United States: Courts Disagree On Whether Locally Enacted "Right-To-Work" Laws Are Pre-empted By The NLRA

Kenneth A. Jenero is a partner in our Chicago office.

HIGHLIGHTS:

  • The issue of a local governmental unit's authority to enact a right-to-work law recently was addressed in two federal court cases: International Union of Operating Engineers, Local 399, AFL-CIO, et al. v. Village of Lincolnshire, et al., decided by the U.S. District Court for the Northern District of Illinois, and United Automobile, Aerospace and Agricultural Workers of America Local 30147, et al. v. Hardin County, Kentucky, et al., decided by the U.S. Court of Appeals for the Sixth Circuit.
  • In Village of Lincolnshire, the District Court held that laws enacted by political subdivisions of a state do not qualify as "State or Territorial law" under Section 14(b) of the National Labor Relations Act (NLRA) and that, accordingly, the village's right-to-work ordinance was pre-empted by the NLRA.
  • In so doing, the District Court specifically disagreed with the earlier decision of the Sixth Circuit in Hardin County, which held that the county's right-to-work ordinance was valid and enforceable under Section 14(b).

The National Labor Relations Act (NLRA) generally permits private sector employers and unions to agree to include "union security" provisions in their collective bargaining agreements. Union security provisions promote compulsory unionism by requiring employees to join or pay dues to a union as a condition of employment. These provisions often are accompanied by other pro-union clauses, such as "dues checkoff" clauses requiring employers to serve as the union's collection agent by deducting the required union dues from the employees' paychecks and remitting them to the union, and "hiring hall" provisions requiring employers to hire only those applicants who have been recommended, approved, referred or cleared by, or through, the union.

Although permitted by the NLRA, Section 14(b) of the NLRA specifically exempts from the Act's protection union security provisions that are prohibited by "State or Territorial law." Laws prohibiting union security clauses are referred to as "right-to-work" laws. More than half of the states in the U.S. have enacted right-to-work laws. In January 2017, Kentucky joined the growing number of Midwestern states – including Indiana, Iowa, Michigan and Wisconsin – that have enacted such laws. A number of counties and municipalities located in non-right-to-work states recently have attempted to take matters into their own hands by passing local right-to-work ordinances prohibiting employers and unions conducting business within their jurisdiction from making or enforcing union security provisions. This action, in turn, has led the affected unions to respond with lawsuits asserting that only states and territories – not their political subdivisions – are authorized to enact right-to-work laws under Section 14(b) and that the NLRA pre-empts locally enacted right-to-work laws.

Sixth Circuit and District Court Decisions

The issue of a local governmental unit's authority to enact a right-to-work law recently was addressed in two federal court cases: International Union of Operating Engineers, Local 399, AFL-CIO, et al. v. Village of Lincolnshire, et al., Case No. 16 C 2395, decided by the U.S. District Court for the Northern District of Illinois on Jan. 7, 2017, and United Automobile, Aerospace and Agricultural Workers of America Local 30147, et al. v. Hardin County, Kentucky, et al., Case No. 16-5246, decided by the U.S. Court of Appeals for the Sixth Circuit on Nov. 18, 2016. In Village of Lincolnshire, the District Court held that laws enacted by political subdivisions of a state do not qualify as "State or Territorial law" under Section 14(b) and that, accordingly, the village's right-to-work ordinance was pre-empted by the NLRA. In so doing, the District Court specifically disagreed with the earlier decision of the Sixth Circuit in Hardin County, which held that the county's right-to-work ordinance was valid and enforceable under Section 14(b).

Interestingly, the Northern District of Illinois and Sixth Circuit considered virtually all of the same legal arguments regarding the language of Section 14(b), the legislative history of Section 14(b), potentially relevant Supreme Court precedents and policy considerations – and yet reached diametrically opposite results. In a nutshell, the Sixth Circuit concluded that because local governmental units with home rule powers are "merely subordinate components of the whole," they enjoy the same freedom that their state does under Section 14(b). As such, to conclude that a right-to-work ordinance enacted by a local governmental unit is not covered by Section 14(b) would require evidence of "a clear and manifest purpose to pre-empt state authority to delegate governmental powers to its political subdivisions." Finding a lack of such evidence in the case before it, the Sixth Circuit concluded: "Because Hardin County's right-to-work ordinance is 'State law,' it is not preempted."

The Northern District of Illinois expressly disagreed with the Sixth Circuit's analysis. According to the Northern District, the "dispositive question is not whether Congress intended to pre-empt state authority to delegate governmental power." Rather, "the question is whether Congress intended to pre-empt legislation in general in the field of union security agreements." Finding that Congress had this intention in passing the NLRA, the court concluded that the exception in Section 14(b) must "be read narrowly to extend to states and no further." Therefore, because ordinances enacted by political subdivisions do not qualify as "State law" under Section 14(b), the Village of Lincolnshire's right-to-work ordinance was pre-empted by the NLRA.

Although the Northern District and Sixth Circuit disagreed regarding the authority of political subdivisions to enact laws that prohibit true union security clauses, they agreed that the NLRA pre-empts both states and their political subdivisions from enacting laws that prohibit or restrict dues checkoff clauses or hiring hall provisions in collective bargaining agreements. Both courts agreed that the exemption set forth in Section 14(b) is limited to those provisions that amount to "compulsory unionism." Because voluntary dues checkoff clauses and hiring hall provisions do not, by themselves, require employees to join or pay dues to a union as a condition of employment, they do not fall within the scope of the exemption provided in Section 14(b). As such, they are pre-empted.

Considerations for Local Governments

The Village of Lincolnshire decision likely is headed to the Seventh Circuit Court of Appeals and, if it affirms the lower court's decision, there will be a conflict in the circuits that is ripe for review by the U.S. Supreme Court. It could take many years before the issue is finally decided. For now, however, local governmental units within the Sixth Circuit (which encompasses the states of Kentucky, Michigan, Ohio and Tennessee) have a green light to enact and enforce right-to-work laws. Local governmental units in other federal circuits, including the Seventh Circuit (which covers the states of Illinois, Wisconsin and Indiana), must exercise caution before enacting such laws, at least until their particular circuit – or ultimately, the U.S. Supreme Court – decides the issue.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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