Last month, the Indiana Supreme Court unanimously upheld the Indiana Right to Work Law, rejecting a union’s claim that the state statute violates the Indiana Constitution. The Indiana Supreme Court’s decision comes roughly two months after the Seventh Circuit Court of Appeals (which hears appeals from federal trial courts in Indiana) rejected the same union’s challenges to the Indiana law based on federal preemption and constitutional grounds.
Background on the Indiana Right to Work Law
In February 2012, Indiana joined 23 other states in enacting a right-to-work law. The law prohibits unions from requiring any employee, as a condition of employment, to:
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Become or remain a member of a labor organization;
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Pay dues, fees, assessments, or other charges of any kind or amount to a labor organization; or
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Pay to a charity or third party an amount equivalent to or a pro-rata part of dues, fees, assessments, or other charges required of members of a labor organization.
The law does not apply to certain categories of employees, including employees of the State of Indiana and political subdivisions. The law also does not have any effect on union collective bargaining agreements that were in effect as of March 14, 2012, as they were “grandfathered” under the law.
The Indiana Supreme Court’s Decision
The Indiana Constitution provides that no person’s services can be demanded without “just compensation.” The International Union of Operating Engineers, Local 150, AFL-CIO argued that the right-to-work law is effectively a demand by the State of Indiana that unions represent all workers, whether they pay dues or not and thus violates the constitutional provision. In response, the State argued that it is not demanding anything from any union because unions can choose not to be exclusive. The court agreed with the State’s position, concluding that “[a]ny compulsion to provide services does not constitute a demand made by the State of Indiana.” Rather, quoting the Seventh Circuit’s recent decision, the court recognized that “[b]ecause it is federal law that provides a duty of fair representation, Indiana’s right-to-work statute does not ‘take’ property from the Union.”
Insights for Indiana Employers
The Indiana Supreme Court’s unanimous decision upholding the state right-to-work law is welcome news for Indiana employers. Barring an additional appeal and reversal of the current court rulings, which seems unlikely at this point, Indiana is now one of 24 states with a right-to-work law. Moving forward, Indiana employers will need to be mindful of the right-to-work law in negotiating new or successor union agreements. Employers should consult with their legal counsel regarding bargaining obligations and the specific impact of the right-to-work law on “union security” provisions in any collective bargaining agreements. It remains to be seen how unions will address this issue during negotiations.
Both unionized and non-unionized Indiana employers should also keep in mind that the right-to-work law does not prevent unionization. Indeed, unions continue to organize and represent employees, and have a significant impact on employers, in many of the 23 states which already have right-to-work laws.
