Today’s News & Commentary — July 3, 2015

Across the pond, The Guardian weighs in on the significance of the Supreme Court’s decision to hear the Friedrichs case. The Guardian quotes Professor Ben Sachs on the implications of a potential decision to ban “fair-share” fees: “Right-to-work has been decided by voters in 25 right-to-work states and 25 fair-share states. If the court holds that fair-share agreements are unconstitutional in the public sector, that will mean the court would be imposing a very new view of the first amendment and taking the issue away from the voters.” Some legal scholars speculate the court decided to hear the case now because the five most conservative justices are prepared to prohibit “fair-share” fees in public sector unions.

On Thursday, President Obama spoke in greater detail about his administration’s proposed changes to overtime rules in Wisconsin. The Chicago Tribune notes the significance of the president’s speech in historically pro-labor Wisconsin, which has become a right to work state under Governor Scott Walker’s leadership. Soon the Department of Labor will publish the regulation to begin the 60-day comment period, which will elicit strong opinions from both sides. Politico forecasts fierce opposition from business and congressional Republicans. The Washington Post’s Lydia DePillis quotes several business owners who claim they want to better compensate their managerial employees, but cannot afford the administrative or financial burden caused by the new earnings cap.

Unpaid interns faced a major setback. The Court of Appeals for the Second Circuit overturned a lower court’s 2013 ruling that unpaid interns working on Black Swan should have been classified as employees and subject to wage and hour laws. But, as the New York Times and the Wall Street Journal report, the Second Circuit applied a new test to determine if an employee is an intern: whether the intern or the employer is the “primary beneficiary of the relationship. The case will go back to the lower court to apply the new standard. The interns’ attorney says the new standard overlooks unpaid interns’ productive labor provided to the employer.

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Today’s News & Commentary — July 2, 2015

Los Angeles is set to ease the minimum wage requirements for some nonprofits, according to the Los Angeles Times. On Tuesday, the City Council agreed that nonprofits that hire and train disadvantaged workers, such as former inmates and the homeless, will not be required to pay them L.A.’s new minimum wage for the first year and a half of their employment. The proposal came in response to warnings by certain nonprofits that without such an exemption, they would not be able to help as many people. The L.A. County Federation opposed the plan, but a number of workers being assisted by these nonprofits, as well as the SEIU Local 72 and various business groups, supported it.

The Los Angeles Times also reports that in response to a “billing debacle” at the L.A. Department of Water and Power, in which the DWP sent inaccurate bills to many customers, a watchdog group has issued a report criticizing the way the agency hires and contracts workers. It claims that municipal rules and union agreements slow down the hiring process, which rendered the DWP unable to hire enough new workers to deal with the erroneous billing system and respond to customer complaints. The report recommends various changes to current hiring practices, and hopes that some of these changes will rectify what it sees as an “imbalance between labor and management.”

The private sector added 237,000 jobs in June. This figure comes from a national employment report compiled by payroll processor Automatic Data Processing (ADP) and reported in the Wall Street Journal and the New York Times. The ADP report comes ahead of the Labor Department employment report, which will be released later today. Economists expect that the Labor Department will report an increase of 233,000 non-farm jobs (which include government positions). This will push the unemployment rate to 5.4%. Although many expect the unemployment rate to continue to drop, the Wall Street Journal notes that it may take more time than economists think.

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Today’s News & Commentary — July 1, 2015

As we reported earlier this week, President Obama announced Monday his new plan to extend overtime protections to salaried workers making up to $50,440 a year, a jump from its current level of $23,660, where it has stood since 1975.  While the $23,660 threshold rendered over 60% of full-time workers eligible for overtime in 1975, now the rate only covers 8% of workers, according to the Los Angeles Times.  Labor Secretary Thomas Perez said yesterday that this “proposed overtime rule goes to the heart of what it means to be middle-class in America,” and that “it’s no coincidence” that as the threshold for overtime pay has “atrophied,” “so too has the middle class’s ability to get ahead and stay ahead.”  The proposed rules will soon be open to public comment for a 60 day period, and the administration hopes that if the rule is adopted by the end of the year, it will be implemented in January 2016.

