Pursuant to this scheme, respondent SEIU Healthcare Illinois & Indiana (SEIU–HII) was designated the exclusive union representative for Rehabilitation Program employees. The union entered into collective-bargaining agreements with the State that contained an agency-fee provision, which requires all bargaining unit members who do not wish to join the union to pay the union a fee for the cost of certain activities, including those tied to the collective-bargaining process. A group of Rehabilitation Program PAs brought a class action against SEIU–HII and other respondents in Federal District Court, claiming that the PLRA violated the First Amendment insofar as it authorized the agency-fee provision. The District Court dismissed their claims, and the Seventh Circuit affirmed in relevant part, concluding that the PAs were state employees within the meaning of Abood v. Detroit Bd. of Ed., 431 U. S. 209.
(a) In upholding the Illinois law’s constitutionality, the Seventh Circuit relied on Abood, which, in turn, relied on Railway Employes v. Hanson, 351 U. S. 225, and Machinists v. Street, 367 U. S. 740. Unlike Abood, those cases involved private-sector collective-bargaining agreements. The Abood Court treated the First Amendment issue as largely settled by Hanson and Street and understood those cases to have upheld agency fees based on the desirability of “labor peace” and the problem of “ ‘free riders[hip].’ ” 431 U. S., 220–222, 224. However, “preventing nonmembers from free-riding on the union’s efforts” is a rationale “generally insufficient to overcome First Amendment objections,” Knox v. Service Employees, 567 U. S. ___, ___, and in this respect, Abood is “something of an anomaly,” 567 U. S., at ___.
The Abood Court’s analysis is questionable on several grounds. The First Amendment analysis in Hanson was thin, and Street was not a constitutional decision. And the Court fundamentally misunderstood Hanson’s narrow holding, which upheld the authorization, not imposition, of an agency fee. The Abood Court also failed to appreciate the distinction between core union speech in the public sector and core union speech in the private sector, as well as the conceptual difficulty in public-sector cases of distinguishing union expenditures for collective bargaining from those designed for political purposes. Nor does the Abood Court seem to have anticipated the administrative problems that would result in attempting to classify union expenditures as either chargeable or nonchargeable, see, e.g., Lehnert v. Ferris Faculty Assn., 500 U. S. 507, or the practical problems that would arise from the heavy burden facing objecting nonmembers wishing to challenge the union’s actions. Finally, the Abood Court’s critical “labor peace” analysis rests on the unsupported empirical assumption that exclusive representation in the public sector depends on the right to collect an agency fee from nonmembers. Pp. 8–20.
(d) Respondents’ additional arguments for sustaining the Illinois scheme are unconvincing. First, they urge the application of a balancing test derived from Pickering v. Board of Ed. of Township High School Dist. 205, Will Cty., 391 U. S. 563. This Court has never viewed Abood and its progeny as based on Pickering balancing. And even assuming that Pickering applies, that case’s balancing test clearly tips in favor of the objecting employees’ First Amendment interests. Second, respondents err in contending that a refusal to extend Abood here will call into question this Court’s decisions in Keller v. State Bar of Cal., 496 U. S. 1, and Board of Regents of Univ. of Wis. System v. Southworth, 529 U. S. 217, for those decisions fit comfortably within the framework applied here. Pp. 34–40.
Other provisions of the law emphasize the customer’s employer status. The customer “is responsible for controlling all aspects of the employment relationship between the customer and the [personal assistant (or PA)], including, without limitation, locating and hiring the PA, training the PA, directing, evaluating and otherwise supervising the work performed by the personal assistant, imposing . . . disciplinary action against the PA, and terminating the employment relationship between the customer and the PA.” §676.30(b). 1 In general, the customer “has complete discretion in which Personal Assistant he/she wishes to hire.” §684.20(b).
Other than providing compensation, the State’s role is comparatively small. The State sets some basic threshold qualifications for employment. See §§686.10(h)(1)–(10). 2 (For example, a personal assistant must have a Social Security number, must possess basic communication skills, and must complete an employment agreement with the customer. §§686.10, 686.20, 686.40.) The State mandates an annual performance review by the customer, helps the customer conduct that review, and mediates disagreements between customers and their personal assistants. §686.30. The State suggests certain duties that personal assistants should assume, such as performing “household tasks,” “shopping,” providing “personal care,” performing “incidental health care tasks,” and “monitoring to ensure the health and safety of the cus-tomer.” §686.20. In addition, a state employee must “identify the appropriate level of service provider” “based on the customer’s approval of the initial Service Plan,” §684.20(a) (emphasis added), and must sign each customer’s Service Plan. §684.10.
Three of the petitioners in the case now before us—Theresa Riffey, Susan Watts, and Stephanie Yencer-Price—are personal assistants under the Rehabilitation Program. They all provide in-home services to family members or other individuals suffering from disabilities. 3 Susan Watts, for example, serves as personal assistant for her daughter, who requires constant care due to quadriplegic cerebral palsy and other conditions. See App. 18.
Having construed the RLA to contain this restriction, the Street Court then went on to discuss the remedies available for employees who objected to the use of union funds for political causes. The Court suggested two: The dissenting employees could be given a refund of the portion of their dues spent by the union for political or ideological purposes, or they could be given a refund of the portion spent on those political purposes that they had advised the union they disapproved. 6 Id., at 774–775.
