Seventh Circuit Court of Appeals Issues Two Labor-Law Decisions in September 2018

The Seventh Circuit Court of Appeals, which covers Indiana, Illinois, and Wisconsin, issued two important labor-law decisions in September 2018. Both cases were decided in the unions’ favor but have the potential of being ultimately decided by the Supreme Court.

First, the court tackled state regulation of dues checkoff arrangements in International Association of Machinists, District Ten v. Allen, No. 17-1178 (7th Cir. Sep. 13, 2018). “Dues checkoff” is an arrangement whereby employees pay their union dues by executing a written wage assignment authorizing the employer to deduct an amount equivalent to their union dues from their paychecks and send that money directly to the union to pay their dues. Dues checkoff is permitted under federal law, specifically Section 302(c)(4) of the Taft-Hartley Act, which provides that authorizations must be in writing and may be irrevocable for up to one year. In Machinists District Ten, the Seventh Circuit, in a 2-1 decision, invalidated a Wisconsin law purporting to require all dues checkoff authorizations in Wisconsin be revocable upon 30 days’ notice. The Seventh Circuit held that the Wisconsin law was thwarted by a 1971 Supreme Court decision, Sea Pak, Div. of W.R. Grace & Co. v. Indus., Tech. & Prof’l Emps., 400 U.S. 985, 91 S. Ct. 452 (1971), which invalidated a Georgia law that purported to make checkoff authorizations revocable at any time. The Seventh Circuit also held that the Wisconsin law was more generally pre-empted by federal law, which, as noted above, specifically allows for dues checkoff authorizations to be irrevocable for up to one year.

It is interesting to note that while the Seventh Circuit did not cite it, the Indiana Court of Appeals recently reached the same conclusion in Warner v. Chauffeurs Local Union No. 414, 73 N.E.3d 190 (Ind. Ct. App. 2017). In Warner, the Indiana Court of Appeals stated, “[T]he validity of a dues checkoff authorization is a matter of federal law pursuant to the binding precedent of Seapak.” The Warner case was handled by Fillenwarth Dennerline Groth & Towe.

The second September 2018 Seventh Circuit case was Operating Engineers Local 399 v. Village of Lincolnshire, Nos. 17-300 & 17-1325 (7th Cir., Sep. 28, 2018). There, the Seventh Circuit was presented with whether a local government entity (such as a city or town), as opposed to a state, could enact a local right-to-work law. Section 14(b) of the National Labor Relations Act gives states the authority to enact right-to-work laws. The question was whether a state could delegate its authority to enact right-to-work legislation to local governments. The court emphatically said “no,” reasoning that allowing local governments to enact city or town-specific right-to-work laws would result in a “crazy-quilt of regulations” between cities and towns within a state, which would “do violence to the broad structure of labor law—a law that places great weight on uniformity.” In other words, the Seventh Circuit affirmed that labor law is essentially a federal issue, and while Congress allowed states some leeway to deviate through Section 14(b) of the NLRA, Congress did not intend to allow deviation on a local level.

Both of these cases have the potential to make their way to the Supreme Court. Machinists District Ten was a 2-1 decision in which the dissent called into question the validity of the Supreme Court’s 1971 SeaPak decision. The Operating Engineers Local 399 case conflicts with the Sixth Circuit’s decision in UAW Local 3047 v. Hardin Cnty., Ky., 842 F.3d 407 (6th Cir. 2016), which held that local governments can enact right-to-work laws. Stay tuned.