Janus v. AFSCME and Its Implications for PLAs
By Martin C. Fojas
On June 27, 2018, the U.S. Supreme Court issued a decision against public sector organized labor in Janus v. Am. Fed. of State, County, and Municipal Employees, Council 31, et al. The Janus decision overturns a forty-one-year precedent in the United States – set in the 1977 Supreme Court decision Abood v. Detroit Board of Education – that states may require a public-sector employee to pay agency fees to the union that represents his or her bargaining unit. The Janus decision reverses Abood on First Amendment grounds, holding that by requiring a public-sector employee to financially support the union or collective bargaining, the government was infringing the employee’s freedom of speech.
The Janus v. AFSCME Decision
At issue in Janus was the Illinois Public Labor Relations Act (“IPLRA”), a state version of the National Labor Relations Act (“NLRA”). The IPLRA and NLRA permit state and local public-sector employees to unionize. Once a union is elected, it becomes the designated bargaining representative for all employees within the bargaining unit. Many public employees may decide not to join the union, and by law, public employees may not be required to join the union. Nonetheless, the union has a legal duty to provide fair representation to union members and non-members alike. Because non-members of the union within the bargaining unit benefit from union representation, many states permit public employers to collect agency fees from the non-members to be paid to the Union to cover the cost of collective bargaining and union administration.
The Abood decision held that such agency fees – which are typically some percentage of a union member’s full dues – did not violate an employee’s First Amendment rights, so long as the employer did not require the employee to contribute to the union’s political speech or other activities unrelated to collective bargaining. The Supreme Court’s recent departure from Abood was foreshadowed in its 2013 decision in Harris v. Quinn. In Harris, the Supreme Court held that the First Amendment prohibits state governments from requiring private sector employees to pay agency fees to the union. Harris limited the holding of Abood to public sector employees. In Janus, a 5-4 decision written by conservative Justice Samuel Alito, the Supreme Court extended its decision in Harris to public sector employees as well, thereby overruling Abood in its entirety.
The Janus decision is expected to adversely impact public sector unions such as the defendant AFSCME. However, the loss is not likely to be catastrophic for the larger labor movement. Janus has no effect on federal employees or employees in any of the twenty-eight “right to work” or “open shop” states, which prior to Janus, already banned union security and agency fee agreements. Moreover, the Janus decision explicitly authorizes alternative agency fee arrangements in which public sector employees who decide not to join the union may be required to pay for certain union services, such as representation in grievance proceedings.
Implications for Project Labor Agreements
Thus far, there is no reason to be concerned that Janus will have a considerable impact on project labor agreements (“PLA”) in the construction industry because Janus addresses the government’s obligations as an employer and regulator not to infringe on a worker’s First Amendment rights. It does not address the government’s constitutional obligations when it is bidding out public works projects or otherwise acting as a market participant.
A PLA is a pre-hire contract between a public-sector owner of a public works project and the labor unions governing the trades to be employed on the public works project. Unlike a traditional collective bargaining agreement – in which the employees organize and elect a union to be their bargaining representative – construction industry pre-hire agreements such as PLAs are negotiated between the public agency and the union before the work is bid out, without an election, and before any employees are hired to perform work.
PLAs typically contain the union security agreements and agency fee agreements that the Supreme Court struck down in Janus. However, the Supreme Court approved of PLAs in its 1993 Boston Harbor decision, where it held that a public agency that enters into a PLA for a public construction project is not acting as a lawmaker or regulator, but as a property owner. Thus, unlike the public agency in Janus, which is acting as an employer setting employment policy, a public agency entering into a PLA with a union is merely purchasing services.
In 1996, PLAs also survived a challenge before the New York Court of Appeals in Associated General Contractors of America v. N.Y. State Thruway Authority. There, contractors alleged that PLAs discourage competitive bidding on public projects and represent a social policy favoring organized labor. The Court of Appeals disagreed, finding that so long as the successful bidder on a PLA project need not be a union contractor and the PLA prohibits discrimination based on union membership, the PLAs is not anti-competitive, nor does it constitute policy making in favor of unions. PLAs serve a public interest in maintaining high quality work on large and complex public works projects while keeping labor costs low and stable over the course of the project.
Because a PLA in a generic sense is not considered a regulation or public policy, it is unlikely that the Janus decision heralds any decision striking down the PLA as an unconstitutional infringement of workers’ free speech rights.