Personal assistants also appear to be ineligible for a host of benefits under a variety of other state laws, including the State Employee Vacation Time Act (see Ill. Stat., ch. 5, §360/1); the State Employee Health Savings Account Law (see Ill. Stat., ch. 5, §377/10–1); the State Employee Job Sharing Act (see Ill. Stat., ch. 5, §380/0.01); the State Employee Indemnification Act (see Ill. Stat., ch. 5, §350/2); and the Sick Leave Bank Act. See Ill. Stat., ch. 5, §400/1. Personal assistants are apparently not entitled to the protection that the Illinois Whistleblower Act provides for full-fledged state employees. See Ill. Stat., ch. 740, §174/1. And it likewise appears that personal assistants are shut out of many other state employee programs and benefits. The Illinois Department of Central Management Services lists many such programs and benefits, including a deferred compensation program, full worker’s compensation privileges, 8 behavioral health programs, a program that allows state employees to retain health insurance for a time after leaving state employment, a commuter savings program, dental and vision programs, and a flexible spending program. 9 All of these programs and benefits appear to fall within the provision of the Rehabilitation Program declaring that personal assistants are not state employees for “any purposes” other than collective bargaining. See Ill. Comp. Stat., ch. 20, §2405/3(f ).
Illinois deems personal assistants to be state employees for one purpose only, collective bargaining, 10 but the scope of bargaining that may be conducted on their behalf is sharply limited. Under the governing Illinois statute, collective bargaining can occur only for “terms and conditions of employment that are within the State’s control.” Ill. Comp. Stat., ch. 20, §2405/3(f ). That is not very much.
of bounds when it comes to personal assistants. Under federal law, mandatory subjects include the days of the week and the hours of the day during which an employee must work, 11 lunch breaks, 12 holidays, 13 vacations, 14 termination of employment, 15 and changes in job duties. 16 Illinois law similarly makes subject to mandatory collective-bargaining decisions concerning the “hours and terms and conditions of employment.” Belvidere v. Illinois State Labor Relations Bd., 181 Ill. 2d 191, 201, 692 N. E. 2d 295, 301 (1998); see also, e.g., Aurora Sergeants Assn., 24 PERI ¶25 (2008) (holding that days of the week worked by police officers is subject to mandatory collective bargaining). But under the Rehabilitation Program, all these topics are governed by the Service Plan, with respect to which the union has no role. See §676.30(b) (the customer “is responsible for controlling all aspects of the employment relationship between the customer and the PA, including, without limitation, locating and hiring the PA, training the PA, directing, evaluating, and otherwise supervising the work performed by the PA, imposing . . . disciplinary action against the PA, and terminating the employment relationship between the customer and the PA”); §684.50 (the Service Plan must specify “the frequency with which the specific tasks are to be provided” and “the number of hours each task is to be provided per month”).
Because of Abood’s questionable foundations, and because the personal assistants are quite different from full-fledged public employees, we refuse to extend Abood to the new situation now before us. 19 Abood itself has clear boundaries; it applies to public employees. Extending those boundaries to encompass partial-public employees, quasi-public employees, or simply private employees would invite problems. Consider a continuum, ranging, on the one hand, from full-fledged state employees to, on the other hand, individuals who follow a common calling and benefit from advocacy or lobbying conducted by a group to which they do not belong and pay no dues. A State may not force every person who benefits from this group’s efforts to make payments to the group. See Lehnert, 500 U. S., at 556 (opinion of Scalia, J.). But what if regulation of this group is increased? What if the Federal Government or a State begins to provide or increases subsidies in this area? At what point, short of the point at which the individuals in question become full-fledged state employees, should Abood apply?
Because Abood is not controlling, we must analyze the constitutionality of the payments compelled by Illinois law under generally applicable First Amendment standards. As we explained in Knox, “[t]he government may not prohibit the dissemination of ideas that it disfavors, nor compel the endorsement of ideas that it approves.” 567 U. S., at ___ (slip op. at 8–9); see also, e.g., R.A.V. v. St. Paul, 505 U. S. 377, 382 (1992) ; Riley v. National Federation of Blind of N.C., 487 U. S. 781, 797 (1988) West Virginia Bd. of Ed. v. Barnette, 319 U. S. 624 (1943) ; Wooley v. Maynard, 430 U. S. 705–715 (1977). And “compelled funding of the speech of other private speakers or groups” presents the same dangers as compelled speech. Knox, supra, at ___ (slip op. at 9). As a result, we explained in Knox that an agency-fee provision imposes “a ‘significant impingement on First Amendment rights,’ ” and this cannot be tolerated unless it passes “exacting First Amendment scrutiny.” 567 U. S., at ___ (slip op. at 9–10).
In any event, this effort to recast Abood falls short. To begin, the Pickering test is inapplicable because with respect to the personal assistants, the State is not acting in a traditional employer role. 27 But even if it were, application of Pickering would not sustain the agency-feeprovision.
In recent years, Medicaid expenditures have represented nearly a quarter of all state expenditures. See National Association of State Budget Officers, Summary: Fall 2013 Fiscal Survey of States (Dec. 10, 2013), online at http:// www.nasbo.org. “Medicaid has steadily eaten up a growing share of state budgets.” 29 In fiscal year 2014, “[t]hirty-five states increased spending for Medicaid for a net increase of $6.8 billion.” Ibid. Accordingly, speech by a powerful union that relates to the subject of Medicaid funding cannot be equated with the sort of speech that our cases have treated as concerning matters of only private concern. See, e.g., San Diego v. Roe, 543 U. S. 77 (2004) (per curiam); Connick, supra, at 148 (speech that “reflect[ed] one employee’s dissatisfaction with a transfer and an attempt to turn that displeasure into a cause célèbre” (emphasis added)).
The judgment of the Court of Appeals is reversed in part and affirmed in part, 30 and the case is remanded for further proceedings consistent with this opinion.
1 Although this regulation states clearly that a customer has complete discretion with respect to hiring and firing a personal assistant, the dissent contends that the State also has the authority to end the employment of a personal assistant whose performance is not satisfactory. Nothing in the regulations supports this view. Under 89 Ill. Admin. Code §677.40(d), the State may stop paying a personal assistant if it is found that the assistant does not meet “the standards established by DHS as found at 89 Ill. Adm. Code 686.” These standards are the basic hiring requirements set out in §686.10, see n. 2, infra. Providing adequate performance after hiring is nowhere mentioned in §686.10.
