Hazards of Long-Term Union Security Agreements

As Michigan’s right-to-work law is set to take effect in March, unions — primarily representing public employees — are scrambling to get contract extensions passed that would prevent their members from exercising this new freedom and continue to extract financial support from them as a condition of employment.

This attempt to skirt the law uses a legal strategy that is risky for employers and employees alike. It remains to be seen whether either side will join with the unions and endorse this ploy.

The unions are drafting decade-long “union security agreements” or “agency fee agreements” that, if valid, would continue requiring employees to pay full union dues or agency fees as a condition of employment. If these dues or fees are not paid, a union could force the employee to lose his or her job. By pushing for these last-minute extensions, the unions hope to take advantage of a provision in the bill that grandfathers in existing contracts at the time the law takes effect.

In other words, union bosses are trying to maintain the status quo by flouting a law that was enacted by a democratically elected Legislature and signed by a democratically elected governor and trying to forcibly collect money from employees who do not wish to support the union just so Big Labor can continue to pad its political coffers.

The Mackinac Center has been provided with various versions of these agreements. One such notable agreement is being proposed by the Western Michigan University Chapter of the American Association of University Professors and would lock its employees into financially supporting the union until September 2023. The Berkley Education Association is considering the same tactic, while the Taylor School District is considering a contract extension that would deny teachers their worker freedom rights for another five years.

Such agreements are unprecedented in Michigan. Union security clauses are generally a provision in the larger collective bargaining agreement entered into between the employer and the union, and lasts only for the length of the current collective bargaining agreement — usually about three years.

This attempt to circumvent the new right-to-work law is sure to be tested in the courts, and therein lays one of the dangers for employees and employers. To induce the employer, such as Western Michigan University, into entering such an arrangement, the union is proposing that it will pay the legal costs of the employer when this scheme is challenged in court. The apparent hope is that the employer will see this agreement as reducing its financial liability and therefore acquiesce in the hopes of avoiding labor strife.

The very fact that this indemnification against legal challenges is being offered ought to set of warning bells for all the parties. This novel attempt will undoubtedly be tested in court and might take years of costly litigation. Even where the union local promises to pay the employer’s related legal costs, the employer may still have to bear its own court costs to determine the scope of the agreement’s indemnification, as well as have to defend itself if the union accuses it of breaching the security agreement. This also means the union is committing to using the forced dues and agency fees it hopes to collect for purposes other than collective bargaining.

In at least one court case involving a union security agreement, a local school district refused to fire an employee who would not pay union dues. The union, which had granted the district indemnification in the first place and agreed to pay the district’s legal fees, went on to challenge the scope of the school district’s indemnification and sued the district for breach of contract. Even with an indemnification provision in place, the employer still faces the distinct possibility of having to represent itself in court and bear the cost of its own legal fees as a result of the union security agreement.

Employers face a number of other factors that would weigh against entering into such a union security agreement. Why would an employer want to lose a good employee just because that employee doesn’t want to fund the union? Prior to right-to-work, the employer had little choice. But now, why would the employer voluntarily give up the ability to retain good employees? And why would the employer want to force on its employees a reduction in take-home pay by locking them into a long-term dues requirement?

Employees voting on such extensions should think long and hard about funding the legal costs of their employer. Could the local union even bear such a cost, or would it require further financial assistance that may or may not come from the union’s national office? The employees will also have to consider the forced reduction in take-home pay that will result from the security agreement as they would be placing themselves on the hook for the dues and fees for the next decade.

And lastly there is a question about the fairness of locking employees into paying union dues and fees regardless of whether they support the union’s actions or how it is representing them. The benefit of the right-to-work law is that it is supposed to make unions more accountable to their members, who would then be more willing to voluntarily give the union financial support.