In my first column, I explored the impact of the forthcoming Janus v. AFSCME case at the United States Supreme Court. Current labor law provides that if public employees get the benefits of being in a union, then they can be compelled to pay an “agency fee” to cover the union’s costs of representation. However, the Court is widely expected to rule that these mandatory payments are unconstitutional under the First Amendment. Unions that represent public employees would then face an unchecked “free rider problem,” whereby employees could receive all the benefits of a union contract and union representation without paying a dollar to the union for its efforts. The potential impact of the decision could be a significant drop in union membership and loss of revenue, as those employees who elected not to join the union will no longer be required to pay a representation fee.

A ruling by the Supreme Court creates a far greater challenge than laws passed by a hostile state or federal government, because it cannot be overturned easily. In other words, we will be stuck with it for the foreseeable future. However, because public employment (and public employee unionism) is largely regulated at the state level, states can change their laws to adapt to the Court’s decision. To date, there has been no consensus on what legislative changes public sector unions will seek. Below, I describe two significant changes that lawmakers can enact to combat the free rider problem that Janus is expected to create.

One change involves keeping the basic structure of public sector unionism intact, but would enlist public employers to play a larger and more direct role in collective negotiations. Currently, labor law generally prohibits direct payments from employers to unions, but permits indirect payments through mandatory agency fees deducted from union members’ paychecks. From a legal standpoint, there is not much substantive distinction between these two systems. Rather than preserve this distinction, State laws could simply be amended to permit public employers to directly reimburse unions’ representational costs. In fact, in New Jersey such reimbursements are already permitted.

This change would essentially treat public sector unions as contractors, which provide public employers with a thing of value – stable and predictable labor relations – and in return the employer provides the union with a thing of value – the reimbursement of its expenses. This change solves the “free rider” problem that Janus would create, because the union would not be dependent on agency fee payments from non-members. Additionally, because there would be no deduction from employee paychecks, this change would avoid any First Amendment issues. Recognizing these advantages, in 2016 the Hawaii Legislature introduced a bill with these provisions.

A more dramatic change would be to amend State laws to permit the formation of “members-only unions.” Currently, public sector unions (as well as private sector) are obligated to negotiate for and represent both members and non-members alike. In a members-only union, by contrast, the union would only be obligated to negotiate for and represents its members, and the union contract would only apply to union members.

Such a change would require significant restructuring of State laws. Currently our laws do not permit members-only unions, and forbid treating members and non-members differently with respect to most issues. Permitting the introduction of members-only unions would solve the free rider problem created by Janus because the union would only be obligated to represent its dues-paying members. Similarly, there would be no First Amendment concern, because there would be no compelled deduction from non-members. But, legislation would need to be introduced to guarantee that employers cannot undermine the union by offering better deals to non-members.

New Jersey has a long and illustrious history of labor union activity which continues to the present day. But unions and their allies must understand that the Janus decision will not merely be another decision in a long line of anti-union Supreme Court cases. Rather, the case will be a severe threat to their continued existence. In this State, which proudly proclaims a tradition of strong unionism, an equally strong legislative response must be forthcoming. Our unions and their members deserve nothing less.

David Bander is a labor attorney at Mets, Schiro & McGovern, LLP, a councilman in Plainsboro Township, and a former union organizer. He is also a member of the New Leaders Council – New Jersey Advisory Board and a 2013 NLC-NJ fellow. He can be reached at dbander@msmlaborlaw.com.

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