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September/October 2017 Issue

Also in this issue: Budget Bill Eliminates Domestic Partnership Benefits     |     Department of Labor Overtime Rule Halted     |     Wisconsin Court of Appeals Clarifies Municipal Authority to Issue Raze Orders     |     City of Madison Kicks Off 100% Renewable Energy Resolution Efforts

Court Rejects Claim that Right-to-Work Law Is an Unconstitutional Taking

The Wisconsin Court of Appeals recently reversed a circuit court decision holding Wisconsin’s right-to-work law, 2015 Wis. Act 1, to be an unconstitutional taking of the private property of unions. International Ass’n of Machinists v. State of Wisconsin, 2016AP820 (Sept. 16, 2017) (recommended for publication). Act 1 makes it a crime for employers or unions to require employees to become members of a union or to pay any sums to a union in return for the union’s representation of them.

The court of appeals began with a discussion of the history of federal and state labor laws prior to the adoption of Act 1. A union may become the exclusive representative of all employees in a bargaining unit. As such, it has the authority to negotiate the terms and conditions of employment binding on all employees in the unit regardless of union membership. Concomitantly, the union has the duty to represent all employees equally without discrimination as to union membership. Prior to Act 1, employers and unions in Wisconsin could require employees who are not union members to pay unions an equivalent of the union dues attributable to the unions’ costs of representing the employee.

The U.S. Constitution bars the government from taking private property without paying just compensation. The court of appeals found that Act 1 does not take unions’ property for several reasons. First, the statute imposes an obligation of equal representation on unions; it does not concern itself with how that obligation will be funded. The Act does not confiscate any funds in unions’ accounts. Second, the duty is owed to third parties, not to the government itself. Third, the law does not mandate that unions represent employees. Rather, a union undertakes that obligation when it voluntarily chooses to become the exclusive representative of employees.

The court then addressed whether Act 1 constitutes a regulatory taking. In brief, a regulatory taking occurs when the government imposes regulations that “go to far.” The primary factors in analyzing whether a regulatory taking has occurred are: (a) the economic impact on the challenger, (b) whether the regulation interferes with the challenger’s “reasonable investment-based expectations,” and (c) the nature of the government’s actions. The analysis focuses on what the government actual takes, not on what the owner loses.

The court of appeals found that there was no regulatory taking , because the unions did not have a reasonable expectation that Wisconsin’s labor laws would remain the same. Federal law has allowed right-to-take laws for decades. By the time Act 1 was enacted, half the states and the federal government had adopted similar right-to-work laws. The court rejected the unions’ analogy to cases finding an unconstitutional taking where regulatory bodies for public utilities impose customer rates that are too low to compensate the utilities for the costs of providing the services. The court reasoned that, unlike regulated utilities, unions have broad discretion to set the amount of dues they charge members. Utilities must always charge their customers reasonable rates. In addition, the court found that non-union members are not the equivalent of utility customers, because the function of labor unions is to serve the collective good of the bargaining unit rather than individual employees.

— Mark J. Steichen

This newsletter is published and distributed for informational pur- poses only. It does not offer legal advice with respect to particular situations, and does not purport to be a complete treatment of the legal issues surrounding any topic. Because your situation may differ from those described in this Newsletter, you should not rely solely on this information in making legal decisions.

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