Category: Unions

Michigan’s New Right to Work Law: What It Means for Employers, Workers and the Upper Midwest

Michael Best Logo

On December 11, 2012, Governor Rick Snyder signed into law two bills collectively enacting “Right to Work” legislation in the State of Michigan. Michigan becomes the 24th state to enact some form of a right to work law, and joins Indiana as the second state in the Upper Midwest to do so in 2012. Wisconsin passed a similar law in 2010, though that highly publicized legislation applied only to public sector employers and unions. The most significant aspect of right to work laws is that they prevent unions and employers from requiring workers to join a union or to pay union dues as a condition of employment. The law will take effect gradually (it takes effect on or around April 1, 2013), as it allows all current collective bargaining agreements between unions and employers to remain in place.

So what does the new law actually say? Michigan’s Right to Work Law was passed as two separate Public Acts. Public Act 348 addresses private sector unions and amended 1939 PA 176, which governs many union activities and the relationship between unions and private employers in Michigan. Public Act 349 is a nearly identical Act that relates to public sector employers and unions. The following is a summary of significant changes to private sector relationships between unions and employers as a result of Public Act 348:

  • Outlaws Closed Shops. Private sector employees may now choose whether or not to join a union or pay any dues or charitable contributions in relation to union membership. Individuals can no longer be required, as a condition of new or continued employment, to join or pay dues to a union, or to pay any charitable organization or third party an amount in lieu of union dues. Employees in Michigan can now decide, individually, whether they want to join a union and pay dues (“open shop”). Under prior Michigan law, an employee, by a labor agreement, could be compelled to join a union and pay dues (referred to as “closed shop” or “union security” clause). That is now banned.
  • Individuals Still Must Be Allowed to Join Unions. Consistent with prior Michigan law, individuals shall not be required to refrain or resign from membership in or to avoid financially supporting a union as a condition of employment.
  • Invalidates Closed Shop Agreements. Any agreement, contract, understanding, or practice between an employer and a labor organization that violates the Act is invalid.
  • Current Collective Bargaining Agreements Unaffected. The Act contains a “Grandfather Clause.” The prohibition against closed shop agreements applies only to an agreement, contract, understanding, or practice that takes effect or is extended or renewed after the effective date of the Act.
  • Violation Subject to Civil Fine. Any individual, employer, or labor organization that violates Section 1 of the Act by requiring an individual to join or resign from a union, or pay or refrain from paying dues, may be fined up to $500.
  • Private Right of Action for Injured Persons. Any person injured by a violation of the Act (i.e. forced or threatened to be forced to join or quit a union as a condition of employment) may file a civil action for injunction and damages. The provision contains a “fee shifter,” meaning a prevailing plaintiff gets costs and reasonable attorney fees associated with the civil action.
  • Employees Subject to Civil Fines for Intimidation. Any employee who attempts to compel by force, intimidation, or unlawful threats any person into joining a union or paying dues may be liable for a civil penalty of up to $500.
  • Responsibilities of the Michigan Department of Licensing and Regulatory Affairs (LARA). The Act allocates $1 million to LARA to do the following: (1) respond to public inquiries regarding the Act; (2) provide sufficient staff and resources to implement the Act; and (3) inform employers, employees, and labor organizations concerning their rights and responsibilities under the Act. An informational hotline, website, and/or informational pamphlets are likely to become available as a result of this section.

Public Act 349 contains nearly identical provisions pertaining to public sector employers and unions in Michigan. The only significant difference in Public Act 349 is it contains an exception for public police, fire departments, and state police unions. These unions may continue to collectively bargain for an agreement that all members of their organization shall pay union dues or fees to their union or exclusive bargaining representative.

