Aug. 4, 2014 – The Wisconsin Supreme Court (5-2) recently upheld Act 10, ruling that the “budget repair bill” does not violate constitutional protections through provisions that limit the right of workers to collectively bargain through unions.
Specifically, in Madison Teachers Inc. v. Scott Walker, 2014 WI 99 (July 31, 2014), five justices ruled that 2011 Wisconsin Act 10 does not violate workers’ associational or equal protection rights under U.S. and state constitutions, among other conclusions.
Act 10 modified Wisconsin labor laws, prohibiting collective bargaining on issues other than base wages. Previously, employers could also bargain on hours, working conditions, and non-base wages such as overtime, bonuses, and merit increases.
The law also requires annual certification of bargaining agents by a supermajority, and prevents bargaining agents from collecting costs associated with the indirect representation of non-represented employees who benefit from bargaining activity.
Previously, bargaining agents could negotiate for “fair-share” payments and agents remained the exclusive bargaining agent unless 30 percent of employees called for a recertification election, the costs of which are borne by the unions. Act 10 also prohibits automatic payroll deductions for union dues, which was allowed previously.
Madison Teachers Inc., a union that represents more than 4,000 public employees at the Madison Metropolitan School District, challenged these changes as unconstitutional.
But the majority of the court upheld Act 10 in its entirety. First, the majority noted that collective bargaining is a statutory right, not a constitutional right.
“No matter the limitations or ‘burdens’ a legislative enactment places on the collective bargaining process, collective bargaining remains a creation of legislative grace and not constitutional obligation,” wrote Justice Michael Gableman for the majority, which included Justices David Prosser, Patience Roggensack, and Annette Ziegler.
Justice Patrick Crooks wrote a concurring opinion. He noted that Act 10 “effectively ended meaningful union representation carried out through statutory collective bargaining,” but also noted that Act 10 does not violate the U.S. or state constitutions.
“The legal questions in this case can be answered in no other way than the majority answers them,” Justice Crooks wrote. “The collective bargaining rights at issue here are statutory, not constitutional rights.”
Justice Ann Walsh Bradley wrote a dissenting opinion, joined by Chief Justice Shirley Abrahamson. They concluded that Act 10 does infringe on constitutional rights through provisions that place significant burdens on the “associational right to organize.”
“Because Act 10 infringes on associational rights to organize by discouraging and punishing membership in collective baragaining units, it can survive strict scrutiny only if it is narrowly tailored to meet a compelling government interest,” Bradley wrote.
“The State has made no argument that Act 10 is narrowly tailored to meet a compelling government interest and has conceded that it cannot meet this standard.”
However, the majority noted that any burdens on the statutory right to collectively bargain are inconsequential to the constitutional question: “Act 10 certainly presents meaningful difficulties for certified representatives, but these difficulties have no bearing on our analysis of the Act’s constitutionality,” wrote Justice Gableman.
Majority: Right to Associate
Enacted in 2011, Act 10 changed statutory collective bargaining rights under the State Employee Labor Relations Act and the Municipal Labor Relations Act.
Although collective bargaining is a statutory right, Madison Teachers Inc. (MTI) said Act 10 impermissibly burdened the right to associate, which is a constitutional right.
In September 2012, Dane County Circuit Court Judge Juan Colas halted enforcement of Act 10, ruling that most of its provisions were unconstitutional. He also issued a contempt order against the government officials charged with enforcing it. The Wisconsin Court of Appeals certified the case to the state supreme court last year.
The U.S. Court of Appeals for the Seventh Circuit twice upheld Act 10 in two separate cases, one decided in January 2013 and the other in April of this year.
But all eyes were on the Wisconsin Supreme Court to decide the fate of Act 10, given the long history of collective bargaining in Wisconsin and the protests and recall elections that divided Wisconsin and captivated onlookers throughout the nation.
“These issues are always emotionally charged, especially in turbulent times, but perhaps nowhere are these topics more controversial or sensitive than in the State of Wisconsin,” wrote Justice Gableman for the majority.
First, the majority ruled that Act 10 does not implicate the right to associate, because Act 10 does not prohibit workers from associating together in a union.
It rejected MTI’s argument that Act 10 is unconstitutional because it penalizes public workers who choose to associate for collective bargaining purposes. Joining a union, MTI argued, means they cannot bargain on anything beyond base wages. As the majority notes, this argument is rooted in the so-called doctrine of unconstitutional conditions.
“This doctrine embodies the principle that freedom of speech would be rendered a hollow right if the government was permitted to place, as a condition on the receipt of a governmental benefit, any restrictions on speech it pleased,” Gableman noted.
Although recognizing the unconstitutional conditions doctrine and “its robustness in our jurisprudence,” the majority declared that it is not applicable in this case.
“[G]eneral employees are not being forced under Act 10 to choose between a tangible benefit and their constitutional right to associate,” Gableman wrote.