2 It is true, as the dissent notes, post, at 4, that a personal assistant must provide two written or oral references, see §686.10(c), but judging the adequacy of these references is the sole prerogative of the customer. See §676.30(b). And while the regulations say that an applicant must have either previous experience or training, see §686.10(f ), they also provide that a customer has complete discretion to judge the adequacy of training and prior experience. See §684.20(b) (the customer has complete discretion with respect to hiring and training a personal assistant). See also §686.10(b) (the customer may hire a minor—even under some circumstances, a person as young as 14); §686.10(f ) (the customer may hire a personal assistant who was never previously employed so long as the assistant has adequate training); §684.20(b) (criminal record check not required).
3 The other five petitioners are personal assistants under a similar Illinois program called the “Disabilities Program.” See, infra, at 39–40, and n. 30.
4 The employees’ First Amendment claim necessarily raised the question of governmental action, since the First Amendment does not restrict private conduct, and the Hanson Court, in a brief passage, concluded that governmental action was present. This was so, the Court reasoned, because the union-shop provision of the RLA took away a right that employees had previously enjoyed under state law. 351 U. S., at 232–233.
5 A related question arose in Keller v. State Bar of Cal., 496 U. S. 1 (1990) , which we discuss infra, at 37–38.
6 Only four Justices fully agreed with this approach, but a fifth, Justice Douglas, went along due to “the practical problem of mustering five Justices for a judgment in this case.” Id., at 778–779 (concurring opinion).
10 What is significant is not the label that the State assigns to the personal assistants but the substance of their relationship to the customers and the State. Our decision rests in no way on state-law labels. Cf. post, at 10. Indeed, it is because the First Amendment’s meaning does not turn on state-law labels that we refuse to allow the state to make a nonemployee a full-fledged employee “[s]olely for purposes of coverage under the Illinois Public Labor Relations Act,” Ill. Comp. Stat., ch. 20, §2405/3(f), through the use of a statutory label.
11 See Meat Cutters v. Jewel Tea Co., 381 U. S. 676 (1965) .
12 See In re National Grinding Wheel Co., 75 N. L. R. B. 905 (1948).
13 See In re Singer Manufacturing Co., 24 N. L. R. B. 444 (1940).
14 See Great Southern Trucking Co. v. NLRB, 127 F. 2d 180 (CA4 1942).
15 See N. K. Parker Transport, Inc., 332 N. L. R. B. 547, 551 (2000).
16 See St. John’s Hospital, 281 N. L. R. B. 1163, 1168 (1986).
18 Contrary to the dissent’s argument, post, at 10–11, the scope of the union’s bargaining authority has an important bearing on the question whether Abood should be extended to the situation now before us. As we have explained, the best argument that can be mounted in support of Abood is based on the fact that a union, in serving as the exclusive representative of all the employees in a bargaining unit, is required by law to engage in certain activities that benefit nonmembers and that the union would not undertake if it did not have a legal obligation to do so. But where the law withholds from the union the authority to engage in most of those activities, the argument for Abood is weakened. Here, the dissent does not claim that the union’s approach to negotiations on wages or benefits would be any different if it were not required to negotiate on behalf of the nonmembers as well as members. And there is no dispute that the law does not require the union to undertake the burden of representing personal assistants with respect to their grievances with customers; on the contrary, the law entirely excludes the union from that process. The most that the dissent can identify is the union’s obligation to represent nonmembers regarding grievances with the State, but since most aspects of the personal assistants’ work is controlled entirely by the customers, this obligation is relatively slight. It bears little resemblance to the obligation imposed on the union in Abood.
19 It is therefore unnecessary for us to reach petitioners’ argument that Abood should be overruled, and the dissent’s extended discussion of stare decisis is beside the point. Cf. Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc., 552 U. S. 148–166 (2008) (declining to extend the “implied” right of action under §10(b) of the Securities Exchange Act “beyond its present boundaries”).
20 The dissent suggests that the concept of joint employment already supplies a clear line of demarcation, see post, at 8–9, but absent a clear statutory definition, employer status is generally determined based on a variety of factors that often do not provide a clear answer. See generally 22 Illinois Jurisprudence: Labor and Employment §1:02 (2012); American Federation of State, County and Municipal Employees, Council 31 v. State Labor Relations Bd., 216 Ill. 2d 567, 578–582, 839 N. E. 2d 479, 486–487 (2005); Manahan v. Daily News-Tribune, 50 Ill. App. 3d 9, 12–16, 365 N. E. 2d 1045, 1048–1050 (1977). More important, the joint-employer standard was developed for use in other contexts. What matters here is whether the relationship between the State and the personal assistants is sufficient to bring this case within Abood’s reach.
21 The dissent claims that our refusal to extend Abood to the Rehabilitation Program personal assistants produces a “perverse result” by penalizing the State for giving customers extensive control over the care they receive. Post, at 12. But it is not at all perverse to recognize that a State may exercise more control over its full-fledged employees than it may over those who are not full-fledged state employees or are privately employed.
22 A similar statute adopts the same rule specifically as to the U. S. Postal Service. See 39 U. S. C. §1209(c).
26 The Abood majority cited Pickering once, in a footnote, for the proposition that “there may be limits on the extent to which an employee in a sensitive or policymaking position may freely criticize his superiors and the policies they espouse.” 431 U. S., at 230, n. 27. And it was cited once in Justice Powell’s concurrence, for the uncontroversial proposition that “ ‘the State has interests as an employer in regulating the speech of its employees that differ significantly from those it possesses in connection with regulation of the speech of the citizenry in general.’ ” Id., at 259 (opinion concurring in judgment) (quoting Pickering, 391 U. S., at 568). United States v. United Foods, Inc., 533 U. S. 405 (2001) , cited Pickering only once—in dissent. 533 U. S., at 425 (opinion of Breyer, J.). Neither Roberts v. United States Jaycees, 468 U. S. 609 (1984) , nor Knox cited Pickering a single time.
