Supreme Court Round-up: Agency Fees Violate First Amendment and Money Does Not Include Stock Options

At the end of June, the Supreme Court issued two opinions, one of which had been years in the making.   A divided Court overruled Abood v. Detroit Bd. of Ed., 431 U. S. 209 (1977) and held that laws requiring public sector employees to pay agency fees to unions violate the non-union employee’s First  Amendment rights.  The problem of free riders (who get the benefits of union representation without sharing in its costs) and the desire for labor peace were found not to constitute compelling overriding justifications to require non-union employees to subsidize the speech and activities of private organization with which they disagree or object. “States and public-sector unions may no longer extract agency fees from nonconsenting employees.  . . . Neither an agency fee nor any other payment to the union may be deducted from a nonmember’s wages, nor may any other attempt be made to collect such a payment, unless the employee affirmatively consents to pay.”   Janus v. AFSCME Council 31, 585 U.S. ___ (2018).    In the second case, the Court was faced with a question under the Railroad Retirement Tax Act, which was enacted in 1937 before it became relatively common to compensate employees with stock options.  The Tax Act taxed “compensation,” which the Act defined as “money remuneration.”    A divided Court concluded that while money may include direct deposit, it does not include stock options.  Therefore, compensation to railroad employees by the award of stock options was not taxable under the RRTA. Wisconsin Central Ltd v. U.S., No 17-530 (June 21, 2018). 

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can be changed or amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney