Court: Non-Union Members Entitled To "True" Financial Audits
>That would better protect the public workers’ First Amendment rights not to associate with labor unions and to pay their “fair share” of a union’s costs, the US 3 rd Circuit Court of Appeals ruled, according to a Legal Intelligencer report.
“We recognize that our decision
might place high costs on some local unions. However,
non-members’ First Amendment freedoms may not be eroded
simply because they are costly to enforce,” Appeals Judge
Thomas Ambro wrote. “We hold that every union collecting
fair-share fees from non-members must subject its
disclosed financial information to independent auditor
verification.”
But the appeals judges also handed
victories to both sides. The court ruled that local
unions can require those same non-union-member workers to
pay for litigation costs incurred in a pooling agreement
with other local unions since such pooling of expenses is
“akin to insurance.”
“Even if a local union party to
such an arrangement does not litigate in any given year,
it still derives a tangible benefit from participating in
an expense-pooling agreement: the availability of on-call
resources greater than those it could muster
individually,” Ambro wrote.
And in a second victory for
unions, the court rejected the non-union workers’
argument that they should not be required to pay for the
union’s work on collective-bargaining issues for other
professions. Ambro said unions “may pool costs across
occupational groups,” because such an arrangement
“generates economies of scale” that benefit all workers.
“By spreading the costs of otherwise-chargeable expenses
over a pool of employees,” Ambro said, the non-union
workers “reduce their risk of being assessed unusually
high chargeable expenses in any given year.”
A Teacher Challenge
In the case before the 3
rd
Circuit, seven non-union educators challenged the
fair-share fee procedure and assessments of the Shaler
Area Education Association (SAEA), the exclusive
bargaining representative for workers employed by the
Shaler Area School District. SAEA is the local affiliate
of both the Pennsylvania State Education Association, a
statewide union that represents both education and
healthcare professionals, and the National Education
Association.
Because all three unions provide
collective-bargaining services to the plaintiffs’
bargaining unit, the plaintiffs paid fair-share fees to
all three, the appeals opinion said. Ambro found that the
framework for charging fair-share assessments was
established by the US Supreme Court in a 1986 decision
known as the Hudson case. Under Hudson, a union may not
collect fair-share dues to support ideological causes or
other expenses unrelated to collective bargaining, such
as organizing costs.
To comply with Hudson, unions must
provide non-members with a “Hudson notice” that includes
“sufficient information to gauge the propriety of the
union’s fee.” Ambro found problems with limiting required
disclosures to just the “Hudson notice,” writing that
“when theory meets practice, questions abound.”
A True Audit
In the appeal brought by the SAEA
plaintiffs, Ambro said, the court had to decide whether
Hudson
‘s independent auditor requirement applies to a small
union such as SAEA that says its costs of conducting such
an audit would be greater than the fair-share payments it
receives. Lawyers for the unions also argued that that
SAEA’s finances are so simplistic that non-members can
obtain “sufficient information” by simply examining its
documents themselves.
Ambro found that Hudson requires a
true audit. “Compilations and reviews do not provide an
adequate basis for a non-member to decide whether to
object to a fair-share fee,” Ambro wrote.The case is
Otto v. Pennsylvania State
Education Association.
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