Right-To-Work Laws In The Heart Of The Auto Industry

by Pepper Hamilton LLP

On December 11, 2012, Michigan became the 24th state to adopt “right-to-work” laws. These laws prohibit any requirement that an employee become or remain a member of a labor organization; pay dues, assessments or other charges to a labor organization; or pay a charity or a third-party agency an amount in lieu of such dues or assessments. In addition, any individual or union(s) are prohibited from intimidating an employee into becoming a union member or paying union dues.

These two laws affect most Michigan private and public employers and employees with the exception of police and firefighters. Since the laws apply to those agreements that are in effect or extended after the effective date of the contract, unions may have an incentive to try to reach agreement on contracts before the law becomes effective. The right-to-work laws will become effective March 2013. Unions that have been reluctant to come to the bargaining table to address such increasingly difficult issues as health care coverage, may attempt to negotiate long-term contract extensions in exchange for employer-friendly proposals in order to keep provisions of the union shop agreement.

Under right-to-work laws, an employee who is not a union member and does not pay union dues remains a member of the bargaining unit and is governed by any applicable collective bargaining agreement. A union is required to represent all individuals in the bargaining unit equally, whether they are union members or not. Although unions have some discretion in determining which grievances should be taken to arbitration, the unions are prohibited from exercising that right in a discriminatory manner against nonunion employees. Unions also may not charge a service fee for prosecuting grievances on behalf of nonunion members. In sum, a union cannot require an employer to change the terms and conditions of employment of an employee who opts out of the union or fails to pay union dues.

Michigan’s neighbor, Indiana, enacted a similar law, which became effective in 2012. It is too soon to tell what the impact of that legislation has been on job creation, which is the underlying stated objective of these statutes. Likewise, it is too soon to see the impact that right-to-work laws in America’s industrial heartland will have on union membership. If the Indiana experience shows anything, union members will engage in angry protests and unions will wage contentious legal challenges. The new acts, however, have an expedited appeal process that places original jurisdiction with Michigan’s Court of Appeals. Both employers and unions will aggressively maneuver to decide the fate of these right-to-work laws by the 2014 election. The appropriation of $1 million for the bills was designed to prevent a voter referendum repealing the laws. We have seen Indiana unions become more aggressive in pursuing grievances in order to prove that union membership is desirable. We have also found that disgruntled members may refuse to pay dues or discuss abandoning or decertifying their unions altogether.

Public and private employers should consult with their counsel about their obligations under the new statutes and other laws that may impact their workforce. A carefully considered strategic approach to labor relations could yield considerable opportunities for Michigan employers.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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