US Supreme Court Deals Blow to Unions, Shows Preference for Corporate “Rights“

A little-noticed U.S. Supreme Court decision from June 21 has dealt a blow to public sector unions and demonstrated the conservative majority’s preferential treatment for corporate “rights.” The decision in Knox v. SEIU could have an impact on future election cycles.

The Court’s broadly-drafted opinion establishes new burdens for unions to raise resources for certain political activities. The ruling, which has been described as an “activist decision” because it dealt with issues not before the court, is written in such a way that it could also threaten unions’ ability to raise any political funds, or even raise money for their very existence. Because unions are one of the few counter-weights to corporate spending in elections, diminishing union political power will increase relative corporate influence over politics.

Perhaps most importantly, when compared with other recent Supreme Court decisions, it becomes clear that the conservative majority is laying out a double-standard for how corporations and unions can be involved in the political process.

Court Makes New Law, Requiring “Opt-In” for Certain Union Fees

Unions have an obligation to represent all employees in a bargaining unit, regardless of whether an individual employee chooses to join the union. To avoid non-union employees reaping the benefits of this representation without paying the costs — thereby “free-riding” on the dues paid by the other employees — non-union members can be required to pay their fair share of the collective bargaining expenses.

However, employees are not required to pay for the union’s political activities. Many years ago the U.S. Supreme Court crafted a rule giving employees a right to opt-out of funding the union’s political expenses, such as campaign activities. According to the rule, unions are supposed to annually notify employees about the year’s expected expenses and give dissenting employees an opportunity to “opt-out” and not pay for the political and other costs not related to bargaining.

In this case, the SEIU issued an “emergency” dues increase, not anticipated in the annual notice, to raise funds for fighting anti-worker initiatives on the ballot in California. It did not provide dissenting nonunion employees an opportunity to opt-out of paying for the political expenses, and a handful of these employees sued. A lower court required the SEIU to send a new notice and the union refunded the expenses to non-members who requested it.

Seven justices agreed that prior to the SEIU deducting dues from nonmembers, it should have sent an additional notice about the political expenses and provided an opportunity for nonmembers to not fund the activities. But the five conservative justices went further, and like they did in Citizens United, addressed an issue that was not before the court to establish new law. Justice Alito, writing for the majority, said that unions can only assess a dues increase like this one if employees affirmatively choose to opt-in, departing from the long-standing principle that opting-out of paying for political expenses was constitutionally sufficient. This creates new bureaucratic burdens for unions to raise funds for political activity.

What’s more, the majority opinion’s language suggested that the “opt-in” requirement might apply to all mandatory dues arrangements, which could potentially end the requirement that non-union employees be required to pay the costs of union representation. This would essentially create nationwide “Right to Work” standards. And that would be a massive blow to public sector unions.

Additionally, even though Citizens United opened the door for both corporations and unions to spend more freely on elections, the Knox decision will likely mean that unions will have fewer resources with which to do so. As John Nichols notes in The Nation this impact could compel labor to get serious about a constitutional amendment to overturn Citizens United.

But there’s more.

Preferential Option for Corporations

Harvard Law Professor Benjamin Sachs notes that “the Court’s concern for avoiding compelled funding of union political speech stands in stark contrast to the lack of concern for compelled funding of corporate political speech.”

In Citizens United, the court ruled that corporations (and unions) have a First Amendment right to fund independent political expenditures from their general treasuries. If individual shareholders disagree with the way a corporation is funding political attack ads or bankrolling front groups, they have no right to opt-out and ask that their investments not be used for those purposes. Unions must get this permission. And corporations certainly have no obligation to ask shareholders (who are officially the corporation’s owners) to opt-in, and give affirmative permission for their ownership shares in the corporation to be used for political activities. The Court in Knox signaled that unions might have to get this permission.

“To put it simply,” Sachs writes, “the law gives employees the right to opt out of funding union political speech, but shareholders get no right to opt out of funding corporate political speech. This kind of differential treatment of political speakers is inconsistent with the American ideal of treating political speakers equally.”

“Taking seriously the arguments in Knox and the Court’s other cases about compelled political speech and association means extending these principles beyond the union context and to the corporate one,” he said.

There have been some legislative efforts to make this a reality. Sen. Bob Menendez (D-NJ) and Rep. Mike Capuano (D-MA) have introduced the Shareholder Protection Act, which would require shareholder approval for a company’s expenditures in the coming year, that the company’s board of directors vote on political expenditures over $50,000, and to make the vote public within 48 hours.

Erwin Chemerinsky, Dean and Distinguished Professor of Law at the University of California-Irvine School of Law, supports similar legislation on the state level. “A state can adopt a law which says that neither a corporation nor a union can spend money on political activities without the consent of the individuals. If the Supreme Court is going to require opt-in for unions, it seems only fair and appropriate that the same be required for corporate political spending,” he writes.

But in the wake of successful attacks on public sector unions in Wisconsin, Indiana, Florida and elsewhere, and with a network of right-wing institutions like the American Legislative Exchange Council (ALEC) pushing an anti-union message, passing legislation that is “fair and appropriate” may still be a long way off.