The case, Harris v. Quinn, has broad ramifications, as a ruling against the state would upend public-sector labor unions' ability to recruit and retain workers.
"It would radically restructure the way workplaces across this country are run," said Justice Elena Kagan of a ruling against the state.
The case centers on an Illinois program that uses Medicare funds to employ health care workers to care for disabled residents in their homes who otherwise might have to live in state medical institutions.
The workers have voted to designate the Service Employees International Union to represent them for collective bargaining purposes, a partnership endorsed by the state on the grounds it promotes labor peace.
Illinois says that decades of labor law has upheld the practice of compulsory union fees as a way to avoid "free riders" -- workers who don't join a union but receive union protections and benefits.
But some health care workers have said they don't want to be part of the union and therefore shouldn't be required to pay union fees. The anti-union National Right to Work Foundation took up their case and sued, arguing the workers should be characterized as independent contractors -- not state employees -- and therefore shouldn't be forced to contribute to a union.
"Here the state is not the common-law employer or the sole employer of these providers," William Messenger, an attorney representing the workers, told the justices. "It simply pays them for their services, much like a health insurer pays for the services of medical professionals."
The plaintiffs add the Illinois law violates constitutional free speech rights of workers who don't want to join a union by forcing the SEIU to speak for them against their will. And they say that forcing them into the union unfairly stifles their ability to bring up complaints with the state that are contrary to the union.
But Justice Antonin Scalia, among the most conservative-leaning justices, questioned the latter argument, suggesting that workers are still free to address grievances with the state individually.
"It's the same grievance if the union had presented it," he said.
With the nine-member high court's four liberal-leaning justices appearing skeptical of the workers' claims, Scalia atypically could provide a rare swing vote in favor of organized labor.
U.S. Solicitor General Donald Verrilli, arguing on behalf of Illinois, said free speech rights of public-sector employees sometimes are "diminished" when the government can show the restrictions are "in furtherance of the government's legitimate interests as manager of its own operations."
The extent of the case's impact depends on how the court rules. The justices could decide home-based health care provides are contractors, not state employees, and therefore shouldn't have to pay dues. Or they could uphold lower court decisions that sided with the state and maintain the status quo.
The high court also could decide the workers are state employees, but that state employees shouldn't be forced to pay union dues if they don't want to belong to the union — a decision that would a major blow to public-sector unions nationwide.