II. Reforming Labor Law to Protect Worker Rights

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Michigan's image as a place to do business has improved in recent years as the state has made progress toward reducing burdensome regulatory costs and taxes, but one major roadblock to consolidating and expanding those improvements remains: an unfriendly labor climate. Sometimes unfairly, but often with good reason, Michigan is perceived in other parts of the country as a place where labor unions wield inordinate and harmful influence. But improving the labor climate in Michigan is more than a positive economic policy approach: It is necessary to thwart abuse of the rights of Michigan workers. The following ten recommendations will help enforce Michigan workers' moral and legal rights as well as have a positive impact on the state's labor climate.


3. Enforce the "Beck" rights of Michigan workers and enact "paycheck protection."

Under a 1988 ruling of the United States Supreme Court in Communication Workers of America v Beck, workers are entitled to a refund of any union dues that are used for purposes not related to collective bargaining activities, contract administration, or grievance processing. Unfortunately, these "Beck" rights have gone largely unrealized because workers are unaware of them and governments have shown virtually no desire to enforce them. The result is that labor unions routinely spend half or more of their members' dues on causes and candidates that many of those members personally oppose.

Either by act of the Legislature or by executive order of the Governor, Michigan should act to protect the freedoms of speech and association of workers by enforcing the Beck decision. Requiring the posting of Beck information notices in all private-sector firms that contract with the state would be a step in the right direction. An April 1996survey of 1,000 union members nationwide revealed that 78 percent were not aware of their right to have an independent accounting of how their unions spend their dues money and to secure a refund for that portion spent for noncollective bargaining activities (see Chart1).

"Paycheck protection" for all Michigan workers would put real teeth in the effort to enforce Beck rights by requiring that unions which compel dues and fees secure from each worker a prior, annual, voluntary, written authorization to use any dues for noncollective bargaining activities. Workers could automatically shield their money from noncollective bargaining activities up-front when dues are collected, instead of having to jump through hoops to recover those dues after they have been extracted.

Details about the Beck decision and suggestions for specific wording of an order to enforce it in Michigan are provided in the Mackinac Center for Public Policy study, Compulsory Union Dues in Michigan4. Information about paycheck protection is provided in the Mackinac Center report, Paycheck Protection in Michigan.5


4. Enact a right-to-work law.

Twenty-one states protect the right of every worker to abstain from union membership without fear of losing his or her job. Michigan, unfortunately, is not one of those states.

Adjusting for the cost of living, including taxes, families in the 21 right-to-work states earn $2,852 more in real income per year than do their counterparts in Michigan and the other 29 states that lack right-to-work laws (See Chart 2). Between 1960 and1993, the number of manufacturing jobs in the 21 right-to-work states rose by 77 percent, far in excess of the other states. The evidence is clear and compelling: Right-to-work really means the right to work for more-more individual freedom, more jobs, and more income in real terms.

Nothing could do more for worker rights and Michigan's image and economic development than a right-to-work law. The only thing union leaders have to fear from right-to-work is the free choice of the very workers they are in business to help.


5. Repeal the Prevailing Wage Act.

Imagine a law that subsidizes the well-off, discriminates against large segments of the work force, wastes tens of millions of dollars every year, and hurts the competitiveness of Michigan businesses. Unfortunately, there is no need to imagine such a law: Those are precisely the effects of the Prevailing Wage Act of 1965. It is a classic case of special interest legislation that benefits a narrow few at the expense of the many.

The Act, which covers construction projects in Michigan that receive full or partial funding from the state, requires workers on those projects to be paid "prevailing" wages and benefits. That invariably means the rates fixed in local collective bargaining agreements-in other words, union wages and benefits. The competitive compensation packages established by non-union contractors and their employees-who make up almost two-thirds of Michigan's construction workforce-are not considered under the law for purpose of determining "prevailing" rates. So less expensive workers who are otherwise competent and qualified, but not unionized, are effectively frozen out of work on a host of projects from school construction to road repair, allowing labor unions to foist tens of millions of dollars in needless costs on Michigan taxpayers every year.

The Prevailing Wage Act has been challenged in the courts in recent years, found to be pre-empted by federal law at one point, and then later reinstated. Between December 1994and June 1997, when the law was inactive, an estimated 11,000 additional construction jobs were created in Michigan. The Legislature needs to settle the prevailing wage issue on behalf of common sense and sound economics and repeal this costly special interest legislation immediately. At the very least, it should follow the example of the Ohio Legislature, which in 1997 exempted public schools from having to pay the excessive costs mandated by that state's counterpart to Michigan's Prevailing Wage Act.


