Michigan Supreme Court Affirms Michigan Court of Appeals Decision in Case Regarding PA 152, Shelby Township v Command Officers Association of Michigan

On November 1, 2017, the Michigan Supreme Court affirmed the December 15, 2015 Court of Appeals’ judgment, which had affirmed the decision of the Michigan Employment Relations Commission (MERC) in the matter of Shelby Township v Command Officers of Michigan, 29 MPER ¶ 38 (2014). Among the issues that were decided: (1) whether the calculation and/or allocation of payments for medical benefit plan costs among represented employees under Michigan Public Act 152 of 2011 (PA 152) is a mandatory subject of bargaining pursuant to the Public Employee Relations Act, MCL §§ 423.201, et seq. (“PERA”), and (2) whether PA 152, alone or in conjunction with PERA, precludes a public employer’s use of illustrative insurance rates (that include retiree health insurance costs) when calculating employer and employee contributions toward the cost of health insurance under PA 152.

This decision affirms the MERC ruling that, even though the employer’s choice under PA 152 between the 80/20, hard cap, or opt-out options is not a mandatory subject of bargaining, once that choice is made, the public employer has a duty to bargain about the calculation of the Union members’ premium shares, and how the total employee contributions are to be allocated between bargaining units.

Furthermore, the Supreme Court decision affirms that the public employer is prohibited from using blended insurance rates that include both active and retiree health insurance costs when calculating employer and employee contributions toward the cost of health insurance under PA 152. With respect to the bundled insurance rates, the Court of Appeals held: “[W]e conclude that MERC did not err as a matter of law when it determined that the Township could not use a rate for its employees’ premiums that included benefits for retired employees. The definition of ‘medical benefit plan’ specifically excludes benefits to retired employees. The bundled rate used in this case included retirees’ costs.”

Please feel free to contact a Keller Thoma attorney at (313) 965-7610 with any questions.

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