27 Nor is the State acting as a “proprietor in managing its internal operations” with respect to personal assistants. See NASA v. Nelson, 562 U. S. ___ (2011) (slip op. at 1–2, 14).
28 The dissent misunderstands or mischaracterizes our cases in this line. We have never held that the wages paid to a public-sector bargaining unit are not a matter of public concern. The $338 payment at issue in Guarnieri had a negligible impact on public coffers, but payments made to public-sector bargaining units may have massive implications for government spending. See supra, at 18, and n. 7. That is why the dissent’s “analogy,” post, at 20–21, is not illustrative at all. We do not doubt that a single public employee’s pay is usually not a matter of public concern. But when the issue is pay for an entire collective-bargaining unit involving millions of dollars, that matter affects statewide budgeting decisions.
30 The Court of Appeals held—and we agree—that the First Amendment claims of the petitioners who work, not in the Rehabilitation Program, but in a different but related program, the “Disabilities Program,” are not ripe. This latter program is similar in its basic structure to the Rehabilitation Program, see App. to Pet. for Cert. 14a, but the Disabilities Program personal assistants have not yet unionized. The Disabilities Program petitioners claim that under Illinois Executive Order No. 2009–15, they face imminent unionization and, along with it, compulsory dues payments. Executive Order No. 2009–15, they note, is “almost identical to EO 2003–08, except that it targets providers in the Disabilities Program.” Brief for Petitioners 10.In a 2009 mail-ballot election, the Disabilities Program personal assistants voted down efforts by SEIU Local 73 and American Federation State, County and Municipal Employees Council 31 to become their representatives. See App. 27. The record before us does not suggest that there are any further elections currently scheduled. Nor does the record show that any union is currently trying to obtain certification through a card check program. Under these circumstances, we agree with the holding of the Court of Appeals.
Next, the majority emphasizes that the Illinois Legislature deemed personal assistants “public employees” solely “for the purposes of coverage under the Illinois Public Labor Relations Act” and not for other purposes, like granting statutory benefits and incurring vicarious liability in tort. Ill. Comp. Stat., ch. 20, §2405/3(f) (West 2012); see ante, at 6, 22–23; but cf. Martin v. Illinois, 2005 WL 2267733, *5–*8 (Ill. Workers’ Compensation Comm’n, July 26, 2005) (treating caregivers as public employees for purposes of workers’ compensation). 5 But once again, it is hard to see why that fact is relevant. The majority must agree (this Court has made the point often enough) that “state law labels,” adopted for a whole host of reasons, do not determine whether the State is acting as an employer for purposes of the First Amendment. E.g., Umbehr, 518 U. S., at 679. The true issue is whether Illinois has a sufficient stake in, and control over, the petitioners’ terms and conditions of employment to implicate Abood’s rationales and trigger its application. And once more, that question has a clear answer: As I have shown, Illinois negotiates all workforce-wide terms of the caregivers’ employment as part of its effort to promote labor stability and effectively administer its Rehabilitation Program. See supra, at 6–8. As contrasted to that all-important fact, whether Illinois incurs vicarious liability for caregivers’ torts, see ante, at 23, or grants them certain statutory benefits like health insurance, see ante, at 22, is beside the point. And still more so because the State and SEIU can bargain over most such matters; for example, as I have noted, the two have reached agreement on providing state-funded health coverage, see supra, at 7.
Finally, the majority places weight on an idiosyncrasy of Illinois law: that a regulation requires uniform wages for all personal assistants. See ante, at 25. According to the majority, that means Abood’s free-rider rationale “has little force in the situation now before us”: Even absent the duty of fair representation (requiring the union to work on behalf of all employees, members and non-members alike, see infra, at 22–23), the union could not bargain one employee’s wages against another’s. Ante, at 26. 6 But that idea is doubly wrong. First, the Illinois regulation applies only to wages. It does not cover, for example, the significant health benefits that the SEIU has obtained for in-home caregivers, or any other benefits for which it may bargain in the future. Nor does the regulation prevent preferential participation in the grievance process, which governs all disputes between Illinois and caregivers arising from the terms of their agreement. See n. 2, supra. And second, even if the regulation covered everything subject to collective bargaining, the majority’s reasoning is a non-sequitur. All the regulation would do then is serve as suspenders to the duty of fair representation’s belt: That Illinois has two ways to ensure that the results of collective bargaining redound to the benefit of all employees serves to compound, rather than mitigate, the union’s free-rider problem.
And Abood is not just any precedent: It is entrenched in a way not many decisions are. Over nearly four decades, we have cited Abood favorably numerous times, and we have repeatedly affirmed and applied its core distinction between the costs of collective bargaining (which the government can demand its employees share) and those of political activities (which it cannot). See, e.g., Locke v. Karass, 555 U. S. 207–214 (2009); Lehnert v. Ferris Faculty Assn., 500 U. S. 507, 519 (1991) ; Teachers v. Hudson, 475 U. S. 292–302 (1986); Ellis v. Railway Clerks, 466 U. S. 435–457 (1984). Reviewing those decisions, this Court recently—and unanimously—called the Abood rule “a general First Amendment principle.” Locke, 555 U. S., 213–215. And indeed, the Court has relied on that rule in deciding cases involving compulsory fees outside the labor context—which today’s majority reaffirms as good law, see ante, at 37–39. See, e.g., Keller v. State Bar of Cal., 496 U. S. 1–17 (1990) (state bar fees); Board of Regents of Univ. of Wis. System v. Southworth, 529 U. S. 217–232 (2000) (public university student fees); Glickman v. Wileman Brothers & Elliott, Inc., 521 U. S. 457–473 (1997) (commercial advertising assessments). Not until two years ago, in Knox v. Service Employees, 567 U. S. ___ (2012), did the Court so much as whisper (there without the benefit of briefing or argument, see id., at ___ (Sotomayor, J., concurring in judgment) (slip op., at 1–6)) that it had any misgivings about Abood.
