• Does Public Sector Union Bargaining Rights Reform Portend a General Referendum on Organized Labor?
  • April 6, 2011 | Authors: Philip B. Rosen; Daniel Schudroff
  • Law Firms: Jackson Lewis LLP - Brookfield Office ; Jackson Lewis LLP - New York Office
  • The battles playing out in Wisconsin, Indiana, Ohio, and Michigan over public sector collective bargaining rights have dominated the news headlines over the past few months. Opponents to public sector unionism have argued that either eliminating or significantly curtailing public employees’ collective bargaining rights is necessary to balance state budgets across the country. This article addresses developments in these Midwestern states and possible implications that restricted collective bargaining rights for public sector employees might have on organized labor as a whole.

    State Legislative Activity

    In Wisconsin, Governor Scott Walker and the Republican-dominated state legislature successfully passed a bill that, among other things, requires most public employees to contribute approximately 12 percent of health insurance costs and 50 percent of pension contributions.  It also curtails unions’ bargaining rights with respect to wages to increases at or below the rate of inflation, precludes local governments from deducting union dues from employees’ paychecks, and permits state workers from opting out of contributing union dues. However, unions that have collective bargaining agreements whose terms differ from the provisions contained in the new law will not be affected until the agreements’ expiration. Additionally, the bill requires unions to win a vote by a majority of all their members each year in order to continue serving as their members’ bargaining representative.

    Wisconsin Senate Majority Leader Scott Fitzgerald said of the new law, “This change absolutely gets Wisconsin closer to a balanced budget, a greater balance between the public and private sectors, and most importantly, it prevents deep, real layoffs at both the state and local levels....”  The State A.F.L.-C.I.O.’s president, not surprisingly, viewed the measure differently.  He stated after the Senate passed its version of the bill, “Senate Republicans have exercised the nuclear option to ram through their bill attacking Wisconsin’s working families in the dark of night.”

    While the law was set to take effect on March 26, 2011, on March 18, 2011, a Wisconsin state court judge granted a temporary restraining order blocking its official publication. The judge’s preliminary ruling indicated that legislators may have violated the state’s open meetings law when they passed the legislation.

    On March 31, 2011, the state court judge declared that the law had not taken effect despite the fact that it had been published online by a state official. As a result, as of April 1, 2011, Governor Walker has indicated that his administration will cease attempting to implement the new law.

    The case has begun to wind its way through the appellate courts.  On March 24, 2011, a Wisconsin appellate court refused to take action on the case and reconfirmed its refusal to intervene on March 29, 2011, when it prevented the State’s Attorney General from withdrawing his appeal of the temporary restraining order because the issue had already been sent to the Wisconsin Supreme Court for final resolution. However, the judge’s initial ruling also would not preclude state legislators from reconvening and correcting any asserted  noncompliance with the open meetings law.

    Meanwhile, in Ohio, on March 31, 2011, Governor John Kasich signed similar legislation into law, although opponents have pledged to initiate a voter referendum to overturn this new law.

    In Indiana, Democratic legislators just ended a five-week long absence from the state to prevent the House from reaching quorum and vote on a similar bill to the ones passed in Wisconsin and Ohio. A compromise bill appears to be in the works.

    Finally, in Michigan, on March 16, 2011, Governor Rick Snyder signed a law enabling gubernatorial-appointed emergency financial managers to alter or terminate public sector union contracts in order to help avert local governments’ fiscal crises.


    The effect of events in Wisconsin, Indiana, Ohio, and Michigan on organized labor as a whole, particularly in the private sector, is as yet unclear, but it could either galvanize organized labor into becoming a significant economic force once again or accelerate its steady decline.

    Although the backlash against public sector unions is a relatively recent development, private sector unionism has declined steeply over the past 25 years. While some industry analysts have suggested that the protests against the anti-union bills in these states may have energized organized labor in the private sector, it may not be enough to overcome the challenges private sector unions face due to high unemployment, challenges from a global economy, and their diminished appeal to American workers, occasioned perhaps by federal and state protective labor legislation and enlightened policies by employers.

    Additionally, many members of the public, including unemployed or underemployed private sector workers,  feel that public sector workers should share some of the pain caused by the economy, especially with respect to pension and health benefits. Those who see public sector unions as a cause of state budgetary woes may consider organized labor in both sectors as a contributing factor to the poor economy. That public sector unions historically have carried heavy political clout may add to this perception.

    The issues playing out in Wisconsin, Indiana, Ohio, and Michigan may lead to a general referendum on organized labor and its political influence.