On December 11, 2012, Governor Rick Snyder signed into law two bills collectively enacting "Right to Work" legislation in the State of Michigan. Michigan becomes the 24th state to enact some form of a right to work law, and joins Indiana as the second state in the Upper Midwest to do so in 2012. Wisconsin passed a similar law in 2010, though that highly publicized legislation applied only to public sector employers and unions. The most significant aspect of right to work laws is that they prevent unions and employers from requiring workers to join a union or to pay union dues as a condition of employment. The law will take effect gradually (it takes effect on or around April 1, 2013), as it allows all current collective bargaining agreements between unions and employers to remain in place.

So what does the new law actually say? Michigan’s Right to Work Law was passed as two separate Public Acts. Public Act 348 addresses private sector unions and amended 1939 PA 176, which governs many union activities and the relationship between unions and private employers in Michigan. Public Act 349 is a nearly identical Act that relates to public sector employers and unions. The following is a summary of significant changes to private sector relationships between unions and employers as a result of Public Act 348:

• Outlaws Closed Shops. Private sector employees may now choose whether or not to join a union or pay any dues or charitable contributions in relation to union membership. Individuals can no longer be required, as a condition of new or continued employment, to join or pay dues to a union, or to pay any charitable organization or third party an amount in lieu of union dues. Employees in Michigan can now decide, individually, whether they want to join a union and pay dues ("open shop"). Under prior Michigan law, an employee, by a labor agreement, could be compelled to join a union and pay dues (referred to as "closed shop" or "union security" clause). That is now banned.
• Individuals Still Must Be Allowed to Join Unions. Consistent with prior Michigan law, individuals shall not be required to refrain or resign from membership in or to avoid financially supporting a union as a condition of employment.
• Invalidates Closed Shop Agreements. Any agreement, contract, understanding, or practice between an employer and a labor organization that violates the Act is invalid.
• Current Collective Bargaining Agreements Unaffected. The Act contains a "Grandfather Clause." The prohibition against closed shop agreements applies only to an agreement, contract, understanding, or practice that takes effect or is extended or renewed after the effective date of the Act.
• Violation Subject to Civil Fine. Any individual, employer, or labor organization that violates Section 1 of the Act by requiring an individual to join or resign from a union, or pay or refrain from paying dues, may be fined up to $500.
• Private Right of Action for Injured Persons. Any person injured by a violation of the Act (i.e. forced or threatened to be forced to join or quit a union as a condition of employment) may file a civil action for injunction and damages. The provision contains a "fee shifter," meaning a prevailing plaintiff gets costs and reasonable attorney fees associated with the civil action.
• Employees Subject to Civil Fines for Intimidation. Any employee who attempts to compel by force, intimidation, or unlawful threats any person into joining a union or paying dues may be liable for a civil penalty of up to $500.
• Responsibilities of the Michigan Department of Licensing and Regulatory Affairs (LARA). The Act allocates $1 million to LARA to do the following: (1) respond to public inquiries regarding the Act; (2) provide sufficient staff and resources to implement the Act; and (3) inform employers, employees, and labor organizations concerning their rights and responsibilities under the Act. An informational hotline, website, and/or informational pamphlets are likely to become available as a result of this section.

Public Act 349 contains nearly identical provisions pertaining to public sector employers and unions in Michigan. The only significant difference in Public Act 349 is it contains an exception for public police, fire departments, and state police unions. These unions may continue to collectively bargain for an agreement that all members of their organization shall pay union dues or fees to their union or exclusive bargaining representative.

There are likely to be challenges, both legal and political, to the new legislation. Labor unions, including the Michigan-based UAW, have already pledged to challenge the Acts in court. The Acts grant exclusive jurisdiction to the Michigan Court of Appeals, and indicate that the Court of Appeals will hear the action in an expedited manner. From a political standpoint, the monetary allocation to LARA in each Act prevents a referendum on the Acts because of language in Michigan’s Constitution. Instead, the UAW has indicated it will attempt to recall state legislators who supported the Act, and potentially Governor Snyder. A recall effort as to Governor Snyder may be less likely because he is up for re-election in 2014, but one might expect a scene similar to what played out in Wisconsin throughout 2011.

The significance of this legislation will also be felt throughout the Upper Midwest. Like Wisconsin, Michigan may be viewed as a bellwether for union opposition to right to work legislation. State and local governments, as well as private employers operating in closed shop states will need to remain aware of regional trends and shifting business climates as the right to work legislation in their neighboring states begins to take effect. As Michigan’s neighbor to the south, Ohio is now potentially under more pressure to pass a right to work measure given that its surrounding neighbors, Indiana, Kentucky, and now Michigan, are right to work states.

MBF client-employers will want to continue to monitor legislative developments, especially those clients making site selection decisions either to expand existing facilities or open new locations. Also, for those clients with operations in Michigan, there are issues to consider now including employee communications and other impacts the new Michigan law will have on existing operations.