For businesses, right-to-work ruling comes with short-term uncertainty

Many believe law will ultimately be upheld

Gov. Scott Walker signs right-to-work legislation at Badger Meter in March 2015. Source: Office of Gov. Scott Walker

Last updated on July 2nd, 2019 at 10:58 am

Business supporters of Wisconsin’s Right-to-Work law say they aren’t surprised the law was struck down by Dane County judge William Foust, but they also expect the law will ultimately be upheld by a higher court.

The view that the ruling would eventually be overturned is a common one among supporters of the law, said Steve Baas, Metropolitan Milwaukee Association of Commerce senior vice president for governmental affairs and public policy.

“I don’t think there’s a whole lot of panic in the business community that his ruling is going to stand,” Baas said.

If the Fourth District Court of Appeals doesn’t overturn Foust’s ruling, supporters would likely have a better chance at the state Supreme Court where conservatives hold a 5-2 majority.

“I wouldn’t even rule out a 7-0 ruling,” Baas said.

Supporters of the law often note 25 other states have a right-to-work law. Many of those laws have withstood challenges in the court system and supporters say that is part of the reason the law will ultimately be upheld.

Ed Paradowski, president of Apache Stainless Equipment Corp. in Beaver Dam, is among those who said he wasn’t surprised by the ruling but expects it to be overturned. He has been a strong supporter of right-to-work, although Apache is 100 percent employee owned and doesn’t have a union.

Paradowski said he feels right-to-work will improve the business climate in the state. He noted that he gets phone calls “with some frequency” from other states seeking to recruit his business, adding that the pitches generally involve arguments around workforce, logistics, energy and commerce friendly government.

“The workforce piece of it is as important as anything,” he said.

Gov. Scott Walker signs right-to-work legislation at Badger Meter in March 2015. Source: Office of Gov. Scott Walker
Gov. Scott Walker signs right-to-work legislation at Badger Meter in March 2015. Source: Office of Gov. Scott Walker

Still, the ruling has the potential to influence ongoing or upcoming union negotiations or businesses that agreed to new union contracts after the law was signed in 2015. The law prohibits businesses and unions from requiring employees to pay union dues as a condition of employment.

Rich Meeusen, chief executive officer of Brown Deer-based Badger Meter, is one of those facing uncertainty about how to proceed with upcoming negotiations. One of the biggest supporters of the law during debate over its passage, Meeusen hasn’t implemented right-to-work provisions yet because Badger Meter’s five-year contract with the International Association of Machinists District 10 doesn’t expire until Oct. 31.

“I simply want my workers to have a choice,” he said, adding that negotiations would likely have begun in August but now one side or the other might seek an extension.

Business support for the law has been significant, but it has not been unanimous. A group of several hundred business and private-sector skilled trade representatives came together during debate on the bill as the Wisconsin Contractor Coalition to oppose the measure. A call and email to the group’s spokesman were not returned.

Opponents of the law contend it allows employees who choose to not be union members to receive the benefit of negotiations without paying their share.

“Right-to-work goes against the Wisconsin principles of fairness and democracy and hurts all of Wisconsin by eroding the strength of our middle class,” said Wisconsin AFL-CIO president Phil Neuenfeldt in a statement last week. “The courts put a needed check on Scott Walker’s attacks on working families.”

In his ruling, Foust noted several unions in the state had already reported losing $2,000 and $4,000 in annual revenue since the bill became law.

“While plaintiffs’ losses today could be characterized by some as minor, they are not isolated and the impact of Act 1 over time is threatening to the unions’ very economic viability,” Foust wrote.

In 2015, Wisconsin union membership dropped by 83,000, the largest drop by any state. The gap between the number of people in unions and those represented by unions did increase by 9,000 to 30,000.

The law remains in effect pending a final ruling by Foust. The unions challenging the law have asked him to declare it unconstitutional and prohibit enforcement of it. Attorney general Brad Schimel plans to appeal the decision and is asking Foust to stay his ruling while the appeal is pending.

If Foust doesn’t stay the ruling, Schimel could ask the Court of Appeals or even the Wisconsin Supreme Court to put it on hold, said Michael Aldana, a partner in the Quarles & Brady LLP labor and employment group.

“It’s going to have the biggest impact on employers who are in the middle of collective bargaining,” Aldana said.

While the fate of the law will ultimately be sorted out in the courts, the challenge is what to do in the meantime. Aldana said he expects unions to push hard to have provisions requiring dues payments to be included and added that clients are having to be creative about handling the ruling. He noted some are looking to establish an interim agreement until there is a final ruling, but others are taking the position the ruling only applies to the unions who were plaintiffs in the lawsuit.

Aldana also said employers who have negotiated new contracts since the law was signed may receive demands from the union to reopen negotiations.

“I haven’t heard that yet, but that’s another area for employers,” Aldana said.

In striking down the law, Foust agreed with arguments from the plaintiffs, which included the Wisconsin AFL-CIO, United Steelworkers District 2 and International Association of Machinists District 10 Lodge 1061. The unions contended the law amounted to of a taking of their property while they were still required to negotiate on behalf of non-members.

Meeusen said it wasn’t unexpected that there would be a legal challenge to the law – many of the measures passed by Republicans in recent years have – or that a Dane County judge would overturn it.

“It’s unfortunate though that things work this way, because it causes a lot of confusion,” Meeusen said.

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Arthur covers banking and finance and the economy at BizTimes while also leading special projects as an associate editor. He also spent five years covering manufacturing at BizTimes. He previously was managing editor at The Waukesha Freeman. He is a graduate of Carroll University and did graduate coursework at Marquette. A native of southeastern Wisconsin, he is also a nationally certified gymnastics judge and enjoys golf on the weekends.

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