Supreme Court Rules Public Sector NonMember Union Dues Are Unconstitutional

Q: Can public employees, who are not members of a union, be forced to pay union dues?

A: No. On June 27, 2018, in a 5-4 opinion, the United States Supreme Court overturned more than 40 years of precedent, ruling that it is unconstitutional to force public employees to pay agency fees.

In Janus v. AFSCME, Council 31, Mark Janus, a state employee of Illinois, refused to join AFSCME (the “Union”).  Mr. Janus strongly objected to several of the public policy positions taken by the Union.  Despite his refusal to join the Union, however, he was still required to pay a portion of the Union’s fees.  Under the Illinois Public Labor Relations Act, employees who do not wish to join the union are not required to pay full union dues, but rather must pay a percentage of the dues.  These fees, commonly referred to as agency fees, are automatically deducted from nonmembers’ wages in order to compensate the union for the costs of the collective bargaining process and related activities.

The central point of Mr. Janus’ argument was that the nonmember fee deductions are coerced political speech, violating the First Amendment. The Court held that since unions take positions on matters of public importance, requiring public employees to provide financial support to a union would infringe upon their First Amendment rights.  By acting as the exclusive representative of the employees, a union is essentially speaking for all of the employees.  Thus, when a union speaks about matters of public concern, it violates employees’ First Amendment rights, because the union is forcing individuals to endorse views that they find objectionable.

AFSCME argued that agency fees are necessary to prevent nonmembers from taking advantage of the benefits of union representation without bearing the cost. The Court explained that unions receive several benefits simply from being designated as the exclusive representative of the employees.  For example, unions are given a privileged place in negotiations with employers over wages, benefits, and working conditions.  Therefore, it is in the union’s best interest to represent even nonmembers because it allows them to retain their power and control over the administration of the collective-bargaining agreement.  In addition, the union argued that the nonmembers’ First Amendment rights were not restricted because the fees collected by unions only cover collective bargaining, and not political and ideological activities.

The Court found in favor of the nonmembers, stating that it is unconstitutional to force those nonmember employees to pay agency fees. The majority opinion, written by Justice Samuel Alito, ruled that states and public-sector unions “may no longer extract agency fees from nonconsenting employees … The procedure violates the First Amendment and cannot continue.”

Although this decision applies directly to public-sector unions, it could result in a decline in the labor movement generally. Twenty-eight states already have “right to work” statutes in place, banning unions from requiring nonmembers to pay agency fees.  However, unions are steadfast in many of the remaining states, including Pennsylvania.  The elimination of mandatory agency fees for nonmembers may reduce membership across the country, and thus, weaken unions generally.  Justice Alito seemed to recognize this, stating:  “We recognize that the loss of payments from nonmembers may cause unions to experience unpleasant transition costs in the short term, and may require unions to make adjustments in order to attract and retain members.”

— Tracey E. Diamond and Lula T. Weldekidan, Law Clerk


Using Employees’ Fingerprints for Timekeeping: Protecting Employee Data and Minimizing Risk

Q.  Can my Company institute a timekeeping system that uses fingerprints to track time?

A. Employers increasingly maintain timekeeping systems that require employees to clock in and out of work using their fingerprints to reduce the risk of coworkers clocking in for each other (so-called “buddy punching”) and to increase the accuracy of time reporting. Fingerprints are biometric data, and some employees fear that their data could be stolen or sold, leading to identity theft. The damage caused by identity theft is greater when biometric data is stolen because, unlike Social Security numbers or other personally identifiable information, an individual’s biometrics cannot be changed.

At present, there is no federal statute regulating employers’ use of employees’ biometric data, and just three states — Illinois, Texas and Washington — have laws that specifically regulate biometric privacy.1

For more information about this topic, click here.

Susan K. Lessack


Let Them Eat Cake: U.S. Supreme Court Admonishes Colorado Civil Rights Commission to Avoid Anti-Religious Bias

Q: Can an employer discriminate against members of the LGBT community on the basis of the employer’s religious beliefs?

A.  On June 4, 2018, the United States Supreme Court ruled in favor of a bakery that refused to bake a wedding cake ordered by a same sex couple because of the baker’s religious beliefs. The baker argued that requiring him to create a cake for a same-sex wedding would violate his right to free speech by compelling him to exercise his artistic talents to express a message with which he disagreed, and that it would also violate his right to the free exercise of religion. The opinion was eagerly anticipated, as it was expected that the Court would provide some clarity on the question of whether an LGBT individual’s right to be protected from discrimination trumps an employer’s or business owner’s exercise of its sincerely-held religious belief.  The Court failed to address the substantive First Amendment issue, however, and instead focused its decision on the Colorado Civil Rights Commission’s failure to remain a neutral decision-maker.

