Wisconsin's Right to Work Law Upheld by Wisconsin Court of Appeals
In March 2015, Wisconsin became the 25th state in the country to enact a "Right to Work" law. That law prohibits collective bargaining agreements from requiring an employee, as a condition of employment, to become or remain a union member or to pay any union dues, fees, assessments, charges, or other expenses to a union. Almost immediately after its enactment, a trio of unions—the International Association of Machinists, the United Steelworkers and the Wisconsin AFL-CIO—challenged the law in Dane County Circuit Court. The unions claimed the law acted as an illegal taking of property without just compensation, prohibited under the Wisconsin constitution.
On Friday, April 8, 2016, Dane County Circuit Court Judge William Foust issued a decision finding the law unconstitutional because it results in an unconstitutional taking of union "property." The Wisconsin Attorney General appealed the ruling and the Wisconsin Court of Appeals stayed the ruling until it could decide the constitutionality of the law.
On September 19, 2017, the Wisconsin Court of Appeals upheld the law finding it does not illegally take property within the meaning of the Wisconsin constitution. This ruling was based on a finding that the law does not take a property interest of the union as it does not deprive unions of compensation for representing employees. In particular, the Court of Appeals found the law does not take money from a union's treasuries or require a union to provide services to anyone, but instead, merely prohibits requiring union membership or conditioning employment on payment of monies designed to cover the costs of representing the employees. While unions may have a duty to expend resources to represent employees, they have no constitutional entitlement to fees of non-member employees. Further, the duty to represent employees is optional as a union generally must either voluntarily file or authorize a petition before it will have the duty of acting in such a capacity. Finally, the Court of Appeals rejected that the law constitutes a taking because it goes too far as the unions did not show that they would have not incurred the economic impact of which they are complaining in the absence of the legal obligation to do so under the preexisting duty of fair representation; the law does not interfere with their reasonable expectations in property (the money contained in their treasuries) because unions have long been subject to regulation and had no reasonable expectation that the laws would not change; and because Congress specifically gave States the right to prohibit agreements requiring employees to pay representative fees as a condition of employment.
Impact on Wisconsin Employers
It is likely that the Wisconsin Supreme Court will be asked to review the case. Until the Supreme Court weighs in by either denying a request for review or deciding on the constitutionality of the law, Unions will still resist removing union security language from collective bargaining agreements. However, this decision provides employers with potentially more leverage in negotiations. In addition, employers should be aware that a federal district court in Wisconsin has found unconstitutional that part of the law allowing employees to revoke a dues deduction authorization upon 30 days written notice. While that decision is on appeal before the Seventh Circuit of Appeals, employers should be mindful of whether they need to negotiate changes to dues deduction language in their collective bargaining agreements. Given the uncertainty regarding the ability of employees to revoke such deductions with 30 days' notice, provisions requiring dues deductions may need to be modified to avoid an employer being caught in the middle of a disagreement between an employee and the union as to whether the employee has lawfully revoked such an authorization.
Quarles & Brady will monitor the developments in this case and continue to update our clients. If you have questions or would like to discuss impact of this decision, please contact Judi Williams-Killackey at (414) 277-5439 / judi.williams@quarles.com or other members of Quarles & Brady's NLRA team here in Wisconsin - Mike Aldana at (414) 277-5151 / michael.aldana@quarles.com or Fred Gants at (608) 283-2618 / fred.gants@quarles.com.