September 29, 2016Client Alert

Wisconsin’s Right to Work Upheld – Again

On September 26, 2016, Federal District Court Judge J. P. Stadtmueller upheld Wisconsin’s Right to Work Law, rejecting union arguments that the state law was preempted by the National Labor Relations Act (NLRA) and that it constituted an unconstitutional “taking” of property from the unions. The unions argued that absent compelled union dues, they would be forced to provide services to non-paying employees. Wisconsin’s Right to Work law has now been upheld twice, including an earlier failed Wisconsin state court challenge.

Any appeal of the decision faces an uphill fight, as the Seventh Circuit Court of Appeals recently upheld Indiana’s Right to Work law and, in the process, rejected very similar arguments to those the unions relied on in this case.

At the core of the Right to Work law is the policy that employees in Wisconsin cannot be forced to either join a union (become a member) or to pay union dues (so-called fair share payments). It’s well settled that compulsory union membership is illegal, and both the unions and the state of Wisconsin stipulated to that point. The lawsuit focused on the unions’ claimed right to force non-members to pay dues to the union as a condition of employment.

The court rejected the unions’ claim that the NLRA preempted the state law’s provision prohibiting compelled union dues, noting that the NLRA contains a clause that allows the states to regulate union dues payments and that the courts have decided over the years that states are free to allow or ban compelled dues payments as they see fit. Wisconsin was the 26th state to pass a Right to Work law forbidding compulsory union dues.

The unions’ takings argument was also rejected. The Seventh Circuit had previously held that a union still was required to expend funds for nonmembers without just compensation because mandatory representation is the flip side of the coin of a union’s right to exclusive representation. That is, a union’s compensation for mandatory representation is the ability to exclude other unions from the bargaining table.

The unions who filed this lawsuit had also negotiated what they call “Fair Representation Fee Agreements” with certain Wisconsin employers. These agreements feature a conditional representation fee provision, which essentially provides that if the Right to Work law was found to be invalid, all employees would have to pay a service fee equating to the value of the union’s negotiation and administration of a labor agreement. In light of Judge Stadtmueller’s decision, these types of agreements should be evaluated by experienced labor counsel. Counsel should also be consulted prior to expiration of an existing labor agreement with a dues payment requirement, so as to consider the options available under the Right to Work law.

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