Seventh Circuit Upholds Indiana's Right to Work Act

In 2012, Indiana enacted its Right to Work Act, which prohibits, among other practices, making the payment of union dues a condition of getting or keeping a job. The Act also bars the practice of requiring an individual to join a union as a condition of employment. Three weeks after its enactment, members and officers of the International Union of Operating Engineers, Local 150, AFL-CIO (the "Union") brought suit in federal district court against Indiana's Governor, Attorney General, and Commissioner of the Department of Labor alleging that the National Labor Relations Act preempted the Right to Work Act, and further, that the Act violated the United States Constitution and the Indiana Constitution. The Indiana government defendants moved to dismiss those claims, and the federal district court granted dismissal of the preemption and constitutional violation claims. The Union appealed the dismissal.

On appeal, the Seventh Circuit Court of Appeals addressed both the preemption claim and constitutional violation claims. As to preemption by the NLRA, the Union claimed that the Act was preempted by NLRA Section 8(a)(3), which expressly permits bargaining parties to require union membership as a condition of employment. The Seventh Circuit looked beyond this provision, however, and found that NLRA Section 14(b), which expressly recognizes the right of states to prohibit union "membership" as a condition of employment, applied here. The Court reasoned that under Section 14(b), states could ban parties from negotiating provisions requiring the payment of any fees to the union .

Next, as to the Union's constitutional claims, the Union argued that the Right to Work Act violated the Contracts Clause and the Ex Post Facto Clause. The majority of the Seventh Circuit justices dismissed such arguments, finding that the Right to Work Act expressly provided that it would only apply prospectively as existing collective bargaining agreements expired. Any violation under the Contracts Clause or Ex Post Facto Clause would require some retroactive application, such as impairment of an already existing contract or punishment for past conduct. The Court found no retroactive application here.

Finally, the dissenting justice claimed that the Right to Work Act constituted an unconstitutional taking in violation of the Takings Clause. The dissenting justice argued that the union was being required to provide fair representation, regardless of membership, without just compensation. The majority opinion disagreed, The majority also noted that no Takings Clause argument was advanced by the Union, and therefore, such an argument was forfeited.

The contentious ruling of the Seventh Circuit may lead this case to be reviewed en banc, and may ultimately lead to Supreme Court review.  24 states — including Texas, Florida, and Arizona — have enacted laws similar in nature to the Indiana Right to Work law. Employers should be mindful as to whether they are located in a state with a Right to Work law or other similar law and should determine how this may affect current labor practices.