PERB: Employer Must Let Employees Vote On Modified Agency Shop Provision

Orange County Water District (2015) PERB Decision No. 2454-M (Issued on 09/23/15)

With the Friedrichs v. California Teachers Association (Friedrichs) case before the Supreme Court, the issue of public sector agency fees is a topic on everyone’s mind. This case was spawned, in part, by worry over the potential consequences of Friedrichs. The issue here involved a Modified Agency Shop (MAS) agreement proposed by the Orange County Water District Employees Association (Union). The “modification” was that only new employees would be required to pay agency fees; current employees would be exempt.

The employer refused to agree to the MAS agreement because it considered the provision illegal since it didn’t apply to all employees. Pursuant to MMBA section 3502.5(b), the union then presented a petition seeking an election to impose the MAS agreement. The employer refused to provide its consent for such an election on the grounds that the provision was illegal. This unfair practice charge followed.

In its decision, the Board affirmed and adopted the ALJ’s proposed decision. The ALJ’s proposed decision traced the history of agency and union shop provisions in both the Meyers-Milias-Brown Act and the National Labor Relations Act. The ALJ concluded that the language of MMBA section 3502.5(b) was intended to reduce the control of the employer over whether an agency shop provision could be implemented. The ALJ further concluded that historically, there has never been a uniform definition or understanding of an agency shop provision and that many variants exist; therefore there was nothing illegal about the MAS agreement. As for the employer’s argument that employee rights are violated by the MAS agreement, the ALJ concluded that the employer lacked standing to make such an argument. Accordingly, the ALJ held, and the Board affirmed, that the employer committed an unfair practice by refusing to consent to the election required by MMBA section 3502.5.

Comments:

This was an issue of first impression before PERB. In a footnote, the Board urges that the ALJ’s proposed decision be read. I agree. The ALJ’s proposed decision delves into the “rich labor history” behind the various forms of union security arrangements in both the private and public sector. Anyone who wants to understand why and how these agreements came about should read the ALJ’s proposed decision.
I had previously heard of a “modified union shop” provision, but not a “modified agency shop” provision in the way it is used here. As the employer emphasized in this case, the MAS agreement here seems to run counter to the traditional purpose of agency fees, which is to prevent the “free-rider” effect.
According to the Union’s website, the MAS agreement is good for employees because: “[I]t creates union security at the Water District. By going forward with the petitions and election we are sending a message to the Water District that the employees are united and committed to protecting our voices and our livelihoods. Also, in the future all employees will have to contribute so there will be no more ‘free rides.’” However, this explanation would apply to a traditional agency shop provision where everyone must pay either union dues or agency fees. This explanation does nothing to explain why current employees should be exempt from such fees.
One of the reasons the employer took the position it did was because of the looming Friedrichs decision. The employer was worried about liability if the Supreme Court invalidated public sector agency shop agreements. However, PERB felt that under the circumstances here, the indemnification provided by MMBA section 3502.5 is sufficient to protect the employer in such an event.