A closer look at the 7th Circuit Court’s Act 10 ruling

On Jan. 18, the 7th Circuit Court of Appeals ruled on the federal constitutional challenges to 2011 Wisconsin Act 10, the Budget Repair Bill that drastically changed collective bargaining for state and municipal workers in Wisconsin. In a 74-page opinion, the court rejected challenges to three provisions of the law and upheld all of Act 10.

Three provisions challenged

Public sector unions pursued the lawsuit on behalf of state and municipal workers classified as “general employees” under Act 10. These workers faced substantially reduced collective bargaining rights and new restrictions in comparison to “public safety employees,” who were not affected.

The unions claimed an Equal Protection violation in three provisions of Act 10: limitations on the mandatory subjects of bargaining, an annual recertification vote requiring a 51% majority of all union members (rather than a majority of those voting), and a prohibition on deducting union dues from a member’s paycheck. The unions also claimed a First Amendment violation for the paycheck deductions provision.

At the district court level, the unions won the annual recertification and paycheck deductions challenges. However, the appeals court reversed those gains.

Equal protection challenges

Under an Equal Protection challenge, a statute remains valid if it has a reasonable purpose and that purpose is achieved in a rational manner. Any categorization or classification used to create groups is upheld if it bears some rational relationship to a legitimate government end.

This is a highly deferential standard and an uphill battle for a party challenging a statute. The government does not need to actually articulate the law’s purpose or produce evidence that its method is rational. Instead, the law is presumed to be constitutional. The challenger’s burden is to negate every basis or possibility that might support the law, even when that basis is not stated in the record.

Act 10’s purpose is to restrict collective bargaining rights for unionized employees. However, such restrictions were going to be contentious and may have resulted in labor unrest. To minimize fallout in critical areas, Act 10 exempted unions in the public safety category.

The general worker unions could not argue that restricting collective bargaining rights was an unreasonable purpose. Collective bargaining rights are not fundamental rights and the state does not have to provide those rights. Therefore, the unions had to focus on showing an irrational means to achieve the statute’s purpose.

The unions argued the worker classifications are irrational. For example, state motor vehicle inspectors are classified as public safety workers, while prison guards, University of Wisconsin Police, and the State Capitol Police are treated as general employees. Clearly, it is hard to imagine how labor unrest by vehicle inspectors would pose a critical risk when compared to striking prison guards or police. Such flawed sorting could show an illegitimate purpose, such as political favoritism for those unions that supported Scott Walker’s campaign for governor.

Such arguments posed several concerns for the court. First, the court was unwilling to speculate about the Legislature’s motives when the statute, as written, passed the legal standard for an Equal Protection challenge. Second, there is 7th Circuit precedent that allows for political favoritism. In Hearne v. Board of Education, Chicago teachers claimed their job security was reduced in retaliation for opposing Republican candidates. In response, the 7th Circuit stated: “there is no rule whereby legislation that otherwise passes the proper level of scrutiny … becomes constitutionally defective because one of the reasons the legislators voted for it was to punish those who opposed them during the election campaign.” Lastly, the court was unwilling to act as a supra-legislature by evaluating the political wisdom of each classification or expecting that every attempt to include or exclude a group would be precisely correct. That vehicle inspectors are included as public safety workers, while prison guards and other police are not, was not a matter for the court.

Applying the Equal Protection analysis to the challenged provisions, the court ruled:

  1. The state reasonably concluded that excluding public safety workers from Act 10’s changes was the right step to avoid labor unrest in critical public safety functions.
  2. Act 10 reasonably applies the annual recertification requirement only on general worker unions, because the state could still fear labor unrest if a public safety union fails to recertify in the future.
  3. Allowing payroll deductions for only public safety workers was reasonable because of the state’s fear of labor unrest.

The court’s rationale for upholding this provision is not apparent. The court lists the labor unrest following passage of Act 10, and the unions’ statement that removing the payroll deductions would be catastrophic, as supporting reasons. However, the labor protests were in response to Act 10’s overall impact, not specifically because of the payroll deductions. Further, is it reasonable that there could be labor unrest by removing payroll deductions for public safety workers? Perhaps the court did not want to second-guess the state’s concerns. Building on the unions’ comment about the catastrophic impact, perhaps there is an alternative reasonable explanation: it is an administrative burden to maintain payroll deductions and the state only wanted to take on that burden for workers who perform critical functions.


First Amendment challenge

The First Amendment challenge generated the most interesting discussion from the court and resulted in a dissent by Judge Hamilton. Joining a union and paying dues to fund union advocacy are recognized expressions of speech and association under the First Amendment. Act 10 made union dues payments voluntary for general workers, while keeping deductions mandatory for public safety workers.

The general worker unions claimed that by taking away their ability to collect dues via payroll deductions, the state set up an illegal barrier that would result in lost money and diminished speech. By restricting access for general workers to the most efficient means of dues collection, the state was favoring the speech of public safety unions over general worker unions. Lastly, the unions claimed Act 10 was engaging in speaker and viewpoint discrimination by burdening the speech of those unions that did not support Scott Walker’s candidacy for governor.

The majority of the panel did not agree with the unions. First, preferential access to payroll deductions is not government interference with speech but rather a subsidy of speech. Second, where the government is not creating the barrier to speech, it is allowed to subsidize speech based on the identity of the speaker, as long as the government does not make its choices based on the content or viewpoint of the speaker.

The court found that Act 10’s language is viewpoint neutral because it does not tie access to the payroll system based on a particular viewpoint. The court rejected three arguments asking it to look to the motives or effects of Act 10. Indeed, the debate between the majority and the dissent was about whether the court should examine motives or events when the circumstances seem suspicious.

The first argument relied on the coincidence of continued payroll deductions for unions that endorsed candidate Scott Walker. The court was not persuaded because unions that did not endorse Scott Walker are included as public safety workers.

The second argument claimed that Act 10 was a pretext for viewpoint discrimination, because several occupations involved in public safety duties are classified as general workers. The court rejected this argument because categories of speakers may be excluded as long as it is not on the basis of what they are saying.

The last argument tried to show viewpoint discrimination based on Sen. Scott Fitzgerald’s partisan comments that if the unions did not have money, it would be difficult for President Obama to win in Wisconsin. As damaging and viewpoint discriminatory as those statements sound, the court would not attribute the motives of one legislator to the entire legislative body.


The 7th Circuit’s denial of all of the claims means that if the unions want to continue their challenge, they will have to ask the entire 7th Circuit to rehear the case or appeal to the U.S. Supreme Court. Two state level challenges remain arguing violations of the Wisconsin Constitution. I do not expect that this decision will affect those claims. 

Sign up for the free IB Update – your weekly resource for local business news, analysis, voices, and the names you need to know. Click hereIf you are not already a subscriber to In Business magazine, be sure to sign up for our monthly print edition here.