BSCs Benefit From Right-to-Work Legislation

Michigan’s enactment of a “right-to-work” statute in December made national headlines. Few issues are likely to stir more controversy, so I thought it might help readers understand the issue if I explained a few relevant terms and concepts.

When a labor organization is recognized by an employer, either voluntarily or through an election conducted by the National Labor Relations Board, as the representative of a group of workers for the purposes of bargaining over wages, hours and other terms and conditions of employment, that labor organization has the legal duty to represent all of the employees in the group equally. The union must provide the same services to all workers in the group, regardless of whether they are actual members of the union. All employees are supposed to receive the same rates of pay, benefits and access to union representation.

In return for these services, the union has the legal right to ask for compensation. This generally takes the form of a “union shop” clause in a collective bargaining agreement. Such a clause provides that all employees must become members within 30 days and pay uniform dues and assessments. Failure to do so can result in termination of employment.

Congress, however, wrote a provision into federal labor law that allows each state to enact “right to work” legislation. This means that a worker cannot be compelled to join a union as a condition of employment. Twenty-four states have now done exactly that: Alabama, Arizona, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Louisiana, Michigan, Mississippi, Nebraska, Nevada, North Carolina, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia and Wyoming.

The laws of each state vary significantly. Some states forbid a union from receiving any compensation; other states permit a union to impose “agency fees” to reimburse it for the costs of providing services to the employees it represents.

The labor movement has reacted to the Michigan law with predictable outrage, claiming that it seeks to destroy unions by depriving them of essential income. In Michigan’s case, the motivation is more economic than philosophical.

One of Michigan’s most important industries is automotive manufacturing. Ford, GM and Chrysler all have an important and long-standing presence in the state. Foreign brands, however, such as Mercedes, Toyota, Hyundai and Mazda are building big, new plants in the United States; these plants are almost universally located in “right to work” states such as Alabama and Arkansas where wages are lower and unions are weaker. Michigan, seeking to preserve its hegemony in the automotive industry, enacted its new law in an effort to get its share of the new construction, together with the employment and tax revenues they bring.

Historically, “right-to-work” laws were found in rural, mostly agricultural states, many in the Deep South. This is no longer true. The trend is for more and more states, including some that are urban and industrial such as Michigan and Indiana, to enact such laws to either gain new industries or to protect existing industries within their borders. Ten states have put such laws on their books within the past 20 years. Michigan is only the latest.

Employers in the building service industry benefit from this trend, although they are probably not the intended beneficiaries. Depriving unions of at least part of their revenue base has the inevitable result of making them smaller and weaker than they would otherwise be. This could well accelerate the ongoing national decline in the rate of union membership (presently at 6.9 percent, down from 37 percent in 1955). Only time will tell.

Perry Heidecker is senior counsel for Milman Labuda Law Group PLLC, Lake Success, N.Y. The firm is a full-service Employment Law practice focused on counseling, preventive advice and training, policy and procedure design, representation before administrative agencies, litigation, and appeals.