APNewsBreak: Illinois Governor orders agencies to divert 'fair share' fees away from unions

Illinois Gov. Bruce Rauner, dogged in attempts to eliminate fees paid to unions by workers who choose not to join, has instructed state agencies to divert money from nonunion employee paychecks away from organized labor until a judge settles the matter.

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In a memo obtained by The Associated Press, general counsel Jason Barclay directs departments under the Republican governor's control to create two sets of books, one of which would move deductions from nonunion members to the operations budgets of state agencies instead of to the unions, although the money would not be spent.

The idea was immediately condemned by the American Federation of State, County and Municipal Employees, the largest of two dozen unions that filed a countersuit over an executive order Rauner signed last month calling the fees a free-speech violation. He's seeking a federal court's declaration that they are unconstitutional.

"This legally questionable scheme shows the lengths to which Gov. Rauner will go in his obsession to undermine labor unions," Roberta Lynch, executive director of the Illinois council of AFSCME, said in a prepared statement. "To frustrate lawful fair-share agreements, Rauner is ordering payroll staff to make unauthorized reductions in employees' established salaries."

The process outlined in the memo calls for preparing one payroll report with the "proper pay" and one, to be processed, that reduces the worker's gross pay by an amount equal to what nonunion workers normally pay in so-called "fair share" fees. It is not clear how the deductions would affect federal tax withholding or health-insurance payments. Taxes are based on gross pay — if that amount is lower, less is withheld, creating potential headaches down the line.

"We are confident in the process laid out in the memo," Rauner spokeswoman Catherine Kelly said in a prepared statement. "It's no surprise that AFSCME is doing everything in their power to deny state employees from exercising their First Amendment rights."

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Rauner, a businessman who admires Republican governors of Indiana, Wisconsin and elsewhere who have reduced union power, has also proposed "right-to-work" zones where local voters could decide whether workers should join unions. While he has said that he is not anti-union, he has frequently asserted that out-of-control union pensions and the political power of organized labor have contributed to the state's financial woes.

Lynch questioned what legal liability those payroll employees would face in issuing "inaccurate checks." The system explained in the memo exposes a level of uncertainty associated with what labor expert Robert Bruno called "virgin territory."

The memo recommends that each agency prepare a "payroll report using the normal figures," copy and save it, and then create a second payroll "needed to reduce the gross pay" and enter a zero in a category reserved for fair share amounts. Then, it says, the amounts "should be accepted by the comptroller."

Comptroller Leslie Munger, whom Rauner appointed to fill a vacancy, had stymied the governor's original plan to create a separate escrow account. Munger relied on the attorney general's opinion it would be illegal.

The memo said Munger "provided the method" for the latest plan, but after her spokesman, Rich Carter, denied that, Kelly clarified that after reviewing procedures with Munger's staff, "the governor's staff identified a way" to proceed. Carter, meanwhile, didn't answer a question about whether Munger would process the altered payrolls.

About 6,500 nonunion workers pay amounts lower than union dues — about $575 annually — to cover the costs of union negotiating and grievances. Unions must represent those who chose not to join. Rauner's action could keep about $3.74 million out of union bank accounts.

Bruno, a labor and industrial relations professor at the University of Illinois at Chicago, said Rauner's move would likely prompt a new legal action by the unions. He said if Rauner is trying to demoralize labor, it hasn't worked.

"In fact, a rather extraordinary form of unity and consensus has broken out," Bruno said.

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Contact John O'Connor at https://twitter.com/apoconnor