Judges voted 2-1 to reject a lawsuit filed by labour unions representing state workers. In a state with a heavier presence of organized labour than most, thousands of protesters came to the Capitol late last year as the Republican-backed measure was passed quickly.
The law prohibits forcing public and private workers in Michigan to pay union dues or fees as a condition of employment, and applies to labour contracts extended or renewed after late March. It went to court after questions were raised whether it can apply to state employees, since the Michigan Civil Service Commission, which sets compensation for state employees, has separate powers under the state constitution.
The majority said legislators have the broader 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, adding that legislators decided to "remove politics from public employment and to end all inquiry or debate about how public sector union fees are spent."
Dissenting Judge Elizabeth Gleicher said the court's decision strips the civil service panel of its "regulatory supremacy" clearly laid out in the state's constitution, which allows the four-member commission to regulate "all conditions of employment" for civil service workers.
"It cannot seriously be questioned that imposition of an 'agency fee' constitutes a regulation of a condition of employment," she wrote.
The commission currently has three appointees of former Democratic Gov. Jennifer Granholm, and those members have battled with Republican Gov. Rick Snyder over other proposals affecting state workers.
In January, Snyder himself asked the Michigan Supreme Court to step in early and decide the legality of the right-to-work law, particularly the state employee issue, but the high court declined.
Multiple union-led lawsuits have been filed to strike down Michigan's right-to-work law. Legal challenges in neighbouring Indiana, which passed a right-to-work law just before Michigan did, have been unsuccessful.
The contracts for unionized state employees end Dec. 31. The United Auto Workers, which represents about half of them, recently began contract talks with the Snyder administration.
Police officers and firefighters are exempted from the law and must pay union fees.