The 5-2 ruling upholds the signature policy achievement of Walker in its entirety and is a major victory for the potential 2016 GOP presidential candidate, who is seeking re-election this year.
The ruling also marks the end of the three-year legal fight over the union rights law, which prohibits public worker unions from collectively bargaining for anything beyond base wage increases based on inflation. A federal appeals court twice upheld the law as constitutional.
"No matter the limitations or 'burdens' a legislative enactment places on the collective bargaining process, collective bargaining remains a creation of legislative grace and not constitutional obligation," Justice Michael Gableman wrote for the majority.
The high court ruled in a lawsuit filed by the Madison teachers union and a union representing Milwaukee public workers. They had argued that the law, which came to be known as Act 10, violated workers' constitutional rights to free assembly and equal protection.
The law also requires public employees to contribute more toward their health insurance and pension costs. In a two-sentence statement Walker issued Thursday, he praised the ruling and claimed the law has saved taxpayers more than $3 billion — mostly attributable to schools and local governments saving more money because of the higher contributions.
"Today's ruling is a victory for those hard-working taxpayers," Walker said.
Attorney Lester Pines, who represented the teachers union, said the decision was not unexpected given the conservative makeup of the court and critical comments the justices made during oral arguments.
But Pines said the length of the legal fight gave unions time to prepare for operating in a post-collective bargaining environment.
"The governor's desire to destroy the public employee unions has failed," Pines said. "We'll just see new approaches to dealing with employers by the unions. Those will become evident as we go forward."
Walker introduced the proposal shortly after taking office in 2011, a move that was met with fierce resistance from teachers, other public workers and their supporters who flooded the Capitol for weeks in an effort to block the bill's passage. Democratic state senators fled the state for two weeks in a failed attempt to block the bill's passage.
The law bars automatic withdrawals from members' paychecks and requires annual elections to see if members want their unions to go on representing them. It also required the increased pensions and health care contributions, which Walker has said helped local governments and schools save enough money to deal with other cuts done to balance a state budget shortfall in 2011.
Walker's opponent for re-election, Democrat Mary Burke, supports the higher contributions. But while she backs restoring collective bargaining, Burke has not promised to work for the repeal of Act 10 if elected. Her spokesman Joe Zepecki said in a statement that the decision doesn't change the fact that Burke believes the election is about jobs.
Walker was forced to stand for recall in 2012, a move largely motivated out of anger over the union law. He won, becoming the first governor in U.S. history to defeat a recall.
The union law has been challenged on several fronts since it was introduced, but it's withstood them all.