Union Employers: What You Need to Know About the Supreme Court’s Ruling on Union Dues

In June, the Supreme Court ruled, banning mandatory union fees for non-union employees. That ruling means that employees in 22 states can now choose whether or not to fund union dues. This is a major change for many union employers who must now obtain consent to charge for union dues.

Let’s dive into what you need to know as a Union Employer.

Historical Setting For Union Dues and The Supreme Court Ruling

In 1977, the Supreme Court ruled that non-union employees could be forced to pay their “fair share” of union dues. In theory, those employees would not pay for political campaigns but would be forced to pay for other work the unions did that the employee participated in.

But, the reality is often different as even collective bargaining involves a pushing what is often a political agenda.

And, in a recent ruling of  Janus v. American Federation of State, County, and Municipal Employees (AFSCME), the Supreme Court ruled that forced union dues do violate first amendment rights. Instead of employees getting a free ride on a train bound for the promised land, Janus argued that he was a captive bound to a train and a destination he didn’t want.

The ruling came in a 5:4 opinion that states “We conclude that this arrangement violates the free speech rights of nonmembers by compelling them to subsidize private speech on matters of substantial public concern.”

Since that ruling, unionized employers have scrambled to readjust payroll to comply with the new law.

Right to Work Laws: Which States are most Impacted by the New Ruling

Currently, 22 states have laws that force workers to pay union dues, even if they don’t belong to a union. Some states force workers to join a union. Conversely, 27 states have laws that ban unions from requiring employees to pay dues without their consent.

It appears that most Americans would prefer not to belong to a union. In fact, union memberships have dropped steadily over the last several decades. In the 1800s unions rose to high popularity. At that time, few employment laws protected employees from unfair practices.

Yet, today’s workers are protected from the kinds of employment conditions that existed in the 1800s. As a result union membership has dropped from 35% in World War II to 10.7% today. It is likely to fall more now that employees can’t be forced to pay union dues.

Currently, the states that have required Union Dues are:

  • Alaska
  • California
  • Colorado
  • Connecticut
  • Delaware
  • Hawaii
  • Illinois
  • Maine
  • Maryland
  • Minnesota
  • Montana
  • New Hampshire
  • New Jersey
  • New Mexico
  • New York
  • Ohio
  • Oregon
  • Pennsylvania
  • Rhode Island
  • Vermont
  • Washington
  • Washington D.C.
United States Map of Right-to-work and Mandatory Union states inforgraphic

The new ruling specifically affects employers in these states who must now adjust payroll for non-union employees.

Processing Union Payroll: Understanding Requirements

Employers with both union and nonunion employees process payroll differently through union deductions. Union dues require a predetermined portion to be set aside each pay period. While those deductions may be treated as “voluntary,” they are often involuntary dues. They are considered voluntary because most involuntary deductions are those in which neither the employer or the employee has any control over. Involuntary deductions include Medicaid, social security, state and federal taxes, child support, and wage garnishments.

In theory, union dues are partially determined by the employer and thus are classified as voluntary. Unionized employers can face up to four types of union dues:

  • Union Shop: Employees do not have to join a union as a condition of being hired, but they must join within a set time frame, such as 30 days.
  • Closed Shop: Employees are required to join a union as a condition of being hired. Employers cannot hire an employee who is not willing to join.
  • Agency Shop: Employees are required to pay union dues and membership fees, but they are not required to be participating members.
  • Open Shop: These shops are typically found in right to work states. Employees are not required to join a union and are not required to pay union dues.

After the new supreme court ruling- workers who don’t want to join a union won’t be required to join. The law affects the public sector. This will have big implications for the collective bargaining agreements between employers and unions.

In addition, most collective bargaining agreements determine the factors for employees pay. This can be problematic for employers who wish to reward top employees with extra pay, especially when those employees have fewer years with the employer or a lower educational degree.

Union pay scales require employer software to manage the various pay scales. Employers who attempt to use manual payroll often run afoul of union agreements and make mistakes.

In addition, to pay, union agreements often oversee time off. This includes sick leave. In states where sick leave laws have passed (most are union states), unions have lobbied for exceptions for union employees. This means that instead of a uniform law for all employees, the union retains the power to set the guidelines regarding sick leave and time off. Employers must pay for higher benefits for non-union employees.