Perhaps still more important, Abood has created enormous reliance interests. More than 20 States have enacted statutes authorizing fair-share provisions, and on that basis public entities of all stripes have entered into multi-year contracts with unions containing such clauses. “Stare decisis has added force,” we have held, when overturning a precedent would require “States to reexamine [and amend] their statutes.” Hilton v. South Carolina Public Railways Comm’n, 502 U. S. 197–203 (1991). And on top of that, “[c]onsiderations in favor of stare decisis are at their acme in cases involving property and contract rights.” Payne, 501 U. S., at 828. Here, governments and unions across the country have entered into thousands of contracts involving millions of employees in reliance on Abood. Reliance interests do not come any stronger.
Still, the majority too quickly says, it has no worries in this case: Given that Illinois’s caregivers voted to unionize, “it may be presumed that a high percentage of [them] became union members and are willingly paying union dues.” Ante, at 33. But in fact nothing of the sort may be so presumed, given that union supporters (no less than union detractors) have an economic incentive to free ride. See supra, at 22–23. The federal workforce, on which the majority relies, see ante, at 31, provides a case in point. There many fewer employees pay dues than have voted for a union to represent them. 7 And why, after all, should that endemic free-riding be surprising? Does the majority think that public employees are immune from basic principles of economics? If not, the majority can have no basis for thinking that absent a fair-share clause, a union can attract sufficient dues to adequately support its functions.
1 The majority describes the petitioners as “partial” or “quasi” public employees, a label of its own devising. Ante, at 28. But employment law has a real name—joint employees—for workers subject at once to the authority of two or more employers (a not uncommon phenomenon). See, e.g., 29 CFR §791.2 (2013); Boire v. Greyhound Corp., 376 U. S. 473, 475 (1964) . And the Department of Labor recently explained that in-home care programs, if structured like Illinois’s, establish joint employment relationships. See 78 Fed. Reg. 60483–60484 (2013).
3 The majority claims that the Court developed this law “for use in other contexts,” ante, at 28–29, n. 20, but that is true only in the narrowest sense. The decisions I cite dealt with First Amendment claims that joint or contract employees made against the government. The only difference is that those suits challenged different restrictions on the employees’ expressive activities.
4 In a related argument, the majority frets that if Abood extends to the joint employees here, a “host of workers who receive payments from a governmental entity for some sort of service would be candidates for inclusion within Abood’s reach.” Ante, at 28. But as I have just shown, this Court has not allowed such worries about line-drawing to limit the government’s authority over joint and contract employees in the past. And rightly so, because whatever close cases may arise at the margin (there always are some), the essential distinction between such employees and mere recipients of government funding is not hard to maintain. Consider again the combination of things Illinois does here: set wages, provide benefits, administer payroll, withhold taxes, set minimum qualifications, specify terms of standard contracts, develop individualized service plans, fund orientation and training, facilitate annual reviews, and resolve certain grievances. That combination of functions places the petitioners so securely on one side of the boundary between public employees and mere recipients of public funding as to justify deferral of line-drawing angst to another case.
5 As the opinion’s quadruple repetition of the words “appear” and “apparently” suggests, ante, at 22–23, the majority is mostly guessing as to in-home caregivers’ eligibility for various state programs.
6 The majority also suggests in this part of its opinion that even if the union had latitude to demand higher wages only for its own supporters, it would not do so. See ante, at 27, n. 18. But why not? A rational union, in the absence of any legal obligation to the contrary, would almost surely take that approach to bargaining.
7 See, e.g., R. Kearney & P. Mareschal, Labor Relations in the Public Sector 26 (5th ed. 2014) (“[T]he largest federal union, the American Federation of Government Employees (AFGE), represented approximately 650,000 bargaining unit members in 2012, but less than half of them were dues-paying members. All told, out of the approximately 1.9 million full-time federal wage system (blue-collar) and General Schedule (white-collar) employees who are represented by a collective bargaining contract, only one-third actually belong to the union and pay dues”).


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Unfair Competition: What Happened in 2018, and What's in Store for 2019 | Littler Mendelson P.C.
From sweeping legislation to unexpected case law, and everything in between, 2018 brought a lot of changes to unfair competition law. Massachusetts’ successful passage of legislation addressing noncompetition agreements after years of negotiation and California’s further restriction of restrictive covenants are just highlights from a year of significant changes. Read on for a summary of some of the biggest legislative and case law events in unfair competition law of 2018 and a peek into the crystal ball for what is coming in 2019.
After years of negotiation, the Massachusetts legislature passed the Noncompetition Agreement Act, a law limiting the use of noncompetition agreements for any employee (or independent contractor) living or working in the Commonwealth.1 Effective October 1, 2018, employers may only enter into noncompetition agreements with exempt employees, and may only seek to enforce such agreements with employees who resign or are terminated for cause.
Significantly, employers are now required to provide some form of consideration beyond employment in order to make their noncompetition agreements binding. Sufficient consideration is either “garden leave,” defined by the Act as 50% of the employee’s highest annual salary during the prior two years to be paid consistent with the payment of wages during the restricted period, or other mutually-agreed upon consideration between the employer and the employee, provided that it is specifically described in the noncompetition agreement.
