The Right-to-Work movement notched a victory in February 2012 when Indiana became the latest state to pass Right-to-Work legislation. This article discusses Right-to-Work implications for employers and employees working in both unionized and non-union environments.
The Battle for Employees’ Right-to-Work in Indiana
On February 1, 2012, Indiana became the 23rd state to adopt a statute that prohibits private employers and unions from entering into agreements that compel union membership and the payment of dues and fees as a condition of employment. Indiana actually was a “Right-to-Work” state from 1957 until 1964 before the law was repealed. Indiana’s recent action is the first in the “Rust Belt” and may signal similar battles in other states across the region.
The Indiana General Assembly had been “Ground Zero” in the epic battle over the so-called “Right-to-Work” legislation for at least the past two years. During the regular 2011 session of the Indiana General Assembly, the House Democrat Caucus boycotted the proceedings by retreating to an Illinois motel for five weeks, effectively preventing a quorum. Ultimately, the House leadership withdrew the legislation and postponed the battle until this year. Despite several attempts by the House Democrats to delay action, claiming a need to further consider the impact of the law and educate the public, the vote was finally held despite the outcry of thousands of union demonstrators. Governor Mitch Daniels signed the Right-to-Work Law on the day it was passed on to him by the legislature, just days before Indianapolis hosted Super Bowl XLVI. Union leaders could have protested during the festivities but decided instead to take the battle to the people of Indiana by focusing on the November election. Indiana AFL-CIO President Nancy Guyott told a crowd of protesters after the final vote that, “We’ll take our state back, one citizen at a time! You ain’t seen nothin’ yet!” Besides mobilizing support for overturning the law at the polls in November, unions planned to go to court to challenge the law based on Article 4, Section 22 of the Indiana Constitution. Indiana’s Constitution prohibits “special laws” relating to fees or salaries. The unions argue that Indiana’s Right-to-Work law is a special law that relates to the payment of dues and fees by employees. The strength of that challenge remains to be seen.
In Indiana, the sides were deeply entrenched in their positions. Supporters of the law claimed it would bring jobs. The opposition claimed that the law would drive down wages, calling it “Right-to-Work for Less” law. In the end, neither side could actually prove what the long-term effect might be if the law passed.
What lay deeper in the debate was the fact that a lot of political money was at stake. If employees had the right to voluntarily join a union and pay dues, it would likely follow that many current members might choose to withdraw from the union. A source of political funds would naturally decrease. Indeed, in Oklahoma, the last state to adopt Right-to-Work in 2001, it had been reported that up to 25% of union members stopped paying dues after passage of Right-to-Work legislation. The effect of the law’s passage in Indiana still is unknown. Even so, soon after its passage, there were encouraging reports that a number of large employers that had previously scratched Indiana from the list of potential location sites were now revisiting their decision.
Indiana’s Right-to-Work battle was different than the widely reported battles in Wisconsin and Ohio, where the fight was over collective bargaining rights for public employees. In Indiana, with the exception of teachers, most state and other public employees are not covered by a collective bargaining law.
What is “Right-to-Work”?
Most private, non-governmental employers are covered by the provisions of the National Labor Relations Act (NLRA), sometimes referred to as the Taft-Hartley Act. Until 1947, the law allowed a union and an employer to agree that employees must join the union within 30 days or be fired. That law still allows a “Union Security Clause” to be included in collective bargaining agreements, but in 1947, a provision, Section 14(b), was added to the law. It permitted states to prohibit agreements that would require union membership as an employment condition. Basically, a state could pass a law that gave employees the “right to work” without having to become a union member. Since then, 22 states have passed Right-to-Work laws. Oklahoma was the last state to pass a Right-to-Work law in 2001.
Besides Indiana, other states that have passed Right-to-Work laws include:
Alabama
Louisiana
South Dakota
Arizona
Mississippi
Tennessee
Arkansas
Nebraska
Texas
Florida
Nevada
Utah
Georgia
North Carolina
Virginia
Idaho
North Dakota
Wyoming
Iowa Oklahoma
Kansas
South Carolina
What the Indiana Right-to-Work Law Provides
Indiana’s Right-to-Work law makes it a Class A misdemeanor for a person to knowingly or intentionally, directly or indirectly require an individual to:
- Become or remain a member of a labor organization;
- Pay dues, fees or other charges to a labor organization; or
- Pay to a charity or another third party an amount that represents dues, fees or other charges required of members of a labor organization as a condition of employment or continuation of employment.
