Indiana has become the 23rd state to enact what is commonly known as a right-to-work statute. The National Labor Relations Act permits employers and unions to enter into "union security" clauses that require, as a condition of employment, employees to become members in good standing of the union. Much to the dismay of unions, however, Section 14(b) of the Act permits individual states to override this one aspect of federal law if that state has enacted a statute that prohibits "the execution or application of agreements requiring membership in a labor organization as a condition of employment." With the enactment of its statute, Indiana joins Virginia, North Carolina, South Carolina, Georgia, Florida, Alabama, Tennessee, Arkansas, Mississippi, Texas, Oklahoma, Kansas, Nebraska, Iowa, South Dakota, North Dakota, Wyoming, Nebraska, Arizona, Utah, Nevada, and Idaho as "right-to-work" states.

The Indiana statute, signed into law on February 1 by Republican Gov. Mitch Daniels, goes into effect on March 14, 2012, and makes it a Class A misdemeanor for any person to require, as a condition of employment or continued employment, an individual to "(1) become or remain a member of a labor organization; (2) pay dues, fees, assessments, or other charges of any kind or amount to a labor organization; or (3) pay to a charity or third party an amount that is equivalent to or a pro rata part of dues, fees, assessments, or other charges required of members of a labor organization." The statute further renders any agreement that would violate the statute "unlawful and void." Violations can result in liability for actual and consequential damages, liquidated damages up to $1,000, and attorney fees and costs incurred by the individual who suffered the injury.

Significantly, the statute applies only "to a written or oral contract or agreement entered into, modified, renewed, or extended after March 14, 2012." (Emphasis added.) Thus, existing collective bargaining agreements containing union security clauses do not automatically become unlawful. It is only when the agreement is modified, renewed, or extended that the union security clause becomes subject to challenge.

What is not entirely clear is whether the "enforcement" of an existing union security clause after March 14, 2012 would violate the statute. Although it appears to be the intent of the state legislature to exempt existing agreements, the statute treats acts directed at individuals (whether pursuant to contract or not) separately from contractual agreements, and does not explicitly authorize enforcement of an existing union security clause after March 14, 2012.