In Masterpiece Cakeshop, Ltd, et al. v. Colorado Civil Rights Commission et al., a Colorado bakery owned and operated by a devout Christian refused to create a wedding cake for a same sex couple because of his religious opposition to same-sex marriages—marriages that Colorado did not then recognize.  The couple filed a charge with the Colorado Civil Rights Commission, pursuant to the Colorado Anti-Discrimination Act (CADA),which prohibits discrimination based on sexual orientation, not only in employment, but also in a “place of business engaged in any sales to the public and any place offering services . . . to the public.”  The Commission ruled in the couple’s favor, concluding that the shop’s actions violated CADA.  The Colorado state court affirmed the ruling.

The U.S. Supreme Court reversed the decision, however, siding with the baker. The Court focused on comments made by the Commission that were disparaging towards the baker’s religious beliefs, concluding that the Commission had failed to apply state laws in a manner that was neutral towards religion.  According to the Court, while “gay persons and gay couples cannot be treated as social outcasts or as inferior in dignity and worth,” and that “the exercise of their freedom on terms equal to others must be given great weight and respect by the courts,” in ruling in favor of the same sex couple, the members of the Commission displayed open hostility towards religion.

The Court focused on comments by one commissioner during a public meeting on the case that “[f]reedom of religion and religion has been used to justify all kinds of discrimination throughout history, whether it be slavery, whether it be the holocaust… it is one of the most despicable pieces of rhetoric that people can use to—to use their religion to hurt others.” The Court noted that:  “To describe a man’s faith as ‘one of the most despicable pieces of rhetoric that people can use’ is to disparage his religion in at least two distinct ways: by describing it as despicable, and also by characterizing it as merely rhetorical – something insubstantial and even insincere. . . .  This sentiment is inappropriate for a Commission charged with the solemn responsibility of fair and neutral enforcement of Colorado’s anti-discrimination law—a law that protects discrimination on the basis of religion as well as sexual orientation.”

The Court also observed the Commission’s difference in treatment between this case and the cases of other bakers, where the Commission upheld the bakers’ conscience-based right to refuse to bake cakes with anti-gay messages. The Court found that the Commission’s treatment of these cases was inconsistent, and reflect a bias against Masterpiece Cakeshop’s religious beliefs.  Accordingly, the Supreme Court held that the Commission’s treatment of the case violated the State’s duty under the First Amendment not to base laws or regulations on hostility to a religion or religious viewpoint.

The Masterpiece Cakeshop case is a very narrow decision, and failed to address the underlying issue at stake – whether the First Amendment’s free exercise and free expression clauses protect the baker’s right to deny services to same-sex couples.  In fact, the Court concluded its opinion by stating that: “The outcome of cases like this in other circumstances must await further elaboration in the courts, all in the context of recognizing that these disputes must be resolved with tolerance, without undue disrespect to sincere religious beliefs, and without subjecting gay persons to indignities when they seek goods and services in an open market.”

Although we will have to wait for future decisions to address the underlying Constitutional issues at play in this case, the Court expressly reaffirmed that certain laws provide protection for LGBT individuals against discrimination, while also noting that these laws must be applied in a manner that is neutral toward religion.  Regardless of the narrow grounds upon which the Supreme Court decided this particular case, we recommend that employers treat sexual orientation and gender identity and expression as protected classifications.  The EEOC has issued guidance finding that Title VII’s protections against discrimination “based on sex” extend to LGBT individuals, and numerous Circuit Courts of Appeals have extended Title VII’s reach in this manner.   Moreover, state statutes and local ordinances in many jurisdictions expressly prohibit discrimination based on sexual orientation and gender identity.

Tracey E. Diamond

Kali T. Wellington-James



NFL No-Kneeling Compromise: Implications for the Workplace


Q: Can private employers limit workplace speech and activities?

A: Yes, but only if the limits do not violate other laws.

On May 23, 2018, the NFL issued a new rule that will require all players on the field to stand for the national anthem. The NFL will also impose fines to teams whose players, coaches, or staff fail to follow the new rule.  NFL Commissioner Roger Goodell stated the new rule is a compromise because it does not require players to enter onto the field for the national anthem.  If players choose to enter onto the field, however, they are required to stand for the national anthem.

The NFL rule comes after a contentious and highly publicized 2017 football season. A number of players around the league knelt during the national anthem to protest racial injustice and bring attention to this cause. In response to these protests, President Trump tweeted that players who kneel during the national anthem should be suspended or fired.  Vice President Mike Pence walked out of an Indianapolis Colts game after players knelt for the national anthem.  Several individual teams, such as the Dallas Cowboys, imposed their own sanctions against players who knelt.  Most teams did not.

The new rule illustrates how private employers, such as the NFL, may limit workplace speech and activities. Generally, an employee’s workplace speech is not protected by the First Amendment.  The First Amendment prohibits the government, not private employers, from infringing upon a person’s freedom of speech and religion.  The NFL, as a private employer, is not a government actor, and therefore cannot violate the First Amendment.  As a general matter, private employers are free to prohibit or restrict speech in the workplace about non-work topics such as politics and  social conditions outside the workplace.

