In a post-Knox case challenging the constitutionality of agency shop agreements, a federal district court has granted the challengers’ motion for judgment on the pleadings — but in their opponents’ favor.
The case is Friedrichs v. California Teachers Association, which we have been following since the summer. Last April, ten public school teachers and a religious organization called the Christian Education Association International filed suit challenging the constitutionality of the California Educational Employment Relations Act. Under the Act, when a union submits proof that a majority of public school employees in a district wish to be represented by the union, the union becomes the “exclusive bargaining representative” on behalf of virtually every public school employee in the district. As the exclusive bargaining representative, the union can establish an “agency shop” agreement with the district, which requires all represented employees to pay an “agency fee” as a condition of continued employment, regardless of whether the employees are members of the union. Agency fees are essentially the same as union dues except that nonmembers can “opt out” of paying a portion of the fee that will go to union activities not “germane” to collective bargaining, such as political lobbying.
The challengers allege that agency fees and the opt-out (as opposed to opt-in) procedures violate their rights to free speech and association under the First and Fourteenth Amendments. But the Supreme Court has already upheld an identical practice in a 1977 case called Abood v. Detroit Board of Education, in which the Court noted that agency fee agreements are essential to avoid the free-rider problem that would develop if employees could reap a union’s benefits (say, a new high-wage contract) without having to pay for the union’s bargaining costs. The challengers acknowledged that their claim is therefore “presently foreclosed by” Abood — their objective is to have Abood overturned on appeal. The current Supreme Court has welcomed such an invitation, writing in the 2012 Knox decision that Abood and similar cases may not “have given adequate recognition to the critical First Amendment rights at stake.”
According to the Wall Street Journal, teachers across the country will participate in a national “Day of Action” today. The teachers plan to rally to “reclaim the promise of public education.” In New York, teachers will wear blue as they call for more funding and less testing. Politico suggests that, despite this showing of strength, teachers unions are struggling to cope with financial, legal, and public relations challenges.
The Los Angeles Times observes that a growing number of state and local governments are increasing the minimum wage for local workers. This year, five states—California, New York, New Jersey, Connecticut and Rhode Island—and four municipalities raised their minimum wage above the national rate ($7.25 an hour). With these developments, workers in a record 21 states will be entitled to more than the federal minimum wage next year. And at least five other states are set to consider their minimum wage laws in the near future.
The Los Angeles Times also notes that, Boeing—Washington’s largest private employer—has begun to look outside of Washington for a site to build its new airliner, the 777X. Last month, the International Association of Machinists and Aerospace Workers District 751 voted to reject a contract that would have cut some pension plans and healthcare benefits for Boeing workers, but guaranteed that the program would stay in the Pacific Northwest.
Both the Washington Post and the Wall Street Journal report that, since a federal bankruptcy court entertained the idea of cuts to Detroit’s constitutionally protected public pensions, public pensions in other cities (including New York) have become more vulnerable. This vulnerability could give cities more leverage to negotiate with unions during budget crises.
The online edition of Time Magazine reports that one-day “flash strikes” are labor’s new weapon of last resort. According to the publication, declining union membership has made protracted strikes increasingly rare, as evidenced by the labor activity that took place across the nation this past Thursday at fast food establishments in over 100 cities. The flash strikes were the culmination of a yearlong movement that began in New York last November. The goal of this movement is an hourly wage of $15 per hour and the right to unionize. Local labor activism groups, who receive funding from the Service Employees International Union, are responsible for organizing these strikes.
The Wall Street Journal reports that last week’s federal bankruptcy court decision in Detroit has opened the door for pension reductions in New York. The New York State Comptroller has determined that at least 23 cities in the state of New York are significantly or moderately stressed. An additional seventeen cities have been categorized as “susceptible” to stress. The concern among New York unions is that pensions will no longer be sacred, with the recent court decision giving municipalities new leverage.
News coverage today is dominated by the death of Nelson Mandela, South Africa’s first black president and an instrumental player in helping that country abolish apartheid. The New York Times, LA Times, Washington Post, and the Wall Street Journal all have coverage.
Joe Davidson has a piece in the Washington Post about the political posturing already surrounding the new budget bills in Congress, which he argues could have serious repercussions for federal employees. He reports that two Republican congressmen have proposed increasing the share federal employees pay towards their retirement programs from 0.8% to 2%, while switching to a slower-rising inflation formula called the chained-CPI for the calculation of retirement benefits. The Wall Street Journal adds that Democrats and several prominent unions are already lining up to oppose this measure, which they view as “unacceptable” for requiring federal employees to pay 5.5% more for their retirement.
