4.28 - B. Constitutional Limitations

• Jurisdiction: New York

B. Constitutional Limitations

Since Abood, the U.S. Supreme Court has issued several other decisions that limit the power of unions to collect agency shop fees. In Ellis v. Brotherhood of Railway Clerks,²⁶⁵⁹ a case decided under the Railway Labor Act,²⁶⁶⁰ the Court stated that, in assessing union expenditures, “the test must be whether the challenged expenditures are necessarily or reasonably incurred for the purpose of performing the duties of an exclusive representative of the employees in dealing with the employer on labor-management issues.”²⁶⁶¹ The Court further said that objecting employees could be forced to pay their fair share of the direct costs of negotiating and administering the contract, of settling grievances and disputes and “the expenses of activities or undertakings normally or reasonably employed to implement or effectuate the duties of the union as exclusive representative of the employees in the bargaining unit.”²⁶⁶² Applying these criteria, the Court found that expenditures on union conventions, social activities and publications were all part of the union’s exclusive representational duties and were thus permissible. On the other hand, the Court found that organizing efforts that went beyond the bargaining unit were more like political activity and were too attenuated from the representational function to be supportable.

Going beyond the question of what activities could properly be financed out of agency shop fees, the Supreme Court dealt with the question of what is a proper procedure for protecting independent employees. It held that a “pure rebate approach” was inadequate. Such a procedure is one in which the union collects agency shop fees from objecting nonmembers, uses some of that money for impermissible purposes and then refunds the moneys to the objecting employees. The Court ruled that, instead of using a “pure rebate approach,” unions must provide for either an advance reduction of the agency shop fee based upon the union’s experience in prior years or the deposit of agency shop fees in interest-bearing escrow accounts.²⁶⁶³

In Chicago Teachers Union, Local No. 1 v. Hudson,²⁶⁶⁴ the Court reiterated that refund procedures that enable a union to use a dissenter’s funds to subsidize political or ideological views violate the First Amendment, even if these funds are subsequently returned. As a result, only schemes that insulate the dissenter’s contributions from such uses in the first instance will pass constitutional muster.

Chicago Teachers goes beyond Ellis in mandating additional procedural protections for objecting employees. It indicates that while a union need not escrow the entire amount of...