ed. of Township High School Dist. 205, Will Cty., 391 U.S. 563 (1968). In addition to stating the Pickering test is not applicable because the State is not a traditional employer with respect to the personal assistants, the Court did not find it proper to restrict the free speech rights of non-members because matters of collective bargaining affecting the expenditure of Medicaid funds are inherently a matter of great public concern.

Although the majority refused to extend Abood to apply in this case, and based its determination that the First Amendment prohibits the collection of an agency fee from the personal assistants who do not want to join or support the union, it telegraphed a strong message about the viability of Abood. It described the Court's analysis in Abood as "questionable on several grounds." Primarily, the majority said it overstated the constitutional considerations in both Hanson and Street, suggesting the First Amendment issue deserved more thought than it received in those cases. It does not believe Abood sufficiently addressed the distinction between the private sector, where collective bargaining and political expenditures are more distinguishable, and the public sector, where both collective bargaining and political advocacy are directed at the government. Further, the majority rejects the assumption, which it says was critical in Abood, that the principle of exclusive representation in the public sector is dependent on a union or agency shop.

Justice Kagan, in the dissent, finds some solace in the fact that Abood was not overruled, despite the "potshots" taken at it by the majority in its "gratuitous dicta." She argues, though, that the majority overlooked or misstated factors in the relationship between the personal assistants and the State that support a finding that they are employees of both the customer and the State. For instance, the majority stated the State may withhold payment to a personal assistant, which would effectively constitute a termination, only if the personal assistant did not meet the standards to qualify for the job. However, Justice Kagan notes, payment may also be withheld based on credible allegations of customer abuse, neglect or financial exploitation. Regardless of how the statute characterizes the employment relationship, she says the "true issue is whether Illinois has a sufficient stake in, and control over, the petitioner's terms and conditions of employment to implicate Abood's rationales and trigger its application." The dissent points to how both the State and the personal assistants have benefitted by higher wages resulting in a more stable workforce, and better training resulting in a higher quality of care.

Justice Kagan writes that the majority, despite its disdain for Abood, has not made a case for reversing it. Aside from stare decisis, she says it is the only sensible outcome in the context of the caselaw. When the government acts as an employer, the dissent contends the Court has acknowledged it has wider constitutional latitude than when it acts as sovereign. The decisions have recognized that collective bargaining on behalf of public employees over wages and benefits does not become speech of "public concern." Abood, Justice Kagan writes, is the correct application of the Pickering test.

Fair share provisions, says Justice Kagan, ensure that the union has sufficient funds to carry out its responsibilities as the exclusive representative of the bargaining unit. This, she concludes, is in the interest of the State by providing a better and more stable workforce to serve the disabled patients.

Union Perspective

Reacting to the Harris decision from the union side of the aisle, Gary M. Messing comments:

"It is disturbing that Justice Alito and the other justices in the Harris majority found it necessary to criticize more than four decades of jurisprudence upholding the constitutionality of agency fees. The Court went out of its way to express hostility toward fair share fees and union shop in general, just as it did in its 2012 decision in Knox, which sets rules regarding special assessments (requiring opt-in, Hudson letters each time, and that the union bears all financial risk as to cost estimates.)

"Today, in Harris, as in Knox, the Court went beyond its narrow holding to attack the legitimacy of its own precedents, including decades of well-established law upon which many unions have relied for decades to pass along some of the costs of representation to non-members. We agree with the perspective expressed in Justice Kagan's dissent that the majority opinion attempts to minimize the significance of stare decisis, especially with respect to Abood. Justice Kagan points out that the majority can personally criticize Abood as relying too heavily on certain cases, but that is all that the majority can do--state that Abood relied on cases with weak analysis or that are inapposite. As Justice Kagan points out, as recently as 2009 in Locke v. Karass 555 U.S. 207, the Court analyzed the Abood line and stated that the Abood rule is a 'general First Amendment principle.' The full quote actually includes the cases that the majority in Harris claims Abood should not have relied upon: 'In Hanson, Street, and Abood, the Court set forth a general First Amendment principle: The First Amendment permits the government to require both public sector and private sector employees who do not wish to join a union designated as the exclusive collective bargaining representative at their unit of employment to pay that union a service fee as a condition of their continued employment.'