The majority noted that under Act 10, public workers still receive a statutory benefit because employers are required to bargain on base wages, whereas unrepresented workers cannot force their employers to collectively bargain on any subject.
“[T]he plaintiffs’ associational rights are in no way implicated by Act 10’s modifications to Wisconsin’s collective bargaining framework,” Justice Gableman wrote.
The majority also concluded that Act 10’s prohibition on “fair share agreements,” the requirement for annual union recertification, and the prohibition on payroll deductions for union dues do not cumulatively burden the right to associate in a union.
“If a general employee participates in collective bargaining under Act 10’s statutory framework, that general employee has not relinquished a constitutional right. They have only acquired a benefit to which they were constitutionally entitled,” Gableman wrote.
Majority: Equal Protection
MTI argued that Act 10 violates the right to equal protection under the law, because it treats workers who are represented by a union differently than those who are not. But the majority noted that the Legislature had a rational basis for such treatment.
“We will uphold a statute against an equal protection challenge if the classification bears a rational relationship to some legitimate government interest,” wrote Gableman, noting that rational basis applies because collective bargaining is not a fundamental right.
The majority noted that Act 10 “rationally advances the legislative purpose of improving Wisconsin’s fiscal health through enhanced control over public expenditures.”
Majority: Home Rule and Contracts Clause
The Act 10 litigation involved another issue. A Milwaukee union challenged a provision in Act 10 which prohibits the City of Milwaukee from paying the employee share of retirement contributions to the Milwaukee Employees’ Retirement System (ERS).
The plaintiff union argued that such provision violates the home rule, which gives cities the power to govern exclusively local affairs. In the alternative, the union argued that preventing the city from making the contribution violates the right of parties to contract.
With respect to the home rule argument, the majority concluded that Milwaukee’s retirement system is a matter of both local and statewide concern. It applied the “test of paramountcy” to rule that Act 10 primarily implicates a matter of statewide concern, upholding the provision that prohibits Milwaukee from paying retirement contributions.
The majority noted that at the time Act 10 passed, Wisconsin was facing a $3.6 billion budget deficit. “We find that, given the facts presented in this case, the conflicting state and local regulations are of more paramount concern within the state as a whole than in the City of Milwaukee,” Justice Gableman wrote for the majority.
Finally, the majority ruled that plaintiffs “failed to demonstrate that the allocation of contribution rates in the Milwaukee ERS is a contractual ‘benefit’ protected by the Contract Clause,” concluding that Act 10 does not violate the right to contract.
Justice Patrick Crooks concurred with the majority, noting that the case could not be decided differently under the law. However, Crooks, who will not seek reelection next year, noted the importance of worker rights and collective bargaining in Wisconsin.
“It is my view that the Wisconsin Legislature and Governor could have chosen a different way to accomplish a goal of cost savings that would have left intact meaningful union representation carried out through statutory collective bargaining for public employees,” Justice Crooks wrote.
Justice Bradley wrote a dissenting opinion, joined by Chief Justice Abrahamson. The dissenters argued that the majority opinion sidesteps the actual issues.
“The result of the majority’s dodge is the needless diminution of multiple constitutional rights,” she wrote. “I determine that the majority’s failure to address the actual issues presented allows it to substitute analysis resulting in conclusions that countenance the violation rather than the protection of constitutional rights.”
The dissent ruled that Act 10 violates the right to organize into a collective bargaining unit. It said the majority wrongly focused its analysis on the right to collectively bargain.
“The plaintiff’s actual argument is based on the well-established premise that there is a constitutional right to organize as a collective bargaining unit,” wrote Bradley, noting a U.S. Supreme Court case declaring the right to organize for such purpose as fundamental, thereby requiring the case to be decided under strict scrutiny.
“In reaching its result the majority appears to ignore over a century’s worth of jurisprudence and undermines a right long held sacred in our State,” she wrote.
With respect to the home rule, the dissent called the majority opinion “stunning, not just because of its breadth but also because it runs counter to the history of the Home Rule Amendment and Milwaukee’s pension system, ignores our precedent, and is unsupported by fact.”
The dissent also determined that “the right to contract is undermined as the majority demonstrates its willingness to creatively interpret a contract in a manner permitting the State to disregard it,” Justice Bradley wrote.
Unions Lose Another Act 10 Challenge, Federal Appeals Court Upholds the Law – WisBar News, April 21, 2014
Act 10: Supreme Court Vacates Contempt Order Against WERC Commissioners – WisBar News, Nov. 22, 2013
Act 10: Sides Battle, State Supreme Court Will Make Final Call on Collective Bargaining Law – WisBar InsideTrack, Nov. 20, 2013
Dane County Court’s Act 10 Decision Intact Pending Appeal – WisBar News, March 13, 2013
Act 10: Federal Appeals Court Rules on Budget Repair Bill, Downs Challenge by Unions – WisBar News, Jan. 23, 2013