6. Amend the Public Employment Relations Act (PERA) to provide a "Teacher Bill of Rights."

This recommendation would make exclusive representation optional for each individual teacher in Michigan, and remove the unions' duty of fair representation obligation toward a teacher who opts out of his workplace union.

The monopoly bargaining privilege of the Michigan Education Association(MEA)-afforded by the existing PERA law-is the basis of the MEA's power to prevent teachers from negotiating their own individual terms of employment. As the exclusive representative, school employee unions such as the MEA inevitably end up bargaining education policy with local school boards and state government. The interests and objectives of individual teachers are often subordinated to the "collective whole" even when the individual teacher's employment opportunities may suffer as a result.

Many Michigan teachers want professionalism, not unionism. Accordingly, current legal requirements of mandatory union memberships or dues as a condition of employment should be repealed. The law should be further amended to permit the teacher union to represent only those teachers who affirmatively elect such representation in writing. Employees who do not affirmatively select such representation may represent themselves. Governor Engler, in a major address to the Legislature in October 1993, stated that no teacher in Michigan should be coerced into joining and paying dues to a union, and the Mackinac Center agrees.

Under a "teacher bill of rights" arrangement, unions will owe no duty of fair representation to any teacher who elects independent (non-collective bargaining) status. Unions would, however, be prevented from discriminating against any teacher regarding his terms and conditions of employment solely on the basis that he has elected to not join or be represented by a union. This avoids the so-called "free rider" argument.


7. Amend PERA to recognize the unconditional and immediate right of employees to resign their union memberships.

Employees in the private sector have an unconditional right to resign from union membership at any time. A line of United States Supreme Court cases recognizes this right as essential to preserving the integrity of the First Amendment's guarantees of free speech and free association. As a result, private-sector union constitutions and bylaws clauses that limit the timing of an employee's resignation from the union are unconstitutional. Additionally, it is a violation of a union's duty of fair representation under the National Labor Relations Act to refuse to honor an individual's unconditional withdrawal from the union.

PERA as written provides an option to government employees who are exclusively represented: They may either become members of the union, or else they may be non-member" agency fee payers."6 Some Michigan public employee unions place limitations on the rights of members to resign in order to secure non-member agency fee-payer status. Unfortunately, there is no right afforded by Michigan statute to protect an employee's unconditional right of union resignation, contrary to federal labor law regarding the individual's First Amendment right of free association. This can be remedied, and government employees' rights could be easily protected, by amending PERA to include a clause specifically prohibiting any unreasonable restrictions on any government employee's right to resign from his union.


8. Amend PERA to permit employees to determine by majority vote whether they will be required to contribute money to a union to retain their jobs before a union security clause is added to any contract.

Union security clauses are contractual agreements between employers and unions that obligate employees to either join a union and pay union dues or else refrain from joining but pay agency fees, which are usually equivalent to the dues of a full union member. Security clauses are the primary source of funding for unions, and they carry the compulsory force of law so union negotiators will routinely sacrifice employees' economic benefits for the right to compel every employee to pay dues or fees. Management often agrees to the security clause, regarding it as a throwaway concession to the union. Ultimately, the employee pays in the form of reduced compensation and freedom to choose otherwise.

The inherently abusive nature of the security clause is a ripe opportunity for employee-friendly labor reform. An amendment to PERA requiring prior employee approval-by way of a majority vote on the union security clause-would augment employees' freedom by giving them the ability to accept or reject an obligation to pay dues or fees before it is included in the contract and becomes legally binding. This is a matter of democratic governance and simple fairness.


9. Amend PERA to provide that no collective bargaining contract can be implemented without the prior approval-determined by a secret ballot election-of a majority of the employees covered by the agreement.

As written, PERA does not require that all of the employees in a bargaining unit be allowed to vote by secret ballot on whether to accept or reject the collective bargaining agreement their union has bargained for them. Nor is employee ratification of contracts a uniform practice among unions. Those unions that are progressive enough to provide for ratification do not necessarily provide for a secret-ballot vote. With no ratification procedure in place, union officials can trade direct employee benefits-such as wage increases-for items which benefit the union's interest, such as paid time off for union officials or free office space.

As the workers' representative, the union has a legal and ethical obligation to advance the interests of its members, and not the interests of the organization. As written, PERA does not even ensure that union members can vote on whether the contract negotiated by their representative meets their needs. These are fundamental economic workplace issues that bind all of the employees in the bargaining unit, regardless of their membership status. This gaping hole in the law should be plugged immediately to protect the interests of bargaining unit members.

PERA should be amended to introduce union accountability to the employees that unions represent. The amendment should provide that each bargaining unit employee-regardless of his union membership status-may vote on the acceptance of any contract offer submitted by the employer, including collective bargaining agreements that affect wages, benefits, and working conditions. The amendment should further provide for a secret ballot procedure during the ratification process, in order to limit the occurrence of employee intimidation and assure an untainted protected ballot.


10. Amend PERA to provide that upon filing of an unfair labor practice charge by an individual against an employer or union, the Michigan Employment Relations Commission (MERC) shall investigate the merits of the charge to determine whether a complaint shall be issued.

Existing MERC procedures for pursuing unfair labor practice charges place an insurmountable burden on individual employees attempting to enforce their rights through the agency. MERC does not investigate the merits of an unfair labor charge before issuing a complaint-it is the charging party's responsibility to gather sufficient facts, affidavits, and other evidence in support of the charge. Employees pressing charges with MERC usually do not have the benefit of counsel and must conduct this investigation independently.

If the charge appears to state a claim, then a complaint issues and a formal hearing occurs. Without counsel, an employee in a hearing is left to navigate a maze of unfamiliar formal procedures entirely his own. These are significant disincentives for the individual employee contemplating a MERC charge against his union or employer. As a result, relatively few employees pursue their rights successfully with MERC.

MERC should be accessible to unions, employers, and individual employees alike. PERA should be amended to authorize MERC to investigate charges and prosecute complaints on behalf of individual charging employees. A MERC attorney should investigate charges as they are filed, taking affidavits from the charging party and relevant witnesses. He should then determine whether there is reasonable cause to believe that the law has been broken and if so, a complaint should issue. Upon issuance of a complaint, the case should be assigned to a MERC trial attorney, who prosecutes the case on behalf of the employee free of charge.


11. Remove the state government's ability to act as a union collection agent for union political funds.

If workers' wages are the source of union funding, then employers are the faucets that control the flow of funds to labor organizations. The payroll deduction is a convenient and popular method of funds collection that springs from a contractual provision between the union and the employer. Without such an agreement, unions would bear the burden of collecting funds from their membership after the money has made its way into workers' pockets. This would not only involve additional time and expense for the unions-it would also require union collection agents to persuade members to consciously and voluntarily part with their hard-earned money.

The state has a compelling interest to remove partisan politics from government workplaces. One solution, the banning of wage check-offs for political purposes, has withstood judicial scrutiny in the Circuit Court covering Michigan. Political action committee (PAC) funding is already regulated in Michigan: Public Act 117 of 1994'sban of "reverse check-offs" (which stipulate that a worker must take action if he does not want political contributions deducted from his paycheck) and requirement for annual, worker consent of PAC payroll deduction authorizations were significant steps toward greater worker freedom and union accountability. After union legal challenges resulted in Public Act 117 being upheld in court, worker contributions to union PACs declined in 1998 (see Chart 3). The Legislature should build on these reforms by prohibiting government collection of all political funds via a payroll deduction.

Prohibiting political payroll deduction would serve three additional purposes. First, it would afford greater protection of workers' free speech rights by returning direct control over disbursement of union political funds to the wage earner before it goes to union coffers. Second, it would compel unions during collection periods to persuade their members that the unions' political expenditures properly represent the political views of their memberships. Third, it would save Michigan taxpayers the cost attendant to the government acting as the tax collector for unions, which are private business enterprises. The funds could be used for more worthwhile purposes.


12. Outlaw the use of "project labor agreements" on any building construction using state funds within the state of Michigan.

"Project labor agreements" (PLAs) mandate that all contractors must employ members of a designated union for all labor performed on a particular site. These "union-only" agreements are frequently agreed to by state and local governments in Michigan in order to guarantee labor peace during the life of a given contract, but the premium paid for this peace also permits union discrimination and non-competitive bidding to persist.

As a matter of public interest, the Legislature should intervene in this area to ensure that Michigan's public construction awards are consistent with existing state public bidding policies designed to foster competition in government contracting. The purpose of the many Michigan bidding laws is to protect the public by placing bidders on an equal footing and to ensure that competition will eliminate the possibility of fraud, extravagance, or favoritism in the expenditure of public funds. But PLAs reduce competition and cause discrimination against non-union employees and in favor of union membership. This has potentially severe detrimental effects on non-union employees and employers, including a substantial number of minority-owned construction firms (who are routinely denied union status and union labor for reasons of racial bias).

PLAs severely limit the number of contractors and subcontractors that are available to perform work: In 1997, over 80 percent of construction workers were not unionized, according to the Bureau of National Affairs. Through the use of PLAs, this vast majority of construction workers and contractors is effectively removed from the bidding process, leaving only a small fragment of unionized workers to compete for the project. PLAs are bad public policy because they represent a costly and discriminatory favor to a narrow special interest, and they ought to be eliminated.