There are likely to be challenges, both legal and political, to the new legislation. Labor unions, including the Michigan-based UAW, have already pledged to challenge the Acts in court. The Acts grant exclusive jurisdiction to the Michigan Court of Appeals, and indicate that the Court of Appeals will hear the action in an expedited manner. From a political standpoint, the monetary allocation to LARA in each Act prevents a referendum on the Acts because of language in Michigan’s Constitution. Instead, the UAW has indicated it will attempt to recall state legislators who supported the Act, and potentially Governor Snyder. A recall effort as to Governor Snyder may be less likely because he is up for re-election in 2014, but one might expect a scene similar to what played out in Wisconsin throughout 2011.

The significance of this legislation will also be felt throughout the Upper Midwest. Like Wisconsin, Michigan may be viewed as a bellwether for union opposition to right to work legislation. State and local governments, as well as private employers operating in closed shop states will need to remain aware of regional trends and shifting business climates as the right to work legislation in their neighboring states begins to take effect. As Michigan’s neighbor to the south, Ohio is now potentially under more pressure to pass a right to work measure given that its surrounding neighbors, Indiana, Kentucky, and now Michigan, are right to work states.

MBF client-employers will want to continue to monitor legislative developments, especially those clients making site selection decisions either to expand existing facilities or open new locations. Also, for those clients with operations in Michigan, there are issues to consider now including employee communications and other impacts the new Michigan law will have on existing operations.

© MICHAEL BEST & FRIEDRICH LLP

Right to Work Passes, Signed by Michigan Governor

Barnes & Thornburg

As expected, the Michigan House voted today to enact the pending Right to Work bills. Michigan Governor Rick Snyder signed the bills this evening, making Michigan the 24th Right to Work state in the nation. The changes to the law become effective 90 days following the end of the 2012 legislative session, making the effective date likely to be on or about April 1, 2013.

The full text of the final bills is available on the Legislature’s website and can be accessed by clicking on the links below:

SB 116(private employees)
HB 4003(public employees)

© 2012 BARNES & THORNBURG LLP

Court Grants Summary Judgment Against Coca-Cola in Breach of Collective Bargaining Agreement Claim by United Steel Workers

The National Law Review recently published an article by Bryan R. Walters of Varnum LLP regarding Coca-Cola’s Breach of Collective Bargaining Agreement:

Varnum LLP

 

In Local Union 2-2000 United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied-Industrial, Chemical and Service Workers International Union v. Coca-Cola Refreshments U.S.A. Inc. (W.D. Mich. Nov. 21, 2012), the Honorable Janet T. Neff granted summary judgment in favor of the United Steel Workers against Coca-Cola on a breach of contract claim concerning wage increases under the parties’ collective bargaining agreement. The opinion addressed two interesting legal issues.

First, the court rejected Coca-Cola’s statute of limitations argument under 29 U.S.C. § 160(b), which provides that “no complaint shall issue based upon any unfair labor practice occurring more than six months prior to the filing of the charge with the Board and the service of a copy thereof upon a person against whom such charge is made.”  Coca-Cola argued that, because the United Steel Workers had filed an unfair labor practice charge concerning their unpaid wages claim approximately nine months after becoming aware of the issue, Section 160(b) barred the union’s claim.  The court rejected this argument, concluding that it would be “inappropriate” to apply the six-month limitations period to what was a pure breach of contract claim.  Instead, the court held that the applicable statute of limitations was the six-year statute of limitations under Michigan law for breach of contract actions.  Op. at 13–15.

The second significant issue related to interpretation of the collective bargaining agreement.  The collective bargaining agreement included schedules for wage increases in “Year 1, Year 2, and Year 3” without further defining those terms within the primary contract document.  The court held that this contract language was ambiguous, requiring introduction of parol evidence of the parties’ negotiation history. The court found clear and convincing evidence in the negotiating history that the union’s interpretation of the “Years” was correct, in that “Year 1” referred to the first 365 days after the effective date of the contract, etc.  Id. at 19.

The court also concluded that there was clear and convincing evidence of a mutual mistake in the drafting of the final collective bargaining agreement. Coca-Cola listed specific dates for the wage adjustments in an appendix to the collective bargaining agreement. The court found that the dates listed in the appendix were not bargained for and never agreed to by the parties, rejecting as self-serving subsequent statements from Coca-Cola’s negotiators that Coca-Cola did not consider the dates unilaterally added to the appendix by Coca-Cola a “mistake.”  Id. at 20–21.