Many labor advocates are supportive of the proposal.  The Los Angeles Times reports Chris Tilly, director of the UCLA Institute for Research on Labor and Employment, supports the action, explaining that many in managerial roles “may hold the key to the store, but they’re mopping up spills and taking orders just like everyone else.”  Ken Jacobs, chairman of the UC Berkeley Center for Labor Research and Education lauds the plan for addressing wage issues not only for the workers at the bottom, but for workers in the middle.  The New York Times editorial board also writes that the new rules would “help remedy a severe imbalance in the economy,” and warns opposition: “No party and no politician that opposes the new overtime rules can credibly claim to care about the middle class.”

On the other hand, The Wall Street Journal reports that the proposal has drawn fire from companies and business groups, who warn that it will curtail work hours and dent job growth.  The National Restaurant Association and the National Retail Federation have also been outspoken in opposition.  They argue managers will have to give up some of the perks that come with being a manager, including bonuses and flexibility.  The U.S. Chamber of Commerce ridiculed the administration for adding burdens on employers and hurting small businesses.  Lydia DePillis at The Washington Post fleshes out some of these concerns held by small businesses, as they seek to navigate the proposed overtime rule.  The Wall Street Journal considers this new proposal a recent addition to the “complicated relationship” President Obama has had with labor since the beginning of the President’s first term.

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Roundup of Coverage on Friedrichs Cert. Grant

Since yesterday’s announcement that the Court has voted to hear Friedrichs v. California Teachers Ass’n, a variety of major news outlets and commentators have reported on the case.

Over at the Los Angeles Times, David Savage observes that Friedrichs “comes at a time when public-sector unions are already being targeted by Republican governors in formerly strong union states like Illinois, Michigan and Wisconsin.” Against that backdrop, a spokesperson for CTA contends that “only a small percentage of teachers” — the statewide union has approximately 325,000 members, plus an additional 31,000 agency-fee payers — “chose to pay the lower nonmember fees rather than full dues.” Savage also notes that the petitioners in Friedrichs are represented by Michael Carvin of Jones Day, who recently (and unsuccessfully) litigated King v. Burwell. OnLabor‘s Professor Sachs, as well as frequent OnLabor guest contributor Professor Catherine Fisk, are both quoted in the article.

Lyle Denniston of SCOTUSblog takes a good, quick look at the history of fair-share agreements, writing that the doctrinal underpinnings of Abood “go[] back at least to 1944.” He also describes the fast-track legal strategy employed by petitioners’ counsel, who were “[r]eacting to an undoubted invitation by the Supreme Court [in Harris v. Quinn] to raise the issue” of Abood‘s viability. Finally, of note to those of you who may be wondering about the timing of future developments in this case: Denniston predicts that oral argument will likely take place in December or January, right in time for “[a] final ruling [that] may emerge . . . in the midst of a presidential election campaign in which the role of labor unions in American life could be a visible issue.”

Politico‘s Brian Mahoney notes that the Friedrichs grant comes “[j]ust days after the Supreme Court cheered unions and the rest of the liberal coalition by sanctioning gay marriage and the Affordable Care Act.” Comparing Justice Kagan’s dissent in Harris v. Quinn to Chief Justice Roberts’s dissent in Obergefell v. Hodges, Mahoney goes on to contend that the Court’s recent decisions suggest that “the court disagrees on just what issues it should let the states and citizens decide.”

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Guest Post: Scalia May Be Critical Vote in Friedrichs v. California Teachers’ Ass’n

Catherine Fisk is Chancellor’s Professor of Law at the University of California, Irvine.

The Court today granted review in Friedrichs v. California Teachers’ Ass’n.  This suggests that four Justices may want to extend to public school teachers the right-to-work regime the Court imposed on home care workers in 2014 in Harris v. Quinn.  That is no surprise.  But while it takes the votes of only four Justices to grant review in a case, it is not obvious that there are five votes on the Court to overrule 30 years of precedent and hold unconstitutional a settled principle in the public sector labor laws of half the states.