Consistent with the requirements set forth in recent Massachusetts case law, the Act also limits post-employment noncompetition restrictions to a maximum duration of 12 months and further requires the agreements be reasonable in geographic scope and restricted activity.
In addition, there are several other formal requirements, including 10 business days of notice for new and existing employees, inclusion of a statement that the employee has a right to consult with an attorney regarding the terms of the agreement, and an employer signature. Employers also may not choose another state’s law to govern the agreement in order to avoid the requirements of the law.
Favorable to employers, the Act acknowledges there are circumstances where noncompetition agreements are necessary and should be enforced.
At the same time, the Massachusetts legislature also passed a law adopting the Uniform Trade Secret Act. The Massachusetts Uniform Trade Secret Act (MUTSA) allows employers to seek an injunction for the “actual or threatened misappropriation” of trade secrets. Therefore, the law could open the door to claims based on the “inevitable disclosure” doctrine, i.e., the employer cannot prove the employee took its trade secret information but it is inevitable the employee will disclose the employer’s trade secrets in his/her new position with a competitor, and therefore should be enjoined from working there. The MUTSA also allows for the recovery of attorneys’ fees if the employer prevails. Given the new restrictions around the use of noncompetition agreements, the MUTSA may be a useful tool to employers seeking to protect their trade secrets.
On March 27, 2018, Utah’s governor signed into law an amendment to the state’s Post-Employment Restrictions Act. Limited to employees in the broadcasting industry, the amendment prohibits the use of post-employment noncompetition agreements unless: (1) the employee is exempt; (2) the post-employment restrictive covenant is part of a written employment contract with a term of no more than four years; and (3) the employee is terminated for cause or the employee breaches the employment contract in a manner that results in his or her separation of employment from the broadcasting company. Further, the restrictive covenants are only enforceable for one year. Any agreement with a broadcasting employee that does not comply with the Act is void.
Idaho law only allows for noncompetition agreements with “key employees” or “key independent contractors,” as defined in the statute, for a maximum period of 18 months post-employment, subject to a few rebuttable presumptions. For the past two years, it was also a rebuttable presumption that if a key employee or key independent contractor breached a non-compete, the company suffered irreparable harm. The key employee or key independent contractor then had to establish that he/she did not have the ability to adversely affect the company’s legitimate business interests. On March 28, 2018, however, the Idaho legislature passed an amendment repealing this rebuttable presumption. Consequently, effective July 1, 2018, companies now shoulder the burden of establishing the likelihood of an irreparable harm in order for a court to issue an injunction.
In Colorado, physicians may enter into a covenant not to compete under which a physician who leaves the group practice may be compelled to pay damages if he or she solicits patients who are former or prospective patients of the group practice. In April 2018, the Colorado legislature amended this law (for the first time since 1982) to add an exception for physicians treating patients with rare disorders.2 Specifically, the amendment provides that after termination of an agreement, physicians may disclose their continuing practice of medicine and new contact information to any of their patients with a “rare disorder,” as recognized by the National Organization for Rare Disorders, Inc. Signed into law on April 2, 2018, the Colorado amendment allows physicians to continue treating patients with rare disorders without liability, even when providing such service would otherwise violate their noncompetition agreements.
The parties in the lawsuit compete in the business of providing healthcare professionals, such as travel nurses, on a temporary basis to medical facilities. The individually-named defendants left AMN to work for Aya as travel nurse recruiters. The employee non-solicit at issue prohibited the travel nurse recruiters from soliciting any employee of AMN to leave the service of AMN for a period of at least 12 months. The court held that the provision clearly restrained the recruiters from practicing with Aya their chosen profession—recruiting travel nurses. In coming to this conclusion, the court of appeal noted the provision had the effect of restricting the number of nurses with whom a recruiter could work, and consequently, AMN was limiting the amount of compensation a recruiter would receive after leaving AMN’s employ.
In Barker, Judge Freeman in the Northern District of California followed AMN and reconsidered and reversed her own ruling dismissing claims based on the defendant's requiring employees to execute allegedly unfair and unenforceable employee non-solicitation provisions.5 In doing so, the court noted that it was “convinced by the reasoning in AMN that California law is properly interpreted . . . to invalidate employee nonsolicitation provisions.” Further, the court took pains to reject the notion that the secondary alternative ruling of AMN limited the primary holding: “the Court is not persuaded that the secondary ruling in AMN finding the nonsolicitation provision invalid …based upon those employees’ particular job duties abrogates or limits the primary holding.” In short, Barker—the first decision issued after AMN—unequivocally followed its more expansive reasoning and rejected the opportunity to limit it to its particular facts, thus reinforcing the argument that employee non-solicitation clauses are unenforceable under California law.
While the California Supreme Court could eventually weigh in, it is critical for employers to work closely with counsel to manage the risks presented by these decisions. Employers may need to seek guidance not only for the drafting of new agreements, but also for reviewing current or legacy agreements. Employers are going to have to weigh the legal risk of retaining these clauses in some fashion against any perceived benefit in using such clauses to promote a stable workforce.
In New York and New Jersey, several federal courts considered the enforceability of customer non-solicitation, non-acceptance and no-contact clauses. For example, in Mercer Health & Benefits LLC v. Digregorio, 307 F. Supp. 3d 326 (S.D.N.Y. 2018), the Southern District of New York held that a customer non-solicitation agreement was enforceable to the extent it applied to current clients of the employer, but that the employer did not have a legitimate interest in expanding the scope of the non-solicitation clause to prospective clients. The court further held that the employer was likely to establish that the former employees breached the non-solicitation agreement where the former employees announced their departures to clients through targeted announcements.