© 2012 Varnum LLP

Union “Death Warrant” Heading for November Ballot in Michigan?

The National Law Review recently published an article regarding Unions and Michigan Ballots written by Gerald F. Lutkus of Barnes & Thornburg LLP:

 

The union-backed “Protect Our Jobs” initiative took two steps closer Monday to being on the November ballot in Michigan.  The initiative would make collective bargaining a constitutional right under the Michigan Constitution for both public and private employees.

After the Michigan Board of Can­vassers originally stalemated on whether the initiative could go on the ballot, the Protect Our Jobs Committee filed suit and Monday afternoon, the Michigan Court of Appeals by a 2-1 vote ordered the Board of Canvassers to proceed with putting the initiative on the ballot.

Though an appeal to the Michigan Supreme Court seems likely, on Monday evening, the state Board of Canvassers certified the proposition for placement on the November ballot.  A coalition of union groups lead by the AFL-CIO, the United Auto Workers and the Michigan Education Association had previously submitted petitions with nearly 700,000 signatures — twice the number needed.

A Reuters News Service report quotes critics who have attacked the proposition as a “death warrant” for Michigan’s economy. Sara Wurfel, a spokeswoman for Michigan Gov. Rick Snyder, told Reuters that the governor remained opposed to the measure because “it has potentially far-reaching implications and ramifications to numerous existing statutes that would turn back progress and appear to go well beyond what paid petition gatherers portrayed.”

© 2012 BARNES & THORNBURG LLP

FAA Reauthorization Bill Passes with Union Restrictions Despite Objections from Labor Groups

The National Law Review recently published an article by MapLight regarding the FAA Reauthorization Bill:

Feb. 8, 2012 – Both the U.S. House of Representatives and the Senate agreed to the conference report on a bill that provides a long-term reauthorization of the Federal Aviation Administration (HR 658). The FAA has experienced over 20 short-term reauthorizations since September 2007. A main sticking point centered on labor issues — in particular, changes to the National Mediation Board that would make it more difficult for airline and railway workers to unionize.

On Feb. 3, the House agreed to the conference report by a vote of 248-169 while the Senate agreed on Feb. 6, by a vote of 75-20. The President is expected to sign the measure.

The measure was opposed by unions such as the Communications Workers of America, the International Association of Machinists and Aerospace Workers, and the International Brotherhood of Teamsters. The measure was supported by the Aerospace Industries Association, the Air Transport Association, and the Associated General Contractors of America. Air transportation unions were split on the issue: the Association of Professional Flight Attendants opposed the measure while the Air Line Pilots Association favored the bill overall, stating that although they “would have preferred that certain provisions unrelated to aviation safety had not been included, the compromise was necessary to set the stage for the passage of this extremely important funding bill.”

U.S. Senate

  • Interest groups that oppose this bill (Building trades unions, Teachers unions, Manufacturing unions, Railroad unions, etc.) gave 2.2 times as muchon average to Senators who voted ‘NO’ ($180,640) as they gave to Senators who voted ‘YES’ ($83,649).
  • Interest groups that support this bill (Public works, industrial & commercial construction, Builders associations, Aircraft manufacturers, Travel agents, etc.) gave 1.9 times as much on average to Senators who voted ‘YES’ ($134,065) as they gave to Senators who voted ‘NO’ ($71,362). 17 of the top 20 recipients of campaign contributions connected to interest groups that support this bill voted in favor of the measure.

U.S. House of Representatives

  • Interest groups that oppose this bill (Building trades unions, Teachers unions, Manufacturing unions, Railroad unions, etc.) gave 5.9 times as muchon average to House members who voted ‘NO’ ($100,072) as they gave to House members who voted ‘YES’ ($16,915). 18 of the top 20 recipients of campaign contributions connected to interest groups that oppose this bill voted against the measure.
  • Interest groups that support this bill (Public works, industrial & commercial construction, Builders associations, Aircraft manufacturers, Travel agents, etc.) gave 1.5 times as much on average to House members who voted ‘YES’ ($33,973) as they gave to House members who voted ‘NO’ ($21,984).

