A federal appellate court has upheld an earlier ruling that an anti-union law passed by the Idaho Legislature in 2011 was invalid.

The law, which never took effect, banned “job targeting” or “market recovery” programs, in which unions use funds they collect from workers to subsidize bids by union contractors on jobs.

When lawmakers were considering the measure in 2011, the Idaho attorney general’s office warned that it likely would be overturned in court, as it conflicted with the federal National Labor Relations Act.

But the bill passed anyway; it included criminal penalties and hefty fines for violations.

A group of labor unions immediately sued and won. The state appealed to the 9th Circuit U.S. Court of Appeals.

“Construction unions have developed such programs to increase their members’ access to work and stem the long-term decline in the percentage of construction workers represented by unions,” wrote 9th Circuit Judge Marsha Berzon, on behalf of a unanimous three-judge panel, in a decision released Wednesday.

“Under such programs, a union collects funds from workers it represents and then uses those funds to subsidize bids by union contractors, allowing the contractors to lower their labor costs and so more effectively compete with nonunion contractors.”

“It is well settled that most of the conduct prohibited by Idaho’s statute is protected by the NLRA,” Berzon wrote. The 2011 law was dubbed the Fairness in Contracting Act.

Sponsored by then-Sen. John Goedde, R-Coeur d’Alene, the bill passed the Idaho Senate 25-8 and the House 55-15, and Gov. Butch Otter signed it into law.

James Piotrowski, an attorney for the unions, said Wednesday that they plan to seek attorney fees from the state.