In the first major legal decision on the much-debated, Republican-backed law eight months after its passage, judges voted 2-1 to reject a lawsuit filed by labor unions. The passage of the measure drew thousands of protesters to the state Capitol late last year.
The law prohibits forcing public and private workers in Michigan to pay union dues or fees as a condition of employment, and applies to labor contracts extended or renewed after late March. It went to court after questions were raised whether it applies to state workers, since the Michigan Civil Service Commission, which sets compensation for state employees, has separate powers under the state constitution.
The majority said lawmakers have the authority to pass laws dealing with union fees.
"In light of the First Amendment rights at stake, the Michigan Legislature has made the policy decision to settle the matter by giving all employees the right to choose," Judges Henry Saad and Pat Donofrio wrote.
The dissent said the court's decision strips the civil service panel of its "regulatory supremacy."
Multiple lawsuits have been filed to strike down the law in a mainstay of organized labor. Legal challenges in neighboring Indiana, which passed a right-to-work law just before Michigan did, have been unsuccessful.