Michigan Battles Unions Over Campaign Finance

CINCINNATI (CN) – The Sixth Circuit considered Thursday whether to uphold an injunction against a Michigan law that bans union payroll deductions for political purposes.

Five unions, including the Michigan State AFL-CIO, sued Michigan Secretary of State Ruth Johnson and Michigan Attorney General Bill Schuette in April 2016, following the passage of Public Act 269.

The unions claimed conservative lawmakers circumvented the legislative process when they tacked on a last-minute addition to the bill that made significant changes to the Michigan Campaign Finance Act, also called MCFA.

Most egregious among these changes, argued the unions, was an amendment that makes it a felony for corporations to use payroll deductions to support political candidates through a “separate segregate fund.”

Often called the “PAC check-off,” payroll deduction “is by far the most effective and widely used method for giving financial support to their union’s political advocacy,” the unions’ complaint states.

PA 269 banned the practice, however, as soon as Gov. Rick Snyder signed it into law last year.

Corporations and trade associations can continue using PAC check-off for their own funds, but PA 269 makes it “a felony for a corporation to administer PAC check-off for its employees’ contributions to their union’s [fund],” according to the complaint.

In June, U.S. District Court Judge Linda Parker granted the unions’ motion for a preliminary injunction to prevent enforcement of the law, and wrote that “a ban on payroll deductions does not simply prohibit an employer from engaging in a ministerial act, it precludes employees from using this efficient and secure process to assign their wages to fund certain activities.”

“The court finds that by enacting PA 269, Michigan has placed an obstacle – bolstered by the threat of a felony charge – in the path of organizations’ and employees’ efforts to solicit and raise funds necessary to engage in political speech,” Parker ruled.

Arguing before the Sixth Circuit on behalf of the unions Thursday morning, attorney Andrew Nickelhoff said the payroll deductions are “a crucial mechanism for union members,” and called PA 269 “speaker select prohibition.”

Attorney Erik Grill, on behalf of the state of Michigan, told the appeals court panel that “case law supports that payroll deductions are not speech,” and that no one has a constitutional right to the deductions.

Sixth Circuit Judge Jeffrey S. Sutton asked both attorneys if the elimination of payroll deductions across the board – for both corporations and unions – would be a potential solution.

Grill had no issue with Sutton’s suggestion, but Nickelhoff argued that First Amendment issues would remain.

“The world of writing checks for contributions is long gone,” Judge Sutton responded. “[Through today’s technology,] we could have made six contributions during this argument.”

“Union members are used to payroll deductions,” Nickelhoff answered. “They trust the process. If you disable transactions that allow people to use political speech, that has serious First Amendment implications.”

In his rebuttal, Grill brought up the unions’ failure to provide a complete collective-bargaining agreement during discovery, and questioned whether they are complying with reimbursement requirements.

“Isn’t it a funny thing to ask for a contract to say that it will comply with the law?” Judge Sutton asked. “Isn’t that implied?”

“[At the] preliminary injunction [stage], how can [the unions] demonstrate a likelihood of success when they can’t prove they are following the law?” Grill asked in his final statement to the panel.

Sixth Circuit Judges Richard F. Suhrheinrich and David W. McKeague rounded out the panel.

No timetable has been set for the court’s decision.