Indiana Right to Work Act Constitutional and Not Preempted by Federal Law: Seventh Circuit | Practical Law

Indiana Right to Work Act Constitutional and Not Preempted by Federal Law: Seventh Circuit | Practical Law

In Sweeney v. Pence, the US Court of Appeals from the Seventh Circuit affirmed the district court's dismissal of a lawsuit challenging the Indiana Right To Work Act (IRWA). The IRWA provides that employees may not be required to join a union or pay union fees or dues as a condition of continued employment. The court held that the law is not preempted by federal labor law and does not violate the union's constitutional rights.

Indiana Right to Work Act Constitutional and Not Preempted by Federal Law: Seventh Circuit

by Practical Law Labor & Employment
Published on 10 Sep 2014 • USA (National/Federal)
In Sweeney v. Pence, the US Court of Appeals from the Seventh Circuit affirmed the district court's dismissal of a lawsuit challenging the Indiana Right To Work Act (IRWA). The IRWA provides that employees may not be required to join a union or pay union fees or dues as a condition of continued employment. The court held that the law is not preempted by federal labor law and does not violate the union's constitutional rights.
On September 2, 2014, in a 2-1 decision in Sweeney v. Pence, the US Court of Appeals for the Seventh Circuit affirmed the district court's dismissal of a lawsuit challenging the Indiana Right to Work Act (IRWA). The court held that the IRWA is not preempted by federal labor law and does not violate constitutional rights. The IRWA, which was enacted in February 2012, provides that employees may not be required to join a union or pay union fees or dues as a condition of continued employment. (No. 13-1264, (7th Cir. Sept. 2, 2014).)
The union sought declaratory judgment that the IRWA was invalid, arguing that it was preempted by Section 8(a)(3) of the NLRA, which permits bargaining parties to require union membership as a condition of continued employment. The union claimed that Section 14(b) of the NLRA only banned agreements requiring membership as a precondition for hiring, and did not give states the power to interfere with NLRA provisions regarding what non-union member bargaining unit employees pay to cover their fair share of bargaining costs (agency fee). The union claimed that under its statutory duty of fair representation, it must represent these non-union members and that these individuals should have to pay for the union's costs in representing them.
The district court denied declaratory judgment to the union and granted the state-related defendants' motion to dismiss the union's lawsuit. The union appealed to the Seventh Circuit.
The Seventh Circuit affirmed the district court's decision denying declaratory judgment to the union and dismissing the lawsuit. The Seventh Circuit found that:
  • The IRWA is not preempted by the federal scheme of labor law because:
    • the term "membership" should be interpreted to have the same meaning in 8(a)(3) and 14(b) of the NLRA, which includes bargaining unit members who paid any support to the union. As a result, 14(b) permits state laws that prohibit agreements requiring employees to join and or pay dues or fees to the union;
    • numerous state statutory right-to-work schemes have existed concurrently with the Taft-Hartley Act;
    • the federal labor law does not preempt the IRWA's criminal penalties; and
    • the NLRA does not preempt Section 8(3) of the Indiana law which bars mandatory payment of an amount equal to union dues to a charity.
  • The IRWA does not violate the US Constitution because:
    • the IRWA does not violate the Takings Clause of the Fifth Amendment, as the union advanced no argument on this issue and the union is nonetheless justly compensated for its representation of non-union member bargaining unit employees by exclusive bargaining rights with the employer;
    • contract and Ex Post Facto clause arguments fail since the IRWA would apply prospectively as existing collective bargaining agreements expired, but not retroactively; and
    • the IRWA does not violate the equal protection clause, since it does not implicate a fundamental right (free speech or right to union membership) and it passes rational basis review.
In dissent, Chief Judge Wood noted that she would have held that:
  • States were only permitted to prohibit agreements setting union membership as condition of continued employment, not the collection of fees for representation of the non-union member bargaining unit employees.
  • The IRWA violates the Takings Clause because it requires one party to give services to another party without just compensation in return. Specifically, a union must act to meet its duty of fair representation obligations under federal law to all bargaining unit members and this law precludes agreements ensuring that non-union member bargaining unit employees pay the union for those services.
The validity of the IRWA will continue to be challenged in parallel state court actions. The union in this case and another union obtained judgments holding the IRWA invalid for reasons largely mirroring the dissenting opinion in this case in Lake County. Both of those cases have been appealed to the Indiana Supreme Court.

Update

On January 13, the Court denied the union's petition for a rehearing en banc.