"I think that Justice Alito will be able to form a consensus to hear another agency fee matter and I am not as convinced as Justice Kagan that the law will not be overturned at any point in the future. I believe that the Court will not rest until it has overturned Abood and its predecessors. Whether it is based solely on a challenge to the constitutionality of agency fees, and whether the Court has enough votes to strike down more than four decades of agency fee case law, remains to be seen."

Management Perspective

Reacting to the Harris decision from the management perspective, Ted Clark comments as follows:

"In 2012, in Knox v. SEIU, Justice Alito correctly noted the impingement of First Amendment rights caused by compulsory fair share fees for public employees. That set the stage for the most recent decision in Harris v. Quinn, in which the Court found compulsory agency fees for home care givers unconstitutional. Because the bargaining unit employees at issue in Harris were only deemed quasi-public employees, the Court did not reach the ultimate issue of whether such fees are constitutional for full-fledged public employees generally. Justice Alito made it clear, however, that prior arguments advanced in support of agency fee provisions may be insufficient to overcome First Amendment objections, at one point referring to Abood's 'questionable foundations.' As a result, I agree with Gary Messing that it is likely that the Court will in the future directly address the issue that it did not rule on in Harris, i.e., whether fair share clauses can be constitutionally applied to full-fledged public employees.

"The dissenting opinion authored by Justice Kagan relies largely upon the principles of stare decisis. Justice Kagan suggests that past precedent makes it 'impossible to reverse' Abood. I respectfully disagree. Decades of precedent did not stop the Court from correctly deciding Brown v. Board of Education in 1954, which overturned a decision dating back to 1896, nor did principles of stare decisis operate to prevent the Court from overturning National League of Cities in Garcia v. San Antonio Metropolitan Transit Authority in 1986, which applied the Fair Labor Standards Act to public employers by reinterpreting the extent of Congressional power under the Constitution's Commerce Clause. I know this because I was the author of an amicus brief in the Garcia case, in which I pointed out that all nine justices had issued previous opinions in which they relied upon the Court's decision in National League of Cities, all to no avail. Of necessity, the Court must retain the right to revisit important constitutional issues, such as those addressed in Harris.

"The Court's holding in Harris v. Quinn will likely embolden more public employees to challenge fair share fee clauses in labor agreements in the future. Public employers who agree to such provisions may wish to demand broad indemnification agreements from the union, to minimize their exposure to costly litigation. In addition, employers should ensure that requirements articulated by the Court in Teachers v. Hudson, 475 U.S. 292 (1986) are followed by the union involved."

1Of the eight plaintiffs, all but one care for a disabled family member. Pamela Harris, for example, provides homecare service under the Disabilities Program for her son, who suffers from a rare genetic syndrome that adversely affects his cognitive abilities and muscular skeletal systems, and causes severe intellectual and developmental disabilities.

2Justice Alito delivered the opinion of the Court, joined by Chief Justice Roberts and Justices Scalia, Kennedy and Thomas. Justice Kagan filed a dissenting opinion, joined by Justices Ginsburg, Breyer and Sotomayor.

3In a footnote, it concurred with the Court of Appeals that the claims of the Disability Program personal assistants were not ripe, noting that the record did not show any current attempts to certify a union to represent them.

Barry Simon is a labor arbitrator in Arlington Heights, Illinois. He is a member of the State and Local Government Bargaining and Employment Law Committee of the ABA Section of Labor and Employment Law. Gary Messing is the Managing Partner of Carroll, Burdick & McDonough's Sacramento, California office and is Co-Chair of their Public Sector Labor Law Group. He was an author of an amicus brief on behalf of various collective bargaining representatives of police officers, fire fighters, correctional officers and supporting public safety employees. Ted Clark is a management attorney with Clark Baird Smith LLP, an Illinois law firm representing public employers. Ted Clark was the first recipient of the American Bar Association's Arvid Anderson Public Sector Labor and Employment Law, Lawyer of the Year Award, and is the co-author of a law school textbook entitled Labor Relations Law in the Public Sector.


Opening Page

Comments from the Chair

First Feature
Supreme Court Cases: 2013-2014

Second Feature
The Minimum Wage: An Ongoing Debate

Flash Co-Chairs:
Jeremy J Glenn, Meckler Bulger et al | Monique R. Gougisha, Ogletree Deakins | Amy F. Shulman, Broach & Stulberg LLP | Jennifer R. Spector, National Labor Relations Board

American Bar Association Section of Labor and Employment Law
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