METHODOLOGY: MapLight analysis of reported contributions to congressional campaigns of senators in office on day of vote, from interest groups invested in the vote according to MapLight, July 1, 2005 – June 30, 2011 and House members in office on day of vote, from interest groups invested in the vote according to MapLight, July 1, 2009 – June 30, 2011. Campaign contributions data source:OpenSecrets.org

A link to this data release can be found here.

© Copyright 2012 MapLight

Indiana Becomes the First "Right-to-Work" State in the Rust Belt

The National Law Review recently published an article regarding Right-to-Work by Lisa Carey-Davis of Schiff Hardin LLP:

Indiana Governor Mitch Daniels signed the Right-to-Work Act, making Indiana the first Rust Belt state — and the first state in more than ten years — to adopt right-to-work legislation. With this law, Indiana joins 22 other states, mostly in the southern and western United States, that prohibit employers from requiring employees to become or remain union members and to pay dues or fees to the union as a condition for getting — and keeping — their jobs.

The Impact of the New Law in Indiana and Beyond

Supporters of the new law contend that because it offers employers “more flexibility and lower hiring costs,” more businesses will now choose to call Indiana home. Republican House Speaker Brian Bosma declared that the Right-to-Work Act “announces, especially in the Rust Belt, that we are open for business.”

Some suggest that other Rust Belt states may soon follow Indiana’s example. State Representative Jerry Torr, who sponsored Indiana’s bill, has predicted that two of Indiana’s more heavily unionized neighbors — Michigan (19%) and Ohio (14%) — will “fall like dominoes” in the wake of Indiana’s decision because “they will have to in order to compete.” Mike Shirkey, a Republican state representative from Michigan, admitted that he was disappointed that Indiana beat Michigan to the punch, adding “now a border state is going to establish a leverage position in being attractive to businesses.”

Currently, roughly 11% of Indiana’s workforce is unionized, primarily in the auto and steel industries. If history is any indication, that number may soon decline. On average, right-to-work states have significantly lower rates of unionization than states without such laws. In 2010, for example, the average rate of unionization was seven percent in right-to-work states, while the average in the rest of the states was more than double at 15%.

The Right-To-Work Act was passed by Indiana’s Republican-controlled legislature over bitter opposition from Democratic lawmakers, including a walkout by House Democrats that denied Republicans for several weeks the quorum required to take action on the bill. Democrats also proposed an amendment that would have put a Right-to-Work referendum on the November ballot, but that amendment was voted down. Unlike Ohio — where a short-lived statute that stripped public sector employees of collective bargaining rights was struck down last year by voters — ballot initiatives in Indiana must be approved by the legislature and cannot be introduced by voters. Therefore, a referendum vote on Indiana’s new law is unlikely.

What the New Law Means for Indiana Employers

The new law contains a grandfather clause that exempts any collective bargaining agreement already in effect on March 14, 2012. Until those grandfathered contracts expire, employers may continue to abide by and enforce union security provisions contained therein by requiring employees to join unions and to pay dues as a condition of employment.

But contracts “entered into, modified, renewed, or extended” after the new law takes effect on March 14 cannot contain such requirements. Specifically, the law prohibits employers from requiring employees to join or remain members of any labor organization, and from requiring them to pay dues, fees or “other charges of any kind” to such organizations. If a contract violates any of these prohibitions, the entire contract — not just the offending clause — is “unlawful and void” according to the statute. In addition, any Indiana employer that violates the law may be subject to both criminal and civil penalties and may be sued by an individual who claims to have been injured by the employer’s actual or threatened violation of the law.

Employers are not required to inform employees about the change in the law, but some may wish to do so.

© 2012 Schiff Hardin LLP