MUNICIPAL LAW LEGISLATIVE UPDATE  

    

   

GOVERNOR SNYDER SIGNS HB 4152, IMPORTANT PERA AMENDMENT

 

            HB 4152 amends PERA to mandate that public employers shall pay wages and benefits at levels and amounts no greater than those that were in effect at the time the CBA expired.  The amendment defines the "expiration date" of the CBA as the date set forth in the agreement, without giving effect to any agreements between the parties to extend or honor the CBA during negotiations for a successor agreement.  This amendment also prohibits increases that would result from wage step increases. 

 

            Employees receiving health, dental, vision, prescription, or other insurance benefits pursuant to a CBA will bear any increased costs of maintaining those benefits after the expiration of the CBA.  HB 4152 authorizes public employers to make payroll deductions necessary to pay the increased costs of maintaining those benefits.

 

            HB 4152 also provides that parties to a CBA may not agree to (and an arbitration panel may not order) retroactive wage or benefit increases that are greater than those in effect when the CBA expired.

 

            This amendment took immediate effect when signed by Governor Snyder on June 8, 2011.  For labor contracts that expired before June 8, 2011, wages and benefits are limited to the levels and amounts in effect on June 8, 2011, and employees will bear any increased costs of maintaining health, dental, vision, prescription, or other insurance benefits provided pursuant to the CBA.

 

            HB 4152 represents an important victory for public employers and will serve as a significant cost-containment tool.  If you have any questions regarding HB 4152, or its effect on your current or upcoming labor contract negotiations, please contact John R. McGlinchey or Kristen L. Baiardi at (313) 566-2500.

 

SB 7 PASSED BY MICHIGAN SENATE ON MAY 18, 2011

 

            If SB 7 ultimately becomes law, it would create the "Publicly Funded Health Insurance Contribution Act," which would prohibit a public employer from paying more than 80% of the total annual costs of the medical benefit plans they offer, therefore requiring public employees to pay a certain percentage of the overall cost of medical benefit plans.  A public employer would be allowed to allocate the employee share of medical benefit plan costs among its employees as it sees fit (however, elected officials participating in plans would have to pay 20% or more of the annual cost of the plan).

 

            Labor contracts and other contracts entered into after the Act's effective date (July 1, 2011), would have to comply with the above requirements (but the limitations would not take effect until January 1, 2012).  For existing labor contracts or other contracts in effect on the effective date of the Act (and for all other public employees), the implementation date would be January 1, 2012.  However, if the above requirements are inconsistent with the terms of a CBA currently in effect, the Act's requirements would not take effect until the CBA expires, or is amended, extended, or renewed.

 

            We continue to monitor the progress of SB 7 and will provide further updates throughout the legislative process.  If you have any questions regarding SB 7, or its potential impact on your municipality, please contact John R. McGlinchey or Kristen L. Baiardi at (313) 566-2500.