Seyfarth Synopsis: This weekend Kentucky became the 27th state to pass right-to-work legislation, eliminating the right of unions to collect compelled-dues payments and providing a significant boost to employers hoping to operate union-free.

On Saturday, January 7th, Kentucky’s Governor signed Kentucky House Bill 1 into law, making Kentucky the 27th state in the country to adopt right-to-work legislation and the last state in the South to pass such a law. The new legislation is effective immediately but carves out an exemption for existing collective bargaining agreements.

The law bars making union membership a condition of employment and allows workers in union shops to opt out of paying union dues without fear of losing their jobs. The law also prohibits public employees from going out on strike.

Kentucky House Bill 1 was introduced on January 3 and fast-tracked by Kentucky House Republican leaders, passing by a vote of 58-39 on January 5th and pushed through the full State Senate in a special Saturday session on January 7th. A major factor motivating Kentucky Republicans who introduced the law is that Kentucky’s unemployment figures lag behind those of neighboring right-to-work states such as Indiana and Wisconsin. Likewise, while Kentucky’s overall union membership rates remain on par with the U.S. average, private-sector union membership rates in Kentucky are slightly above the national average. For example, in 2016, 11 percent of employees in Kentucky belonged to a union (right around the national average of 11.1%), while Kentucky’s private-sector employee membership rates hovered slightly above 8 percent, higher than the national average of 6.7 percent.

Overall, right-to-work states are considered more favorable to employers. Specifically, employers in non-right-to-work states experience a higher density of unionization and increased organizing efforts. Likewise, employers in non-right-to-work states often experience greater employment costs associated with doing business. For example, employers in non-right-to-work states: (a) generally pay higher wage rates and benefits to employees, regardless of the employer’s union status; and (b) are subject to increased government regulation of employment, including pro-employee laws and onerous regulations, as unions in these states often possess greater political capital and have additional lobbying capabilities as a result of compelled-dues payments.

Kentucky House Bill 1 follows the 6th Circuit’s recent affirmation of the rights of Kentucky counties to pass right-to-work legislation based on Kentucky’s home-rule powers. See UAW v. Hardin Cty., Docket No. 16-5246 (6th Cir. Nov. 18, 2016). Not surprisingly, Kentucky House Bill 1 restricts the right of local governments to enforce an ordinance contrary to the provisions of the new state law.

Kentucky’s right-to-work legislation comes as Republicans control the state government in Kentucky for the first time in nearly a century. States such as Missouri and Iowa may follow Kentucky’s lead, where Democrats suffered losses in November and state lawmakers have expressed interest in pursuing such laws and creating more employer-friendly climates.