Supreme Court decision to have a profound impact on the future of unions

Just as the Supreme Court was hearing oral argument this week in Janus v. AFSCME, a case in which the court may prohibit forced agency fee payments to all public unions, those unions were about to execute a strategy to nullify the court’s 2014 decision in Harris v. Quinn, which imposed the very same prohibition upon a subset of public unions, so-called partial public employee unions.

The court’s prohibition in Harris in 2014, and prospectively in Janus, applies only to public sector unions. So, lo and behold, what are the unions doing? They are pushing the privatization of government operations, after three quarters of a century adamantly opposing the very notion. How ironic. If, however, operations are privatized, then, their unions automatically become private as well, and they can evade the court’s prohibition on agency fees.

The unions’ privatization idea is to create and insert between government and employees nominally private entities to serve as their “legal employer.” 

{mosads}However, there may be irony operating in the opposite way. The privatization gambit and the inherent nature of the unions for partial public employees, or PPEs, and the manner in which the PPE unions were created, reveal the manifestly political machinations of public sector unions, providing compelling evidence to support Mark Janus’ argument that his forced agency fees do support intensely political activity, despite the unions’ claims that their activity is predominantly apolitical collective bargaining.

PPE unions are fanciful creatures. They aren’t genuine public sector entities. Inherently, they belong more in the private sector than the public. To position them in the public sector in the first place required real maneuvering by the unions.

Take independent health care providers, or IPs, who are the PPEs about to be privatized in Washington State, where the unions are debuting their new privatization strategy. Like PPEs nationwide, Washington’s IPs do not work for the state. They are private individuals who work independently. They work for the patients for whom they care – in many cases, their “job” is to care for disabled or elderly family members. The IPs were only deemed public to any degree because their patient-employers pay for their services with public funds, specifically Medicaid and state health care benefit funds. For convenience and efficiency, the state pays IPs directly.

Washington and other mostly blue states have construed this payment function as creating employer status – at least for purposes of collective bargaining. This is curious. The very same state governments make Medicaid benefit payments directly to doctors (as does every health insurance company), yet these states do not construes themselves to be the doctors’ employer of record.

The purpose of this fantasy is straightforward. A union cannot bargain with tens of thousands of separate unconnected private individuals as employers. To create the unions, it was necessary to conjure a central employer — state governments. To accomplish this, the unions recruited blue state governors to create the unions by executive order. Yes, you read that correctly, most PPE unions were organized pursuant to executive orders issued Democratic governors. Nothing could be more political.

Now the central issue before the Supreme Court in the Janus case is whether there are benefits of unionization for both employer and employees that offset the infringement of the free speech rights of employees who disagree with union activity that many observers consider inherently political.

Let’s assess the benefits, if any, of the PPE unions. On the government side, the genuine employer side, their new incarnation as sham private unions just creates additional bureaucracy, cost, complexity and non-transparency in government. Washington State’s Office of Fiscal Management estimates that the new private IP employer entity about to be created by Senate Bill 6199 will cost the state $11 million annually.

On the employee side, there are no apparent benefits. Real union contracts deliver job security. The PPE contracts do not. Take the case of Washington’s IPs. The patients retain the right to hire, fire and determine the work schedules of IPs, not the state, or, prospectively, the privatized entities, with which the PPE unions “bargain” (Section 20 of SB 6199).

Real unions negotiate binding contracts, setting wages that the employer is bound by law to pay. Not the PPE contracts. Again, take the case of the Washington IP unions: “the legislature shall approve or reject the [governor’s] request for funds” “to implement the proposed [labor] rates” (Section 27, SB 6199).

Of course, the unions deny this analysis and claim that their activity is indeed apolitical collective bargaining. The unions and the liberal justices argue that, if non-members don’t pay agency fees, they are not paying their “fair share” of the union’s cost of bargaining, that these non-members are “free riding,” an argument that Justice Kagan made in the dissent in the Harris case.

But, if the PPE unions do not secure fundamental benefits such as job security and wage commitments to which the employer is legally bound, there’s little to “share” or “free ride.”

If there is only added cost to the state and no genuine benefit to employees, there’s no reason to allow forced agency fee payments and infringement of non-members’ free speech rights. Thus, the decision in Harris.

Now, what is the relevance of Harris to Janus? The curious PPE unions are not at stake in Janus, which involves very real unions, which do negotiate contracts with binding job security and wage provisions.

The point is that the same union organizations are behind both types of unions. The Service Employees International Union (SEIU) and the American Federation of State County and Municipal Employees (AFSCME), the defendant in Janus, are the creators of the PPE unions and the strategic actors behind the privatization initiative, activities which involve manifestly intense political machinations.

The behavior of SEIU and AFSCME with respect to PPE unions provides all the evidence of their inherently political nature that is necessary for the court to find in favor of Mark Janus in his case against AFSCME. 

In deciding in favor of Janus in his pending case, the court should issue a broad decision that not only prohibits SEIU and AFSCME from collecting forced agency fees, but also prohibits their use of sham private entities to thwart the will of the court.

Red Jahncke (@RedJahncke) is president of Townsend Group International, a business consultancy headquartered in Connecticut.