Friday, November 14, 2014

SCOTUS Arguments on Retiree Benefits in CBAs

I love it when current events perfectly align with my lesson plan for my employment law class at Penn State. Yesterday, we discussed health insurance and the reading assignment included this tidbit:
Unionized employees have had some success in arguing that retiree health benefits obtained through collective bargaining are not revocable, particularly in the absence of any clear contract language authorizing the employer to modify or terminate the benefits.
Employment Law for Human Resource Practice (4th Ed.) by David J. Walsh, p. 452. As luck would have it . . . this exact issue was before the Supreme Court on Monday!

The case is M&G Polymers USA, LLC v. Tackett, and you can read the transcript from the oral arguments here. The issue is whether retiree health benefits in a CBA vest immediately and continue indefinitely or if they are subject to change (most notably upon termination of the CBA).

Of course, the parties could specify that in the CBA - but life's never that easy. What happens if the CBA is silent on the subject? Do we look outside the CBA to discern the parties' intent? Will the Court impose a presumption one way or the other?

As I told my class yesterday, if the Court imposes a strong presumption (regardless of whether it's a presumption that the benefits vest and continue, or do not survive the termination of the CBA), that should solve the problem moving forward. The parties will simply know what the "default" is and if they want something else, they can bargain for it and include express language overriding the presumption in the CBA.

We'll have to wait and see what SCOTUS does with this one . . . .