That does not mean that private employers may intrude on all forms of speech by employees, however, because some workplace speech is protected by laws other than the First Amendment.  Employers may not violate these other laws when limiting workplace speech.  For example, Title VII of the Civil Rights Act of 1964, which prohibits employers from taking adverse action against an employee for being a member of a protected class such as race, also prohibits retaliating against an employee for reporting workplace discrimination based on race or other protected classfications.  Under federal labor laws, employers also cannot discipline or terminate employees for their involvement in protected “concerted activity,” such as discussing wages, employment terms or working conditions and forming a union. As a result, employers should be cautious when disciplining or terminating employees for their speech in the workplace or about working conditions.

If speech is not protected by other laws, employers can discipline or terminate employees. Employers also have an have an interest in keeping the workplace professional and efficient.  Provided it does not violate other laws, employers may terminate employees whose workplace speech is disruptive or hinders workplace performance.

Many employers wish to avoid disputes and hard feelings between employees, which often arise from differing opinions over sensitive topics, particularly in today’s charged political and social environment. Virtually all employers want to avoid having those topics spill into communications with customers and important commercial partners.   As a result, many employers choose to implement policies or rules governing workplace speech.  Private employers are free to do that, but they must be wary of the line between protected and non-protected speech.

Employers should consider implementing training for supervisors and employees discussing what speech is and is not appropriate in the workplace.   HR staff should also be aware of what speech is protected in the workplace.  Employers should consult with a labor and employment attorney if they have any questions about protections on workplace speech.

— Doris E. Baxley*

* Ms. Baxley is a 2018 summer associate in Pepper Hamilton’s Berwyn office. She is not admitted to practice law.


PAID Program Provides a Way to Resolve Overtime and Minimum Wage Violations

Q.  I suspect that our company may have inadvertently committed overtime and minimum wage violations. Is there a way I can make this right without incurring substantial legal liability?

A.  Possibly. Earlier this year, the United States Department of Labor (DOL) Wage and Hour Division announced the creation of a new nationwide pilot program called the Payroll Audit Independent Determination (PAID) program. In short, the PAID program encourages employers to conduct payroll self-audits and, if they discover overtime or minimum wage violations, self-report those violations to the DOL and work with the DOL to rectify the problem and ensure employees are paid any wages owed.

Before reaching out to DOL in an effort to resolve any pay issues under PAID, employers must certify that they have read certain compliance materials about the federal Fair Labor Standards Act (FLSA). After reviewing the compliance materials, employers can self-audit their payroll practices by themselves. While the materials on the DOL website about the PAID program do not address attorney involvement, a company may consider conducting a payroll audit under the direction of an attorney. One benefit of auditing payroll practices under the supervision of an attorney is the potential to keep confidential the legal analysis and conclusions from such an audit under the attorney-client privilege. However, if an employer chooses to resolve any wage and hour issues with the DOL through the PAID program, information collected in a payroll audit inevitably will need to be disclosed to the federal government.

The PAID program is not available to employers to resolve claims that are already being investigated or litigated. Further, if either DOL or a court has determined in the past five years that the employer has violated the FLSA by engaging in the same compensation practices at issue in the proposed PAID self-audit, an employer will be prohibited from participating in PAID.

The benefit of this program? After evaluating information provided to it, DOL can accept a company into the PAID program and then facilitate the payment of wages to employees in exchange for employees agreeing to release claims with regard to the particular FLSA violation at issue—all while the company avoids the payment of liquidated damages and attorneys’ fees. Companies typically cannot require employees to waive wage claims unless the process is supervised by a court or the DOL.

The major downside? Neither the employer nor the DOL can force an employee to sign a waiver and release of claims. Employees may opt to accept payment and sign a release of claims or they can decline to accept payment and then file a private lawsuit with the knowledge that its employer believes it may have violated the law. However, an employee may be reluctant to file a private lawsuit because of the likelihood that it would take many years and require the employee to incur the cost of both attorneys’ fees and litigation.

In addition, it is possible but not certain that the DOL may share this information with other agencies, resulting in further liability.   It also appears unclear whether the DOL will apply a two year or three year statute of limitations to employers who participate in the PAID program.

The PAID program’s impact on employee claims under state wage and hour laws is uncertain. According to the DOL website, DOL “may not supervise payments or provide releases for state law violations.”  Thus, even if an employee signs a release of claims while participating in the PAID program, the employee may not release claims under state law. As such, a state labor department or private plaintiff may still try to recover unpaid wages, liquidated damages, and attorneys’ fees if available under state or local law.

As a pilot program, much remains to be seen about how the PAID program will actually be implemented. There are perhaps just as many risks as there are benefits for an employee participating in the PAID program. If your company is interested in conducting an audit of its payroll practices, or exploring the possibility of participating in the PAID program, please contact any member of the Pepper Hamilton Labor & Employment group.

Lee Tankle