It’s important to note that nothing in the law prohibits employees from voluntarily choosing to become union members and pay dues.
Any contract, agreement or practice between an employer and a labor organization that does compel union membership, dues or charity payments is unlawful and void.
The law applies only to agreements entered into, modified, renewed or extended after March 14, 2012. It does not apply to or abrogate agreements in effect on March 14, 2012.
The new law does not cover federal employees, employees subject to the Railway Labor Act, certain employees over whom the federal government has jurisdiction, state employees and political subdivision employees.
Under the law, an employee may file a complaint that alleges a violation or threatened violation with the attorney general, the state department of labor or the prosecuting attorney of the county of employment. The employee also may bring a civil action.
If a violation or threatened violation is found, a court or the Indiana Department of Labor can award actual and consequential damages resulting from the violation or threatened violation; or liquidated damages of not more than $1,000, whichever is greater, reasonable attorney’s fees, litigation expenses and costs and declaratory or equitable relief, including injunctive relief and any other proper relief.
Practical Considerations for Employers
The passage of Right-to-Work in Indiana will have many practical implications for employers that currently are unionized, as well as for those that are not.
Here are some important practical considerations for Indiana employers and employers in other states where Right-to-Work may be on the horizon:
- Employers with collective bargaining agreements (CBAs) should review notice of termination provisions of the CBA to ensure that the CBA and the Union Security Clause do not extend after CBA termination.
- Employees may have to follow union bylaws to resign from the union. They may have to provide advance notice; be current on dues and assessments; consider possible loss of union pension when no longer a union member; and the employee may have to pay an initiation fee if the employee rejoins the union later.
- The law may weaken an employer argument against joining a union – in other words, the cost of dues, fees assessments, initiation fees and union rules.
- The law may make it easier for an employee to vote for union if it doesn’t cost anything.
- The law may provide a possible opening for peer and union pressure tactics to sign authorization cards since it doesn’t mean they have to join the union.
- Employees should be aware that the cards they may sign may be applications to become union members, which is permitted if voluntary and not compelled as an employment condition.
- Employers with CBAs should consider providing information to employees about the new Right-to-Work law and what it means for unionized employees.
- Employers in negotiations for first time CBAs should consider backing away from any tentative agreement on a Union Security Clause since such clauses will now be illegal and void.
- Employers in negotiations for first time CBAs should be prepared for union concessions to preserve a Union Security Clause.
- Employers in negotiations may now lose some leverage in bargaining for strong Management’s Rights clauses in exchange for agreeing to Union Security and Dues Check-Off, as was often the case before Right-to-Work.
- Be wary of any proposal that would allow reversion to Union Security or reopen the CBA if there is a change in the Right-to-Work law in the future.
- Managers and supervisors should be educated about the implications of Right-to-Work so they can effectively and legally address employee questions and confront any union arguments.
- Employers should understand that they are still covered by the NLRA and are still obligated to observe employee rights under Section 7 of that law whether or not those employees are members of a union.
Right-to-Work Activity in Other States
Indiana is not the only state to confront the Right-to-Work issue. A survey of recent legislative activity in other states reveals that Right-to-Work bills have been considered in Alaska, California (ballot initiative), Colorado, Maine, Maryland, Minnesota, Missouri, New Jersey, New Mexico and Pennsylvania, where the Governor said he would sign a bill if it were sent to him. Other states’ governors have indicated that they would veto any Right-to-Work legislation. These include Connecticut, Missouri, Montana, New Hampshire and Wisconsin, where Governor Walker has said that he will not address Right-to-Work in 2012.
Reference: House Enrolled Act No. 1001, adding New Chapter I. C. 22-6-6 to the Indiana Code.
Should you have questions or require further information, please contact Stephen W. Lyman at 317.977.1422 or slyman@wp.hallrender.com or your regular Hall Render attorney.