According to the Wall Street Journal, the American Federation of Teachers has promised to appeal the Detroit bankruptcy ruling. The union is concerned that the bankruptcy decision will place pension rights in jeopardy and will only add to the retirement insecurity faced by many workers.
In international news, the Wall Street Journal reports that the French unemployment rate has reached 10.9%, its highest level since 1998. The new numbers come as a blow to President Hollande, who has made reducing unemployment one of signature issues. The article suggests that because overall economic growth in France is slow, many French companies are pressing ahead with job cuts and restructuring plans.
As Jesse reports, the Fifth Circuit this week declined to enforce the NLRB’s decision in D.R. Horton. In Horton, the Board held that an employer commits an unfair labor practice if it requires employees to pursue all employment-related disputes through individual (i.e., not collective or class) arbitration. By prohibiting employees from pursuing collective legal action on claims related to their employment, the Board held, such an arbitration clause interferes with employees’ NLRA section 7 right to “engage in  concerted activities for the purpose of . . . mutual aid or protection.” The Board’s decision in Horton is among the most well-reasoned and well-crafted NLRB decisions in recent memory, and is worth a complete read. But the basic idea of Horton is straightforward and also, as I will explain, correct. As I will also explain, the Fifth Circuit’s reasoning on this core argument in Horton is just as clearly incorrect. [As Jesse’s Explainer details, the Board’s holding in Horton had several bases. Here, I highlight one.]
In recent years, the Supreme Court has issued a series of decisions that make a wide range of arbitration clauses – in both consumer and employment contracts – enforceable. This includes, as a general matter, arbitration clauses that preclude arbitration on a class basis. But there is a core principle that runs through all of these staunchly pro-arbitration decisions: no arbitration clause may require a party to “forgo the substantive rights afforded by [a] statute.” Arbitration agreements can require parties to submit the resolution of statutory rights to an arbitral forum, and, in doing so, they may alter the procedural rules governing the resolution of such statutory claims. But no arbitration clause can require a party to waive a substantive statutory right.
Section 7 of the NLRA contains the core substantive rights of federal labor law. Those rights include employees’ right to “engage in  concerted activities for . . . mutual aid or protection.” Thus, a core substantive NLRA right is the right of employees to act collectively to improve the terms and conditions of their employment. Sometimes, such employee collective action takes the form of union organizing. Sometimes it takes the form of pickets and demonstrations aimed at improving working conditions. And, sometimes, it takes the form of collective legal action designed to improve those conditions. Whichever form employee collective action takes, when such collective action is directed at improving terms and conditions of employment, it is a substantive right protected by the NLRA.
The Board has long held that when employees collectively pursue legal action against their employers, they engage in Section 7 protected activity. Continue reading
Fast-food workers in 100 cities around the country are participating in a one-day strike today for a $15-an-hour wage — up from a $9-an-hour industry average. The New York Times, Wall Street Journal, USA Today, the Washington Post, and the LA Times all have coverage. While some economists criticize the idea of such a high wage as invariably leading to increased fast food prices and unemployment levels, others suggest that higher wages for low-paid fast food and Walmart employees would stimulate the economy by increasing spending. Union officials, for their part, have responded that wage increases, in practice, do not put workers out of business.
In the wake of yesterday’s bankruptcy ruling in Detroit, which held that public pensions are not entitled to heightened protection in the city’s bankruptcy proceedings, other cities are weighing options in trimming or eliminating pension costs. The New York Times reports that Mayor Rahm Emanuel of Chicago is looking to the Detroit ruling in outlining an agenda to reduce the city’s obligation to contribute to its workers’ pension funds. As Chicago is not bankrupt like Detroit is, however, city officials have for now sought a compromise with public workers to avoid a future credit crisis over its underfunded pension plans.
On December 4, 2013, the Fifth Circuit issued its ruling in the hotly contested case of D.R. Horton, Inc. v. NLRB. In a 2-1 decision, the court overturned the National Labor Relations Board’s decision to invalidate mandatory arbitration agreements that include a class waiver.
Given the prevalence of mandatory arbitration agreements in employment contracts (one 2008 study printed in the University of Michigan’s Journal of Law Reform found that 92.9% of large public corporations utilize mandatory arbitration clauses in their employment contracts), this decision is likely to have far-reaching effects.
Below, you’ll find an overview of the Board’s decision in D.R. Horton and a chronology of subsequent developments pertaining to the case.