On September 5, 2013, Indiana Superior Court Judge John Sedia ruled that the Indiana right-to-work law violates Article I, Section 21 of the Indiana Constitution, which provides that: “No person’s particular services shall be demanded, without just compensation.” The plaintiffs in Sweeney v. Zoeller, who included the AFL-CIO and the International Union of Operating Engineers, alleged that the statute compelled International Union of Operating Engineers, Local 150 to provide a particular service to individual employees it represents without requiring them to pay for that service.  

In February 2012, Indiana Governor Mitch Daniels signed Indiana’s right-to-work law. The law provides that “A person may not require an individual to . . .  pay dues, fees, assessments, or other charges of any kind or amount to a labor organization[.]” A separate provision provides that a person who violates the law commits a Class A misdemeanor.  

The trial court concluded that there “is no doubt that the statute is backed up by the use or threatened use of legal process: If any person requires the payment of dues as a condition of employment, that person is criminally liable.” The court found that the services provided by a union in representing employees constitute “particular services” under Article I, Section 21 because they have been “historically compensated, by the payment of dues, and are not something required generally of all citizens.” The court noted that the National Labor Relations Act “ensures that nonmembers who obtain the benefits of union representation can be made to pay for them.” Next, the court pointed out that “defendants concede [that] unions are required under federal law ‘to process grievances for non-members, negotiate contracts on behalf of members and non-members alike, and otherwise provide services to non-members, regardless of non-members’ failure to make any payments to the union for the services that the union provides[.]’” The court then concluded that “with the enactment of [the law], it becomes a criminal offense for a union to receive just compensation for particular services federal law demands it provide to employees.” Stated another way, the court found “the effect of [the law] under the current, long-standing federal labor law, is to demand particular services without just compensation.” In short, the court concluded that “just compensation” for a union includes payment of union dues by those employees who support and oppose the union.

The court entered a declaratory judgment that the law violates the Indiana Constitution. However, the grant of any relief under the terms of the court’s order has been stayed pending the perfection of an appeal, which has already been filed. The Indiana right-to-work law remains in effect while the appeal is pending.

The decision is particularly odd from the standpoint that the court’s real complaint appears to be addressed to the structure of federal labor law, which specifically provides that unions must represent members and nonmembers alike if they want to receive the benefits of certification as the exclusive bargaining representative under federal law. Under the court’s reasoning, it would presumably violate the Indiana Constitution for an employer to refuse to agree to a standard union-security clause requiring all unit employees, members and nonmembers, to pay a dues equivalent fee to the union. As a matter of federal labor law, however, an employer is not required to agree to such a clause. The union’s choice in those circumstances is to accept the benefits of certification, and the ensuing obligation to represent all unit employees without regard to membership, or to abandon the representation. Of course, the union has the same option here; so there is actually no “requirement” that the union perform the services at all.

Clients operating in Indiana should wait for the final word from the Indiana Supreme Court before taking any action in response to this opinion. This decision faces an uphill battle on appeal to the Indiana Supreme Court, as the appeal will likely challenge the court’s interpretation of the term “just compensation” and the judge’s analysis of the interplay between federal law and the Indiana Constitution. Moreover, four of five justices on the Indiana Supreme Court are Republican appointees and three of five are Governor Daniels’s appointees.