Union security agreements executed after the enactment of Michigan’s Right-to-Work law, but before its effective date, are unenforceable, held the Michigan Court of Appeals in Taylor School District, et al. v. Rhatigan, et al., No. 326128.
The case stemmed from a labor dispute that arose between the employees of the Taylor Board of Education, the Taylor School District (the “School District”), and the Taylor Federation of Teachers, AFT, Local 1085 (the “Union”). In February 2013, the Union and the School District executed a collective bargaining agreement (“CBA”) and a union security agreement. The union security agreement required each member of the bargaining unit represented by the union to either become a dues-paying member of the union or pay a service fee to share in the costs associated with the negotiation and administration of the CBA until the agreement expired in 2023. Public school employees subsequently filed various unfair labor practice charges against the School District and the Union under the Public Employment Relations Act (“PERA”).
After a hearing, an administrative law judge recommended dismissal of the charges. However, the Michigan Employment Relations Commission (“MERC”) determined, among other things, that the union security agreement was unenforceable against the employees, reasoning that (1) the ten-year duration of the agreement was excessive and unreasonable, and (2) compelling bargaining-unit members to financially support a labor organization was a violation of PERA, as amended in December 2012.
On appeal, the School District and the Union asserted that PERA, as amended, impermissibly impaired the union security agreement because the agreement was executed before the right-to-work amendment took effect in March 2013. Accordingly, the respondents asserted the employees had no right to be free from the agreement’s financial obligations. The Court of Appeals disagreed. After reviewing the constitutional impairment-of-contract provisions of the United States’ and Michigan’s Constitutions, the Court concluded that the right-to-work amendment applies to agreements executed after its enactment but before its effective date. Therefore, the impairment-of-contract provisions were inapplicable.
With that backdrop in mind, the Court next reviewed MERC’s conclusions regarding the unfair labor practice charges against the school district and the union. With respect to the School District, the employees charged the school district with (1) interfering with the employees’ free exercise of their rights under PERA and (2) discriminating against the employees in regards to their working conditions in order to encourage union membership. Regarding the interference charge, the School District again argued that the employees had no right to be free from any financial obligation to support the Union because the union security agreement was enacted before the effective date of the right-to-work amendment. However, for the same reasons with respect to the School District’s Union’s contract-impairment arguments, the Court of Appeals disagreed. Regarding the discrimination charge, the School District asserted, in part, that it had not engaged in an adverse employment action against the employees, or that such adverse action was a motivating factor in the School District’s decision to enter into the union security agreement. The Court of Appeals again rejected the School District’s assertion, reasoning that forcing the employees to pay service fees to the Union was an adverse employment action affecting the employees’ wages. Moreover, the Court found the timing of the union agreement’s execution suspicious, recognizing that the agreement was passed almost immediately after the PERA amendment was signed into law.
With respect to the Union, the employees asserted that it breached its duty of fair representation by executing the union security agreement before the right-to-work amendment came into effect. The Court of Appeals agreed for the same reasons articulated with respect to the School District, and additionally, because the CBA executed between the School District and the Union significantly negatively impacted union members by reducing members’ wages by 10 percent and suspending pay increases, among other modified working conditions. Accordingly, the Court of Appeals affirmed.
The Honorable Judge Donald S. Owens dissented, reasoning in part that the majority misinterpreted PERA, as amended. According to Judge Owens, PERA, as amended, clearly and explicitly permitted the enforcement of union security agreements entered into before its effective date. Therefore, according to Judge Owens, the employees did not have a protected right to be free from any obligation to financially support the Union at the time of the union security agreement’s execution. Also, with respect to the Union’s duty of fair representation, Judge Owens asserted that the evidence presented in support of a finding of the Union’s breach of its duty of fair representation was insufficient to conclude that a breach of this duty occurred.