District 3 of the Wisconsin Court of Appeals issued a decision yesterday, May 24, reinstating Wisconsin’s right to work law pending appeal of a Dane County Circuit Court Judge’s decision finding the law to be unconstitutional.  The Court of Appeals held that the Circuit Court erred in not granting a stay pending the appeal of the decision.

The decision means that unions and employers are again unquestionably prohibited from entering into agreements requiring union membership as a condition of employment.  Wisconsin was the 25^th state to enact a so-called right to work statute.  Under the law, as contracts expire, are extended or are amended after March 11, 2015, the parties are precluded from maintaining or agreeing to contract language requiring employees to be members of a union.

It is anticipated the case will find its way to the Wisconsin Supreme Court.  Given that Court’s 5 to 2 conservative majority, we expect the law will ultimately be upheld.

By: Thomas W. Mackenzie

We issued an E-Alert on April 13 addressing Right to Work. Since then, a number of clients have asked for further clarity on the status of Wisconsin’s Right to Work law following the issuance of the Dane County decision.

On April 8, 2016, a Dane County Circuit Court judge found unconstitutional the 2015 statute making Wisconsin the 25^th Right to Work state.  The law, which took effect on March 11, 2015, prohibited an employer and union to agree in a collective bargaining agreement that employees must be union members.  The trial judge found that because federal law requires unions to represent all employees – union members or not – it is an unlawful taking of property to deny the union fair compensation in the form of union dues for the services the union provides to employees who would choose not to be union members.

The Wisconsin Attorney General (“AG”) appealed the decision to the Wisconsin Court of Appeals late last week. The trial court judge denied the AG’s request for a “stay” pending the appeal.  We here at Lindner & Marsack anticipate that the AG will seek and likely be granted a “stay” from the Court of Appeals.  We also join most experts in predicting that the Dane County court decision will be reversed on appeal.

In the interim, however, employers and employees are left in a quandary in how to proceed. In assessing the issue, employers fall into one of three camps.  If your contract has not expired since the law’s passage in March, 2015 – your union security provision remains lawful.  As your contract expires, you should seek legal counsel on how to approach the issue.  Pending final resolution, unions will resist any argument that mandatory union membership is illegal in Wisconsin.

If your contract already expired and you eliminated all forms of union security from your contract, you need to do nothing. You have no language requiring union membership and your employees are free to choose to be members or refrain from union membership.

If, however, you fall in the third camp and you agreed to so called “snap-back” language that nullified your former union security clause only to the extent prohibited by law, the Dane County decision has put you in a legal gray area. Until the circuit court decision is “stayed” or reversed, you will need a strategy.

First, start with your “snap-back” language and determine whether the union has a claim that the union security clause has been “reactivated.” Second, wait and see how your union reacts.  Some unions may elect not to push the issue until the judicial dust settles.  Third, if your union insists on compliance with the union security which would mean the employer could be required to terminate an employee who fails to meet his or her dues obligation, the failure to terminate could trigger a grievance or an unfair labor practice charge.  Delaying the matter while the grievance or NLRB charge is processed is one option.  There are strong legal arguments that the Dane County decision only applies in Dane County and only applies to the Machinists (IAM), Steelworkers and the AFL-CIO, the plaintiffs in that case.  The other option is to tell your reluctant union member employees that they should keep current on dues while the matter is resolved through the courts.  If the non-members elect to satisfy the asserted dues obligation they might want to pay the union directly rather than using payroll deduction (so called dues checkoff).  Signing a union dues authorization card would obligate the employer to deduct dues for up to a one year period, even if the Dane County decision is reversed.

Again, the issue is put on hold if the Court of Appeals or Wisconsin Supreme Court issues a “stay.” Likewise, it goes away altogether if the Court of Appeals or Wisconsin Supreme Court reverses the Circuit Court.  These are likely outcomes, but until they occur, some unions may push the issue and force some hard choices while the matter plays out in the courts.

If you have questions about anything in this e-alert, feel free to call Tom Mackenzie or any other Lindner & Marsack attorney at 414-273-3910.

On March 5, 2015, Senate Bill 69 (bill) was introduced by Senator Paul Farrow (R-Pewaukee). If passed by the Wisconsin legislature and signed by the Governor, the bill would eliminate the current version of Wisconsin’s restrictive covenant law, Wis. Stat. § 103.465. The statute applies to agreements with employee such as non-competition, non-solicitation and non-disclosure agreements. In its place, the bill would establish a new pro-enforcement stance toward restrictive covenants. Wisconsin has consistently rated among the weakest restrictive covenant enforcement states for some time; by contrast, Illinois is routinely rated among the top pro-enforcement states. The bill would place Wisconsin among the states with the best enforcement statutes, likely in front of Illinois. Specifically, the bill:

• Clarifies existing Wisconsin law by defining the legitimate business interests that justify a restrictive covenant to include a business’s trade secrets, confidential information, its relationships with existing and prospective customers, its customer, patient, or client goodwill associated with a specific geographic location, and unique, extraordinary, or specialized training provided by business as a result of the employment relationship, among other things.
• Clarifies that “valid consideration” for a restrictive covenant includes the continuation of an employment relationship.
• Provides greater clarity regarding the enforceable duration of a restrictive covenant.
• Authorizes a court to modify an overly broad and otherwise unenforceable restrictive covenant to the extent reasonably necessary to protect an established legitimate business interest. Wisconsin courts do not currently have that right, for the most part, once it finds that a restrictive covenant is overbroad. Under the bill, a court is invited to tailor a reasonable restriction under the facts presented even where the restrictive covenant is overbroad.
• If the bill is passed by the legislature and signed by the Governor, it would first apply to any restrictive covenant that a business enters into, extends, modifies or renews following the effective date. It would not impact existing restrictive covenants. Accordingly, businesses in the process of updating or rolling out new restrictive covenants for their employees may want to reconsider in light of this bill. Restrictive covenants that are signed between now and the effective date of the new law, if passed, will be considered by Wisconsin courts under the existing law which treats such covenants more harshly than the proposed new law.

Watch for future E*Alerts as this important legislation affecting Wisconsin businesses progresses. If you have questions about the restrictive covenant bills, please contact Daniel Finerty at 414-226-4807, or any other Lindner & Marsack attorney at 414-273-3910.