Marking one of the most important court cases dealing with public sector unions in decades, the U.S. Supreme Court issued its highly anticipated decision today in Janus v. AFSCME.

In a 5-4 ruling, the High Court held that state and public sector unions (such as the NJEA) can no longer compel individuals opting not to join the union to pay agency fees, as doing so violates their First Amendment rights. The decision deals a serious financial blow to public sector unions in 22 states, including New Jersey. Because of this decision, the New Jersey Education Association (NJEA) and other public sector employee unions across the state must make immediate adjustments to their collective bargaining agreements with local school districts.

The ruling overturned a 1977 Supreme Court precedent and shuts off a key source of revenue for the NJEA and other public sector unions. The decision prohibits public sectors from collecting “fair share” or “agency fees” from employees opting out of the union.  Previously, those non-union workers were required to pay a percentage of union dues – called agency fees. The union’s argument for charging these fees is that they are used to fund non-political activities like collective bargaining, and are necessary to prevent “free riders” from benefitting from union services since members and nonmembers benefit from collective bargaining agreements.  The Court rejected this rationale.

This decision will have a significant financial impact on the NJEA, the largest union for public school employees in New Jersey, with over 200,000 members. In New Jersey, agency fees amount to approximately 85 percent of union dues.  Because the 85 percent agency fee payment is not much lower than the cost of union dues, most employees decide to pay the extra amount and join the union. The Janus decision cuts off this source of revenue and the removal of these fees could encourage workers to opt-out of unions and lead to sharp declines in membership in unions across the state, because workers will now be able to access these benefits without paying for them, threatening the very existence of unions by depleting their funds.

Finally, the U.S. Supreme Court noted that employees must “clearly and affirmatively consent” to the union dues before any money may be taken from them.  This calls into question the current methodology for opting out in New Jersey and may require communication between the school business office/payroll department and each individual employee to ensure that the U.S. Supreme Court decision in Janus is given its full force and meaning.

For more information and guidance on this topic, please contact the attorneys in Parker McCay’s Public Schools and Education Department.

The content of this post is for informational purposes only and should not be construed as legal advice or legal opinion. You should consult a lawyer concerning your specific situation and any specific legal question you may have.