Courts have not-so-public unions scrambling

Just as the Supreme Court heard argument last month in Janus v American Federation of State County and Municipal Employees (AFSCME), a case where the court is likely to ban public sector unions from forcing non-members to pay agency fees to the union, what were those unions doing?

Going “private” to evade the likely ban.

They are pushing to privatize government operations, after over half a century adamantly opposing the very notion. The idea is simple. If the employer “goes private,” so does the union.

Of course, it isn’t real privatization. The unions’ version is to create and insert between government and employees sham “private” units to handle human resource and payroll functions and, thereby, assume the role of “legal employer.”

The huge public sector union, Service Employees International Union (SEIU), has racked up the strategy’s first success in Democrat-controlled Washington State, where Governor Inslee just signed implementing legislation enabling SEIU to evade the court’s prohibition against collecting forced union fees, already in place for a subset of public unions pursuant to the Court decision in the 2014 Harris v Quinn case.

The basis of the Harris, and, prospectively, the Janus decision, is a finding that public sector unions are predominantly political organizations, and that forcing non-members to pay agency fees forces them to support political speech with which they may disagree. The central issue in the Harris and Janus cases is whether unionization has sufficient benefits for both employer and employees to offset the degree to which the unions are political and infringe the free speech rights of non-members.

The union being privatized in Washington is a Harris union, a so-called “partial public employee,” or PPE, union. The employees are not state employees. They are deemed “partial” public employees solely because some of their income derives from state social welfare programs.

The unions may be too smart by half. Launching the privatization strategy with a PPE union may well backfire, since it puts a spotlight upon the highly political manner in which the PPE unions were created and upon the fact that PPE unions don’t provide real benefits for either the state or employees.

How PPE unions formed

PPE unions are fanciful constructions.

Take the independent health care providers, or IPs, who are the PPEs being privatized in Washington 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 a disabled or elderly family member. The IPs were only deemed public to any degree because their patient-employers pay for their services with 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. 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 construe 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 individual 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, many, if not most, PPE unions were organized by state governors – Democrats -- including Connecticut’s own Dannel Malloy. Nothing could be more political.

PPE Unions provide no real benefits

On the government side, there are no real benefits. The sham private “employer” entities just create additional bureaucracy, cost, complexity and non-transparency in government. Washington State’s Office of Fiscal Management estimates that the new private IP employer entity will cost the state $11 million annually.

On the employee side, there are no real benefits either. Real union contracts deliver job security. The PPE contracts do not. Take the case of IPs in Washington and Connecticut. The patients retain the right to hire and fire IPs, not the state or Washington’s private “employer,” with which the PPE unions “bargain” (See Section 20 of the Washington legislation or Article 6 of Connecticut’s 2014 Agreement with SEIU 1199).

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 IP unions: the state legislature can approve or reject a request for funds to implement the proposed labor rates (Section 27, the Washington legislation or Article 21 of Connecticut’s 2014 Agreement with SEIU 1199).

Nevertheless, the unions claim that their activity is traditional apolitical collective bargaining. The unions and the liberal Supreme Court 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 Elena Kagan made in the dissent in the Harris case.

But, if the PPE unions don’t provide such fundamental benefits as job security and legally binding wage rates, there’s little to “free ride.”

So, there’s no reason to allow forced agency fee payments and the associated infringement of non-members’ free speech rights. Thus, the decision in Harris.

PPE unions, regular public unions one and the same

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 two different types of unions are just different arms of the same central union organizations, SEIU and AFSCME, whose behavior in the case of the PPE unions provides overwhelming evidence of their inherently political nature and their cravenness in creating largely useless unions just for the purposes of expanding union ranks and collecting dues and fees – all the evidence 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 (and other public sector unions) from collecting forced agency fees, but also prohibits their use of sham private entities to thwart the will of the court.

Red Jahncke (Twitter: @RedJahncke) is president of The Townsend Group Intl, LLC, a Connecticut business consulting firm. A prior version of this column appeared in The Hill.

 

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