As a result of these laws, employers have often been forced into increased administrative costs that come in the form of increased labor to manage employment law and employee payroll. Many employers have turned to software, such as that offered by SwipeClock, to ease the financial burden these requirements place on employers.

In the wake of the new ruling, there are three main things employers should do now to maintain compliance with the law.

Employer Step 1: Educate Employees and Address Morale

The first thing employers should do immediately is to educate employees. They are likely to have many questions, especially in union states where union membership has been mandatory. Employers need to communicate what this means for employees. Employees are likely to have questions such as:

  • When I was hired, I was required to join the union. Now that the law is in place, am I able to drop my membership without losing my job?
  • Will my employment suffer any negative effects if I cancel my union membership?
  • How will the law affect my current union benefits?
  • What things are likely to change in my collective bargaining agreement after these changes take effect?
  • How does the Supreme Court ruling affect my non-membership union dues? When will I see the increased take-home pay?
  • What do I have to do to stop paying the required fees?
  • Will I get a refund on fees already paid?
  • Will other employees who cancel their fees still get union benefits?
  • How does this affect my employment contract?
Employers should communicate and educate employees about Union due changes infographic

It is important for employers to be prepared to answer these questions. In some cases, the answers will only be available as employers and unions renegotiate contracts to maintain compliance with the law. In other cases, the effects and answers are immediately available. Employers should consult with legal representation for specific answers to how state laws and the new federal ruling should be handled.

Another issue that may arise concerns employee morale. It is possible for union employees to become resentful of non-union employees if they perceive that those employees are “freeloading” Therefore employers should keep the status of employee union membership private. Educating employees is another useful tool to help prevent resentment.

They should also be prepared to address conflict arising from union membership status. Employers should have a zero tolerance policy regarding bullying and should allow a place for employees to express themselves and their viewpoints without fear of retaliation. This can be a manager’s office or inside of HR.

  1. Educate employees regarding union benefits and non-union benefits
  2. Keep union membership status information confidential
  3. Prepare to address conflict arising between employees regarding union membership status.

Employer Step 2: Obtain Written Consent

Unionized employers must be familiar with dues checkoff. That’s when an employee voluntarily checks off to contribute to union dues automatically in their paycheck. Employers must create an opt-in form so that they can obtain written consent from workers who want to continue contributing to agency fees.

Employers must obtain written consent from employees to collect union dues infographic

Employers are now faced with the question of whether or not check offs count as authorization. If an employee (such as Janus) previously checked off to pay union fees, but it was as a condition of employment, is that actually considered voluntary? Employers are safest to work with unions to obtain new consent forms and to obtain new authorizations from employees.

SHRM recommended that employers hold al union dues that have been collected from the union until the employees whose dues they collected, signed a new authorization form.

Employers with advanced payroll systems should be able to easily stop non-authorized union deductions immediately. Other employers who are not able to stop union deductions should be prepared to refund unauthorized deductions under the new law.

Employer Step 3: Communicate with the Union

As mentioned above, an important step for employers is to communicate with the union. They should obtain new consent forms for employees. In addition, employers should consult with the unions regarding any changes or required renegotiation that has become mandated by the new law. The federal National Labor Relations Act (NLRA) governs private sector bargaining agreements. NLRA recommends that affected employers first look to applicable state laws when deciding what to do.

Employers and Union can’t negotiate over the law. Mandatory agency fees are now illegal and it will affect thousands of workers. Therefore employers and unions should work together to work something out. It is possible that unions will want some time to talk to affected employees to explain the benefits of union membership. In addition, the collective bargaining agreement may designate some time for unions or employers to explain those benefits to employees.

Employers should communicate with unions about new law and union actions infographic

Conclusion

Union Employers must take action to ensure compliance with the law. As with any employment law change, employers are likely to face lawsuits for noncompliance from unhappy employees. Therefore, employers should act quickly and effectively. What do you think? Employers, do you prefer to be a union employer or a nonunion employer? What tools have you used to navigate the changes in union membership law?

Written by Annemaria Duran. Last updated on October 23, 2018.