What’s Wrong with Right-to-Work?

April 22, 2015

Wisconsin recently became the 25th state to enact a right-to-work law. The law bars private-sector employers from requiring workers to join a union or pay union dues. Prior to the law’s passage, union members and workers circled Madison’s Capitol Square in a protest reminiscent of years past. And, similarly, union members and workers protested shortly after the law’s enactment; legal challenges followed, as well. Employers with little experience working with unions may be wondering, “What’s wrong with right-to-work?”

What Is Right-to-Work?

Some employers are asking, “What’s the big deal?” The short answer is that right-to-work laws bar mandatory union membership and dues, and make it difficult for unions to raise money to fund their core activities. By law, unions are required to represent all workers within a bargaining unit, regardless of whether they are union members. That creates a “free rider” problem in which union members are forced to pay for services provided to nonmembers. The problem strains union members financially and creates a risk that they will leave the union. This article looks at the free rider problem as well as Wisconsin’s new right-to-work law. We’ll then look ahead to what’s next.

Unions’ Free Rider Problem

When a majority of employees in a defined workforce vote for a particular union to represent them, the National Labor Relations Act (NLRA) requires the union to represent all workers in the bargaining unit. That means the union must represent supporters and nonsupporters, members and nonmembers. The task of representing workers is not cheap. As the U.S. Supreme Court pointed out:

The designation of a union as exclusive representative carries with it great responsibilities. The tasks of negotiating and administering a collective bargaining agreement [CBA] and representing the interests of employees in settling disputes and processing grievances are continuing and difficult ones. They often entail expenditure of much time and money.

Federal law requires unions to pay the costs associated with worker representation regardless of whether the aggrieved worker is a union member. In recognition of that fact, federal law allows unions to compel nonunion workers to pay fees and dues necessary for the unions to carry out their exclusive representation role. In other words, federal law allows unions to charge nonmembers for collective bargaining, contract administration, and grievance services.

The free rider problem arises when a union cannot compel a nonmember to pay for the actual cost of services the union is obligated to provide. As one federal judge described it:

The nonmember of the union will reap the benefits of being represented by the union during a grievance, for instance, but he will pay nothing for those benefits, which might include a lay representative, maybe even a lawyer, investigative services, and so on—all things that cost the union real dollars to provide. In short, he will take a “free ride” on the dues that the union members make to the union.

The free rider problem has been litigated for years. But since the 1940s, states have had the authority to pass right-to-work laws, which bar mandatory dues for non-members. Twenty-four states, including Michigan and Indiana, passed right-to-work laws before Wisconsin.

Wisconsin’s Right-to-Work Law

Under Wisconsin’s newly enacted right-to-work law, no person may require, as a condition of obtaining or continuing employment, an individual to:

  • Become or remain a member of a union;
  • Pay dues, fees, assessments, charges, or expenses of any kind or provide anything of value to a union; or
  • Pay the equivalent of dues, fees, assessments, charges, or expenses required of union members to a third party in place of a union.

In other words, an employee cannot be forced to join a union or pay union dues as a condition of employment. That means unions may seek dues and fees only from union members. Despite unions’ obligation to represent all workers in a bargaining unit, Wisconsin law prohibits them from seeking reimbursement for costs associated with representing nonunion workers. In essence, Wisconsin’s right-to-work law removes unions’ protection from free riders.

What’s Next for Right-to-Work in Wisconsin?

It is unclear how Wisconsin’s right-to-work law will affect unions. There is little data on how the free rider problem actually affects union resources. Likewise, there is little information on the effects right-to-work laws have on union membership. Overall union membership is down compared to a generation ago, but a variety of factors have presumably contributed to the decline.

It is also unclear whether the right-to-work law will have a positive impact on businesses in Wisconsin. Proponents of the law assert that it will contribute to a business-friendly environment and that companies will relocate to Wisconsin to take advantage of the new law. Time will tell whether those assertions prove true.

We are unsure what effect the law will have on private companies that have positive relationships with labor unions. Many private companies, especially those in the construction industry, voluntarily enter into CBAs with unions because unions provide them skilled workers without the administrative tasks of providing training, conducting drug screens, or providing employee benefits. Many companies with strong relationships with unions may be unaffected by the new law.

Perhaps the only certainty for right-to-work in Wisconsin is a lawsuit challenging the new law. Like legal challenges to Wisconsin’s Act 10 a few years ago, it seems unlikely that the right-to-work law will be judicially invalidated. In fact, courts in Michigan and Indiana recently upheld those states’ respective right-to-work laws.

Bottom Line

Wisconsin’s right-to-work law has sparked protests and garnered a lot of media attention, but it is unclear what effect the law will have on employers and unions. In the short term, the law will cut off a line of potential funding for unions—“free-riding” nonmembers. The long-term consequences remain to be seen.

This article, slightly modified to note recent updates, was featured in the April 2015 issue of the Wisconsin Employment Law Letter, which is edited by Axley Brynelson Attorney Saul Glazer and published by BLR®—Business & Legal Resources. Reproduced here with the permission of BLR®—Business & Legal Resources.

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