The Wisconsin Court of Appeals recently upheld Wisconsin’s right-to-work law in its decision in International Assoc. of Machinists District 10 and its Local Lodge 1061 v. State of Wisconsin, 2017 WI App 66.
The decision was seen by some as a victory for Wisconsin workers, while others considered it a defeat for labor unions and worker rights. Either way, the decision is part of a national trend of state and federal courts’ upholding similar laws, including the Seventh Circuit Court of Appeals’ decision in July upholding the same Wisconsin law. The losing labor unions have not sought review by the Wisconsin Supreme Court so Wisconsin’s right-to-work law is here to stay.
Labor unions provide representation for employees during collective bargaining, contract administration, grievance adjustment and other employment-related matters. Unions have historically negotiated for clauses in collective-bargaining agreements that required all employees, including members and non-members alike, to pay their “fair share” for union representation as a condition of employment. These have normally been referred to as “union shop” clauses. Among other things, 15 Wisconsin Act 1 prohibited provisions in labor agreements that require employees to pay union dues as a condition of employment.
The state defendants appealed and won. The court of appeals reversed the circuit court’s decision finding that the unions had not proved beyond a reasonable doubt that the act’s right-to-work provision was unconstitutional.
The unions argued that the right-to-work law was facially unconstitutional. In other words, they argued that, as written, the law is unconstitutional in every application, not just in how it directly affected them. The court, however, interpreted the unions’ specific allegations and supporting evidence as a hybrid challenge attacking the act as facially unconstitutional but also as-applied to them. This interpretation allowed the court of appeals to assess only the as-applied challenge and, if it found the act was not unconstitutional as-applied, to forgo making a determination concerning the facial challenge. This is exactly what occurred; the court denied the unions’ as-applied challenge, which ended the inquiry.
The union’s as-applied challenge was that the act, in conjunction with the duty to provide fair representation, constituted a government taking without just compensation. An unconstitutional taking occurs when the government takes private citizens’ property for public use without providing just compensation. The unions argued that the act takes the unions’ money because it compels them to use their own funds to provide services to non-members while not requiring those non-members to reimburse the unions for those expenses.
The court, relying on a concurring opinion from a past United State Supreme Court decision, concluded that the right-to-work law does not constitute an unconstitutional taking. The act simply imposes on labor unions an obligation to act—prohibiting them from collecting dues from non-members—but is silent as to how labor unions must comply. Importantly, the act does not force labor unions to use their own money to make up any difference. Preventing a union from collecting dues from an employee is not a government taking just because a union may use its own money to make up the difference.
The court also denied the unions’ argument that Act 1’s compulsory dues-ban was a regulatory taking under the U.S. Supreme Court’s decision in Penn Central Transportation Co. v. City of New York, 438 U.S. 104 (1978). A regulatory taking occurs when a government regulation on property goes too far in interfering with a property owner’s rights at the expense of the government. Courts use a multifactorial test to decide if such a taking is unconstitutional, including assessing the regulations’ effect on the property owner, the extent to which the regulation interferes with property or investment expectations, and the government action at issue.
The court disagreed with each of the unions’ many arguments. Most notably, in response to the unions’ claim that the act severely affects them financially, the court concluded that the unions failed to show that they would not have suffered the same consequences but for Act 1. The duty to provide fair representation to employees existed before Act 1, so the potential for the financial effects of paying for union services pre-existed the act’s ban on compulsory dues. The act, essentially, did not impose a new monetary obligation on labor unions and therefore did not create a regulatory taking.
The unions also compared Act 1 to a legislature’s setting unreasonably low rates for public utilities, a decision that courts have found to be an unlawful taking against public utilities. The court found the analogy misguided. It concluded that, unlike public utilities, labor unions have the right to raise money through other means to pay for their services. Their inability to collect dues from non-members does not prevent unions from obtaining cash flow from other sources or increasing the rates they charge paying union members. Labor unions have other means to remedy any monetary effect the ban may have on their ability to collect dues to pay for union services.
Wisconsin’s right-to-work law seems to be here to stay, especially in light of the recent decisions by the court of appeals and Seventh Circuit upholding Act 1.
Ryan Wiesner is an associate and member of the litigation group at Davis & Kuelthau. He handles an array of complex litigation nationwide, specializing in intellectual property disputes covering trademarks, copyrights, patents, and unfair competition.