Lake County Court Rules but Defers Pending Appeal
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. This so-called Right-to-Work law was the focus of intense partisan debate, which led to a five-week boycott of the Indiana House, before it was eventually passed by the Indiana General Assembly. Since then, Michigan became the 24th state to pass a Right-to-Work law.
One year later, six individuals and the International Union of Operating Engineers, Local 150, AFL-CIO filed a five-count complaint in the Lake County Superior Court in Hammond, Indiana challenging the constitutionality of Indiana’s Right-to-Work law.
On September 5, 2013, the court declared the Right-to-Work law unconstitutional because it has the effect of requiring unions to provide services without just compensation. The court’s order deferred any relief pending appeal by any party. Needless to say, the Indiana State Attorney General has promised an immediate appeal to the Indiana Supreme Court. How that appeal ultimately turns out is uncertain, but the Attorney General is confident that the Right-to-Work law will be upheld.
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.
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 Legal Challenge to the Law
The challenge to the Right-to-Work law was based on four arguments based on the Indiana Constitution: 1) denial of equal protection; 2) infringement of free speech; 3) an ex post facto law; and 4) it requires the union to provide services to individual employees without them having to pay for those services. The court in its seven-page Order dismissed all claims except for the claim based on requiring services without just compensation.
The court relied on Article I, Section 21 of the Indiana Constitution that provides: “No person’s particular services shall be demanded, without just compensation.” The court reasoned that because Indiana’s Right-to-Work law made it a criminal offense (Class A misdemeanor) for a union to receive just compensation (in the form of union dues) for particular services it provides to employees, the law was unconstitutional.
The Attorney General will be arguing to the Indiana Supreme Court that the provision of the Indiana Constitution, relied upon by the court, only applies to the services of individuals and not to entities like unions.
Effect on Indiana Employers? Not yet.
Fortunately the court stayed the effect of its ruling, so at this time there is nothing for Indiana employers to do other than to watch for the ultimate decision of the Indiana Supreme Court in the coming months.
If you have any questions, please contact Steve Lyman at slyman@wp.hallrender.com or your regular Hall Render attorney.
