Retirement Health Benefits for Current Employees Negotiable

Madera Unified School District (PERB Dec. No. 1907E) (Issued 5/25/07)

Under the statutes administered by PERB, it has been generally understood that retirement benefits for current employees are within the scope of representation and thus must be negotiated. Benefits affecting current retirees, however, have been understood to be a permissive topic of bargaining.

In this case, the union alleged that the employer unilaterally changed the way it calculated its monetary contribution towards health care for retirees. The Board agent dismissed the charge on the ground that the alleged change did not affect any current employees and any changes to the benefits of current retirees were not within the scope of representation – they were rather a permissive subject of bargaining.

The Board generally affirmed the Board agent’s analysis that only benefits for current employees are within the scope of representation. However, the Board held that any changes to retiree benefits are still negotiable to the extent they affect what current employees will receive in the future.

The Board’s decision is potentially problematic in several respects. First, the Board’s holding has the potential to swallow the rule that benefits for retirees are a permissive subject of bargaining. This is because almost any change to the current benefits of retirees arguably affects the future benefits of current employees.

The decision also raises an interesting question regarding remedies. Consider what would have happened had the Board found a violation. By its own admission, the Board would have no jurisdiction to order a remedy for current retirees, who were the only individuals affected by the alleged conduct. The Board could only order a remedy as to current employees; but here they suffered no harm. Presumably, the Board could order the change rescinded as it applied to the future benefits of current employees. In order words, the Board could order the employer to restore the promised benefit for current employees. However, how would the Board ever enforce such a promise? The employer’s promise would not become actionable until the current employee retired; but once that occurred, the Board would again lose jurisdiction!

This is not to say, of course, that employers can freely renege on promised benefits. There are certainly other avenues of enforcement. The point is that this issue is not one that lends itself to PERB enforcement.

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