In HRB Prof’l Res. Ltd. Liab. Co. v. Bello, No. 17-CV-7443 (KMK), 2018 U.S. Dist. LEXIS 166434 (S.D.N.Y. Sept. 27, 2018), the Southern District of New York also confirmed an arbitration award against a former employee, which included a permanent injunction enjoining the former employee from violating a non-solicitation clause in his employment agreement. The court rejected the former employee’s first-contact argument (i.e., that he did not solicit clients, but rather the clients came to him), as “irrelevant” because the at-issue agreement prevented the former employee from “accepting, not just soliciting, HRB clients,” as well as from “providing tax services” to the HRB clients for two years after his employment ended with HRB.
Similarly, in Corporate Synergies Group, LLC v. Andrews, et al., No. 18-cv-13381 (D.N.J. Oct. 3, 2018), the court enforced a non-solicitation clause prohibiting former employees from, among other things, directly or indirectly accepting, soliciting, calling upon or servicing clients with whom the former employees worked in the year prior to their resignations. The court held that it considered the former employees' attending meetings with clients, or providing information concerning the clients to their new employer’s sales representatives (whether in response to a client inquiry or not), to be “prohibited” by the injunction.
In April 2018, a court in the Northern District of Illinois granted a 12(b)(6) motion to dismiss restrictive covenant claims because the covenant at issue was facially overbroad and unenforceable.7 In finding the covenant facially overly broad and defective, the court cited with favor the so called “Janitor Rule,” which states that if a covenant is so broad that it would preclude an employee for working for a competitor even in non-competitive positions such as a janitor, then it is too broad to be enforced. This case serves as a strong reminder that in addition to making sure that duration and geographic scope are limited, covenant drafters also have to narrowly tailor activity restrictions to truly competitive positions—ideally similar to positions the employee held for the former employer.
The case perhaps is even more significant because it granted a motion to dismiss based on just the facially overly broad language of the agreement and the court refused to blue pencil or modify the agreement. This decision is just the most recent of a series of decisions by Illinois courts refusing to enforce and/or dismissing overly broad covenants, and also refusing to blue-pencil or rewrite such covenants. See, e.g., First National Assets Management, LLC v. Garzon, 2016 WL 6301871 (Ill. Cir. Ct. Sept. 6, 2016) (granting motion to dismiss with prejudice as to non-compete provision of restrictive covenant where it was facially overbroad); Assured Partners, Inc. v. Schmitt, 2015 IL App (1st) 141863 at ¶¶37-42, 44 N.E.3d 463 (1st Dist. 2015) (holding customer non-solicitation clause unenforceable as a matter of law where “it seeks to prohibit [employee] from working in the future with customers, suppliers, and other business entities which he never had contact with while working for [employer]” and refusing to blue-pencil agreement; Multimedia Sales & Marketing, Inc. v. Marzullo, 2012 WL 5894340 (Ill. Cir. Ct. Oct. 5, 2012) (granting motion to dismiss and dismissing contract claims with prejudice).
However, in a least one recent case, another Illinois federal judge refused to dismiss a covenant as a matter of law and held, “courts will only find [restrictive] covenants facially invalid in ‘extreme cases.’” American Transort Grp., LLC v. Power, 2018 WL 1993204, at *4 (N.D. Ill. Apr. 27, 2018) (quoting Abbott-Interfast Corp. v. Harkabus, 250 Ill. App. 3d 13, 21 (2d Dist. 1993)). Because the standard for enforceability in Illinois is fairly vague and often dependent on both how well the covenant is drafted and the facts and equities in each particular case, one would expect such disparate results to continue.
The Defend Trade Secrets Act (DTSA) was signed into law in 2016 and provides a federal court civil remedy and federal court jurisdiction for trade secret and misappropriation claims. In 2018 we saw the first cases testing aspects of the law. The following summarizes a few notable 2018 DTSA decisions.
Dunster Live, LLC v. LoneStar Logos Mgmt. Co., LLC., 908 F. 3d 948 (5th Cir. 2018).
In this case, the plaintiff sued former members of the same LLC alleging that defendants stole proprietary software and database in violation of the DTSA. The district court denied the plaintiff’s preliminary injunction request and dismissed the complaint without prejudice. Defendants then sought attorneys’ fees for the claims brought. The district court denied the request because the case was dismissed without prejudice and thus the defendant was not yet the prevailing party. On appeal, the Fifth Circuit held that a determination of bad faith did not support a fee award because it would improperly interpret the "prevailing party" language out of the DTSA, and courts were required to interpret "prevailing party" to mean the same thing in the Act that they did in other federal fee-shifting statutes.
AUA Private Equity Partners v. Soto, 2018 U.S. Dist. LEXIS 58356 (S.D.N.Y. April 18, 2018).
A former employee defendant uploaded AUA's trade secrets from her work laptop to her personal Google Drive, wiped her laptop clean, cleared her browsing history, and was terminated the next day. AUA brought suit under the DTSA, and the defendant moved to dismiss, arguing that the company had not pled that she used or disclosed AUA’s trade secrets. The court denied the defendant’s motion, holding that her argument ignores the definition of “misappropriation.” Disclosure or use is not a required element of misappropriation, but rather an alternative basis for liability under the Act. The court also did not accept defendant’s argument that she had not “acquired” the trade secrets under the plain meaning of that term. The court noted that many courts, which have adopted the UTSA, have found that misappropriation by acquisition satisfies the acquisition element under the DTSA.
Leslie Lyle Camick v. Harry Holladay, esq., 2018 U.S. App. LEXIS 35410 (10th Cir. Dec. 18, 2018).