The petitioners in Friedrichs argue that California school districts violate the First Amendment rights of public school teachers by agreeing that all teachers who are represented by the union must pay their fair share of the cost the union incurs negotiating and administering a collective bargaining agreement.  Under California’s public sector labor laws, like those of almost every other state, the union owes a duty of fair representation (DFR) to all employees it represents.  The DFR requires the union to enforce the contractual rights of all the employees it represents, without regard to whether they are members.

In Abood v. Detroit Board of Education in 1977 the Court rejected the constitutional argument that the petitioners want the Court to accept in Friedrichs.  Abood held that, although public school teachers cannot be required to join a union or to contribute to the union’s political expenditures, they can be required to pay their fair share of the costs the union is required by law to incur in negotiating and administering an agreement on behalf of all teachers.

In Harris v. Quinn, the Court had been invited to overrule Abood, but the Court instead distinguished Abood and limited its ruling to home care workers. The majority reasoned that the state agency and the union did not have enough responsibility over the conditions of employment of home care workers to make it necessary for unions to charge fees for the services that the DFR requires them to provide. Justice Alito’s opinion in Harris criticized Abood at length, but there apparently wasn’t a fifth vote to overrule Abood.

The mystery of Friedrichs is whether there is now a fifth vote.  Justice Scalia may be crucial.  Continue reading

Friedrichs, Harris v. Quinn and the future of Public Sector Fair Share Agreements?

It is way too early to make predictions about the outcome of Friedrichs v. CTA, but if you’re interested in what a Friedrichs opinion authored by Justice Alito overruling Abood would look like, you might read Part II of Justice Alito’s opinion in Harris v. Quinn.  There, writing for a five-justice majority, Justice Alito begins by calling Abood an “anomaly” (something he also argued in his earlier opinion in Knox v. SEIU).  As Justice Alito wrote:

The primary purpose of permitting unions to collect fees from nonmembers . . . is to prevent nonmembers from free-riding on the union’s efforts, sharing the employment benefits obtained by the union’s collective bargaining without sharing the costs incurred.  But such free-rider arguments . . . are generally insufficient to overcome First Amendment objections.

We have pointed out the flaw in this reasoning before, stressing the difference between the union context and other contexts in which the free-rider argument arises, and noting Justice Scalia’s statement of the relevant proposition from his concurrence in Lehnert v. Ferris Faculty Ass’n:

Our First Amendment jurisprudence recognizes a correlation between the rights and the duties of the union, on the one hand, and the nonunion members of the bargaining unit, on the other. Where the state imposes upon the union a duty to deliver services, it may permit the union to demand reimbursement for them; or, looked at from the other end, where the state creates in the nonmembers a legal entitlement from the union, it may compel them to pay the cost. The ‘compelling state interest’ that justifies this constitutional rule is not simply elimination of the inequity arising from the fact that some union activity redounds to the benefit of ‘free-riding’ nonmembers; private speech often furthers the interests of nonspeakers, and that does not alone empower the state to compel the speech to be paid for. What is distinctive, however, about the ‘free riders’ who are nonunion members of the union’s own bargaining unit is that in some respects they are free riders whom the law requires the union to carry — indeed, requires the union to go out of its way to benefit, even at the expense of its other interests. In the context of bargaining, a union must seek to further the interests of its nonmembers; it cannot, for example, negotiate particularly high wage increases for its members in exchange for accepting no increases for others. Thus, the free ridership (if it were left to be that) would be not incidental but calculated, not imposed by circumstances but mandated by government decree.

In Harris, though, Justice Alito moves beyond the “anomaly” point and writes that “[t]he Abood Court’s analysis is questionable on several grounds.”  These several grounds form the core of his critique and will likely feature in Friedrichs, should Justice Alito command a majority.  In sum, the questionable grounds of Abood according to the Harris opinion are: Continue reading

Supreme Court Grants Cert in Friedrichs

In a major development for the future of labor law and the U.S. labor movement, the Supreme Court has granted certiorari in Friedrichs v. California Teachers Association.  At stake is the Abood line of precedent and the constitutional permissibility of fair share agreements for public sector workers.  To put it simply, the Court may well hold in Friedrichs that a right-to-work regime is constitutionally required in the public sector.

We will have extensive coverage in the months ahead.  For relevant past posts see here and here.