The inextricable links between exclusive representation, agency fees, and the duty of fair representation
By Jeffrey Keefe | November 2, 2015
The U.S. Supreme Court in its current session will consider Friedrichs v. California Teachers Association, a case that may require all states to enforce public-sector open-shop laws. Specifically a question before the court is whether to overrule Abood v. Detroit Board of Education, 431 U.S. 209 (1977) and find public-sector agency-shop clauses unconstitutional. Agency-shop clauses allow unions to collect agency fees (also called fair-share fees) from employees who are not union members but whom the union is legally required to represent. The fees are calculated as a percent of union dues. The Court in Abood upheld the constitutionality of agency-shop clauses, provided that the agency service charges are used to finance collective-bargaining, contract-administration, and grievance processes, but not for political or ideological purposes. Since World War II, 25 states have enacted so-called right-to-work (RTW) laws prohibiting the enforcement of agency-shop provisions in the private sector, and then they extended these laws to their public-sector employees. These laws create “open shops,” where all workers, union and nonunion alike, have the right to union representation but are not required to pay the union fees for that representation. If the Supreme Court overturns Abood and eliminates agency fees, it would essentially make all states right-to-work states (also known as “no-fair-share” states) in the public sector.
This briefing paper responds to a claim by the Mackinac Center for Public Policy, in its amicus curiae brief, that there is not an inextricable link between exclusive representation and the agency fees that allow public-sector unions to fulfill their duty of fair representation for all bargaining unit members. “Unions are in fact able to fulfill the duty of fair representation despite whatever incentive workers might have to ‘free ride’ on the union when they do not face any agency fees,” the brief states (Mackinac Center 2015).
The “free-rider” problem alluded to here involves employees who choose not to join a union but whom are legally entitled to union representation in negotiations and in grievance procedures with the employer. Free-riders are those who do not contribute to funding that representation, and free-riding is permitted in open-shop (also called “right-to-work”) states. Free-riding can ultimately undermine the collective benefits provided by unions and the existence of the unions themselves (Olson 1965, Chapter 3). Collective benefits are defined by two properties: 1) joint supply as embodied in the legal requirement that a union created by a majority vote of the workers in the bargaining unit be the exclusive representative of all employees in that bargaining unit, and 2) the impossibility of exclusion as reflected in a union’s duty to fairly represent all members in a bargaining unit whether they are dues paying members or not. For example, if, in a bargaining unit, wage rates are uniform for each job category, nonunion workers cannot be excluded from enjoying the benefits of union-negotiated wages and wage increases. Without the ability to gain payment for the collective benefits provided from collective bargaining, free-riding begins to follow the logic of collective action, thereby undermining the provision of collective benefits. In other words, as some people get benefits without paying for them, others either follow their example or get angry about the free-riders and stop paying dues, and free-riding grows.
Simply put, this briefing paper asks whether agency clauses, which eliminate free-riders, are needed so that unions can carry out their obligations to serve all members of a bargaining unit. It finds that agency clauses are needed because free-riding reduces resources and thus undermines the ability of a union to serve all workers in the bargaining unit. Having fewer resources, for example, likely makes it harder for the union to pay the costs of an arbitration, which could include the costs of investigation, lawyers’ fees, the arbitrator’s fee, and staff time.