Organized labor’s multi-state scheme to gain members, money and influence began to unravel in 2009 when a Michigan housewife started searching for answers on why “union dues” were being taken out of the checks she received from the State of Michigan for providing daycare to parents who were in a welfare to work program. Sherry Loar owns Baby Steps Childcare Center, a limited liability corporation that she operates out of her home in Petoskey. Sherry’s persistence led to the investigation and discovery of the breadth of the union scheme and its flimsy legal justification. Now, nearly five years later, the United States Supreme Court has examined a similar arrangement from Illinois and held that it violated the First Amendment rights of home-based caregivers, thereby freeing hundreds of thousands of individuals and preventing the illegal flow of tens of millions of “dues” to public-sector unions.
For decades, organized labor has lost membership (and therefore dues money) in the private sector. It tried to make up for these losses by unionizing public-sector employees such as teachers, firefighters and bureaucrats. Eventually, the public-sector unionization effort plateaued while the private-sector unions continued to hemorrhage.
Labor then took note of large federal appropriations made to the states to implement Medicaid programs and the Temporary Assistance for Needy Families (TANF) block grant. It saw that people like Sherry Loar were being paid by her clients with the help of subsidies. Labor also saw the subsidies being paid to people like Patricia Haynes of Macomb Township who (with assistance from her husband Robert) provides home help assistance to her two disabled children Kevin and Melissa — both of whom suffer from cerebral palsy. Under Medicaid, Patricia’s children essentially hire her to provide care and the state subsidizes it.
Seeking to obtain a revenue stream from these payments, labor concocted a theory that the use of government subsidies meant that the services provided were really government services and that the service providers were therefore public employees who could be unionized. This idea was given a test run in Illinois in the mid-1980s. In a little-noticed decision, an Illinois labor agency rejected the unionization attempt, stating “There is no typical employment arrangement here, public or otherwise.” Labor then turned to California. Again, it attempted to organize home help workers against Los Angeles County. In 1990, a California appellate court rejected the concept that the county employed the providers.
Undeterred, organized labor tweaked its theory. Needing to make the providers’ ties to government stronger, the unions sought to create a government agency that would be designated as the “employer” for collective bargaining purposes, thereby giving the union something to bargain against. This idea was accepted by the California Legislature, which created the first of these faux employers. Labor organized “against” that employer and managed to net 78,000 “employees” and started charging them dues.
This scheme was then exported to other states. In Washington and Oregon, it was actually approved after a statewide election. Labor then sought to bring this theory to states where there were Democratic governors. Illinois’ then-Gov. Rod Blagojevich was one of the first. Despite the Illinois labor agency ruling, he entered an executive order allowing unionization of home help providers.
Another governor that the unions turned to was Michigan’s Gov. Jennifer Granholm. The first to arrive was the SEIU, which sought the creation of a faux employer so that Michigan’s home help workers could be unionized. Gov. Granholm had this done through an interlocal agreement. The next two unions that sought her aid were the UAW and AFSCME. They sought a faux employer to unionize the home-based day care workers. A new joint union was created for the day care providers.
Each new “employee” group was around 40,000 individuals. The home help unionization got the SEIU around $6 million a year, while the day care providers netted their new union around $2 million a year.
It was just after the day care union started collecting dues that Sherry Loar contacted the Mackinac Center. Serendipitously, the Mackinac Center was at that time looking to open a litigation arm. Sherry was to become the Mackinac Center Legal Foundation’s first client. We announced a challenge to the day care unionization in September 2009. Eventually, Sherry was joined by Michelle Berry of Flint and Paulette Silverson of Brighton.
Within a few months of filing our case in the home-based day care stealth unionization scheme, Michael Jahr, our former vice president for communications, and I co-authored op-eds about the situation for The Wall Street Journal and The Weekly Standard which ran two days apart in December 2009. In between those two days, John Stossel wrote about the plight of Sherry Loar on the Fox Business Channel website.
Stossel followed that in February 2010 with a four-minute on air segment on our case, and an even larger audience heard about it the following day when radio host Rush Limbaugh discussed it on his show.
When the stealth unionization finally ended in March 2011, it was noted by The Washington Post, Boston Globe, The Washington Examiner and both major Detroit papers.
Later in 2011, our legal efforts to combat the stealth unionization of home-based caregivers drew national attention. Robert and Patricia Haynes were featured on Fox Business, National Review Online, The Weekly Standard, The Washington Times and Rush Limbaugh, again, also covered that story. In that case, we also represented Stephen Glossop, who was looking after his mother.
Our efforts led others in the freedom-based movement to look at and fight these unionization efforts in their own states. It also led to other litigation. About five months after the Mackinac Center filed its day care suit, which was based on state-law issues, the National Right to Work Legal Defense Foundation (NRTWLDF) filed a proposed federal class action suit in Michigan. It also filed a similar proposed class action in Illinois against that state’s home help program. This latter case was Harris v Quinn. The plaintiff was Pamela Harris who was suing Illinois Gov. Pat Quinn (Gov. Blagojevich’s successor).
Both the district court and the United States Court of Appeals for the Seventh Circuit improperly rejected the claims. NRTWLDF sought Supreme Court review. The Mackinac Center Legal Foundation joined with the Cato Institute and the National Federation of Independent Business in suggesting that the court take the case. After the Supreme Court agreed to hear that case, the Mackinac Center Legal Foundation filed an amicus brief showing the similarities between the Illinois scheme and the schemes the unions had created in other states. We recommended that the Supreme Court hold that all of these schemes did not concern “public employees” and therefore that no forced dues or fees were permissible.
NRTWLDF courteously extended an offer for us to assist with oral argument preparation and I acted as one of the moot court judges the Thursday before argument for William Messenger, the NRTWLDF attorney who argued the case. The oral argument occurred in January 2014 despite a snow storm that shut down the rest of DC. Mackinac Center President Joe Lehman, Executive Vice President Mike Reitz, Marketing and Communications Team Leader Dan Armstrong and I attended oral arguments to watch the unflappable Messenger.
On June 30, 2014, the Supreme Court announced that Pam Harris had won. The court, in a 5-4 decision, held that people like Pam Harris, Sherry Loar, Michelle Berry, Paulette Silverson, Patricia Haynes and Stephen Glossop would no longer have unions improperly diverting money from them for the services they provided to some of this country’s neediest citizens. This ruling will affect hundreds of thousands of individuals and could prevent the unions from improperly taking more than $100 million in improper dues annually.
The decision also opens the door for the Mackinac Center Legal Foundation to seek a repayment of the dues money taken by the SEIU from home-based caregivers, an amount that exceeds $34 million.
Every now and again, an individual’s refusal to accept a wrong leads to amazing things.