The plaintiff alleged that defendants violated the DTSA by unlawfully acquiring trade secret information in 2011 relating to manhole security covers and pole crabs the plaintiff developed. After the district court dismissed the plaintiff’s complaint, the Tenth Circuit affirmed the ruling because the plaintiff’s complaint did not allege any act of acquisition, disclosure, or use of trade secrets occurring on or after the DTSA’s May 11, 2016 enactment date. The court held that because there were no factual allegations that the misappropriation continued after May 11, 2016, the DTSA claim failed against the defendants.
On April 3, 2018, the DOJ’s Antitrust Division filed a civil antitrust lawsuit against Knorr-Bremse AG and Westinghouse Air Brake Technologies Corp., and with it simultaneously filed a civil settlement. The complaint alleges that these companies and a third company, Faiveley, reached naked no-poach agreements beginning as early as 2009 and continuing until at least 2015, in violation of Section 1 of the Sherman Act.The settlement entailed an injunctive component, cooperation clause, and a provision lowering the evidentiary burden of establishing a violation of the settlement agreement.
No-poach agreements in the franchise context (restrictions in the franchise agreement that preclude one franchisor from hiring from another franchisor) have been drawing the attention of class action counsel and state attorneys general. As a result, a number of fast-food franchise chains have jettisoned their no-hire agreements to avoid being the target of litigation.
Although we are only a little over a month into 2019, multiple states have already introduced noncompetition reform bills. A slew of states have introduced legislation that would prohibit noncompete agreements for low-wage workers, including Hawaii (Hawaii HB 1059 and SB 328), Indiana (Indiana SB 348), Maryland (Maryland HB 38 and SB 328), Missouri (Missouri HB 331), New Hampshire (New Hampshire HB 346 and SB 197), New York (New York AB 2504), and Virginia (Virginia SB 1387). In addition, Washington’s proposed legislation (Washington HB 1450 and SB 5478) limits the use of noncompetition agreements to employees who earn three times the average annual wage and to independent contractors who earn four times the average annual wage.
Other states are proposing broad restrictions to the use of noncompete agreements. A North Dakota bill (North Dakota HB 1351) seeks to amend its existing noncompete statute to clarify the language and definitions. South Dakota’s bill (South Dakota SB 120) reduces the permissible time period a noncompete agreement can be in effect from two years to one year. Proposed legislation in Georgia (Georgia HB 81) would prohibit the use of noncompete agreements with information technology employees. Vermont’s proposed legislation (Vermont HB 1) goes further, prohibiting any noncompetition agreements except for in the limited circumstance of (1) the sale of a business; (2) the dissolution of a partnership; or (3) the dissolution of a limited liability company. Likewise, Pennsylvania’s proposed legislation (Pennsylvania HB 171) prohibits the use of noncompete agreements in employment contracts, limiting the use of future noncompetes to (1) the sale of a business or (2) the dissolution of a partnership.
An Arkansas bill (Arkansas 1068) would go even further and repeal Arkansas Code §4-75-101, effectively prohibiting all non-compete agreements.
At the federal level, in the U.S. Senator Marco Rubio (R-FL) has also introduced legislation that would prevent employers from using non-compete agreements in employment contracts for certain non-exempt employees (S. 124).
The changes in 2018, and early onslaught of legislation in 2019, serve as a reminder that employers should continue to confer with legal counsel when drafting restrictive covenant agreements. It is also prudent to check in with counsel throughout the year in the event there is a new law or court decision affecting the enforceability of its agreements.
1 See Melissa L. McDonagh and Kevin E. Burke, Massachusetts Legislature Passes Comprehensive Noncompete Reform, Litter ASAP (Aug. 2, 2018); Stephen T. Melnick, Chris Kaczmarek, and Melissa L. McDonagh, Frequently Asked Questions About the New Massachusetts Noncompetition Agreement Act, Littler ASAP (Sept. 5, 2018).
2 See Stephen Baumann, A "Rare" Amendment: Colorado Amends its Non-Compete Statute for the First Time Since 1982 to Protect Physicians Treating Patients with "Rare Disorders", Littler ASAP (Apr. 6, 2018).
3 See Stephen Tedesco and Melissa McDonagh, The Other Shoe Drops: Court of Appeal Decision Narrows Use of Employee Non-Solicitation Provisions in California, Littler Insight (Nov. 16, 2018).
4 See James Witz, Second California Court Adopts Position that Employee Non-Solicitation Clauses Are Invalid Restraints on Trade, Littler ASAP (Jan. 24, 2019).
5 Case No. 16-cv-07186-BLF, 2019 WL 176260 (N.D. Cal. Jan. 11, 2019).
6 No. 18-3666, 2018 U.S. Dist. LEXIS 133446 (D.N.J. Aug. 2, 2018).
7 U.S. Dist. LEXIS 64813 (N.D. Ill. Apr. 17, 2018).

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High-pressure sliding (HPS) is a process of severe plastic deformation (SPD) for significant grain refinement and it is similar to high-pressure torsion (HPT) as both processes are operated under high pressure. Whereas the HPT process uses disk or ring samples, the HPS process is applicable to rectangular sheet samples. In this study, it is demonstrated that the HPS process is also applicable to rod samples. To achieve a homogeneous microstructure throughout the cross section of the rod, the sample is rotated along the longitudinal axis after each processing. The HPS process is carried out on pure Al, Al alloys (Al-3%Mg-0.2%Sc, A2024 and A7075) and a Mg alloy (AZ61) under a pressure in the range of 1-2 GPa. It is shown that a homogeneous microstructure is developed in all samples through rotation along the longitudinal axis by 60 degrees after each processing. The Al alloys and the Mg alloy exhibit grain sizes well less than 500 nm and superplastic elongation well more than 400% for the A2024 and A7075 alloys and well more than 1000% for the Al-3%Mg-0.2%Sc alloy and the AZ61 alloy. It is thus antgicipated that the HPS process provides good potential for scaling-up the sample size through not only sheets but also rods.
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