March 15 – the Ides of March – was not only a day of reckoning for Julius Caesar, but may also be one for organized labor in Indiana: it is when Indiana’s new right to work law took effect in 2012. Most private employers are covered by the National Labor Relations Act (“NLRA”), which originally permitted collective bargaining agreements that required the termination of any employees who failed to join or at a minimum pay representation fees to the union. While these “union security clauses” remain lawful in most states, the 1947 Taft-Hartley amendments added NLRA Section 14(b), which gave states the ability to enact laws providing employees the “right to work” without becoming a union member or paying dues. On February 1, 2012, Indiana became the 23rd state – the first since Oklahoma in 2001 and the first in the former “rust belt” heart of unionization – to pass a right to work law.
Indiana’s right to work law only applies to agreements “entered into, modified, renewed, or extended after March 14, 2012” and does not affect any written or oral contract or agreement that was already in effect on that date. Although nothing in the law prohibits employees from voluntarily choosing to become a union member and pay dues, the law prohibits agreements requiring employees to become or remain a member of a union; pay dues, fees, or other charges to a union; or pay a charity or other third-party fees representing the charges that union members might otherwise pay. Thus, if it were entered into on or after March 15th, any collective bargaining agreement or practice between an employer and union that requires union membership or the payment of these fees would be unlawful and void.
As might be expected, unions have raised legal challenges to the right to work law, including one based on an Indiana constitutional provision that prohibits “special laws” relating to fees or salaries. A separate union request for a temporary restraining order was withdrawn after Indiana State officials clearly acknowledged that the law would not be applied retroactively to contracts in effect on or before March 14th. It remains to be seen what will happen to the other challenges.
The new law raises several unanswered questions. For example, nothing in the statute indicates what happens to collective bargaining agreements where a tentative agreement was reached on or before March 14th, but union ratification does not occur until March 15th or later. Likewise, what happens if a “grandfathered” agreement, by its terms, is automatically renewed after March 15 because neither side provided the requisite notice to terminate the labor contract? Some might argue that this results in an automatic “renewal” or extension as defined in the statute and that therefore the union security clause cannot be enforced, while others might argue that because the old agreement was never “formally” terminated, renewed, or extended, the union security clause continues to be a term of the “existing” pre-March 15, 2012 agreement.
It is also unclear what happens if, as often occurs, an employer and union negotiate and agree upon “side letters” or other oral or written understandings during the term of a pre-March 15 labor contract. Are these side letters, oral agreements, or other changes to the labor agreement’s application in effect “modifying” the agreement so that the union security clause is unenforceable? As is frequently the case, we may need to wait for the inevitable litigation to provide clear answers. Perhaps equally important, however, it remains to be seen what will happen in Indiana once employees have the right to choose whether or not to join a union and pay dues. Studies regarding the most recent experience in Oklahoma indicate that approximately 25% of dues paying union members ceased paying dues once Oklahoma’s right to work law went into effect.
Perhaps, like Caesar, unions will be asking: “Et tu, Brute?”