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WERC Ruling Makes Most Employee Health Insurance Language in Collective Bargaining Agreements with Wisconsin Public Safety Unions Illegal

On July 6, 2022, the Wisconsin Employment Relations Commission (WERC) issued a pair of decisions with major state-wide implications for municipal employers and their public safety unions. In City of Racine (police), Decision No. 39446 (WERC, 7-6-22) and City of Racine (firefighters), Decision No. 39447 (WERC, 7-6-22), the WERC held that municipal employers are prohibited from bargaining with public safety unions over all aspects of employee health insurance benefits, except for premium contributions to be paid by those employees the employer has chosen to cover by its health plan. As a result, almost all language in municipal employers’ collective bargaining agreements related to employee health insurance for public safety employees is now considered illegal, and, therefore, invalid. The WERC’s decision provides municipal employers with wide-sweeping flexibility to unilaterally determine matters related to employee health insurance coverage for public safety personnel.

In February 2021, the City of Racine, represented by Attorneys Mark Olson and Brian Waterman of Buelow Vetter, filed a petition for declaratory ruling with the WERC asking the Commission to rule on whether significant portions of the health insurance language contained in its collective bargaining agreements with its police and fire unions included prohibited subjects of bargaining under Wis. Stat. § 111.70(4)(mc)6. 

Section 111.70(4)(mc)6 states as follows:

The municipal employer is prohibited from bargaining collectively with a collective bargaining unit containing a public safety employee with respect to any of the following:…(6) Except for the employee premium contribution, all costs and payments associated with health care coverage plans and the design and selection of health care coverage plans by the municipal employer for public safety employees, and the impact of such costs and payments and the design and selection of the health care coverage plans on the wages, hours, and conditions of employment of the public safety employee.

The City’s petitions for declaratory ruling asserted that, in the wake of 2011 Wisconsin Act 32 and 2013 Wisconsin Act 20, which created and modified Wis. Stat. § 111.70(4)(mc)6, respectively, the City was not permitted to bargain over any language that did not specifically pertain to employee premium contributions, and, therefore, any such language in the parties’ collective bargaining agreements was invalid. 

The WERC agreed with the City’s position, holding:

[T]he Commission is persuaded that the statute gives the City discretion to determine whether it will even have a health insurance plan for public safety employees. Thus, any Association bargaining proposal over the “employee premium contribution” must be framed in the context of that City discretion if it is to be a mandatory subject of bargaining primarily related to wages.

Among other arguments, the unions claimed the “premium contribution portion” of Wis. Stat. § 111.70(4)(mc)6 must necessarily include the issue of which bargaining unit employees will pay the premium the parties bargain, i.e., employee plan eligibility. Rejecting the unions’ arguments, the WERC held: 

When the word “design” is given its ordinary meaning, it encompasses the choice of who will be covered by the plan as well as what benefits the plan will provide. Once that decision is made, then bargaining can occur as to what the employee premium contribution will be. While this result can seem “harsh and unreasonable” when contrasted with the bargaining rights that existed pre-Acts 32 and 20, it is not “harsh and unreasonable” in the context of statutory interruption.

Addressing the City’s duty to bargain over health insurance benefits pertaining to retirees, the WERC first recognized the long-held principle that municipal employers have no duty to bargain over insurance benefits for employees who have already retired, as those individuals are no longer bargaining unit members. The WERC then went further to hold:

As to employees who may retire under the terms of the agreement the City and Union will bargain, the Commission concludes that the language of Wis. Stat. § 111.70(4)(mc)6 has eliminated the right to bargain insurance coverage as part of deferred compensation. If current employees have lost the right to bargain over whether the City will even offer insurance benefits while they are employed, it logically follows that the Union is prohibited from bargaining over such benefits as part of deferred compensation once they retire.

The WERC did hold, however, that as part of deferred compensation for employees who retire during the term of the contract, there is a duty to bargain over a municipal employer’s payment of Medicare B premiums, because Medicare B is not a “health care coverage plan” provided by the employer, and thus falls outside the scope of Wis. Stat. § 111.70(4)(mc)6. 

It is likely the WERC’s City of Racine decisions will be appealed by the labor organizations involved. However, the decisions’ immediate impact on Wisconsin’s municipal employers and their public safety unions is significant. Because the WERC has held that any contract language that presumes the existence of a health insurance plan, other than employee premium contributions, is a prohibited subject of bargaining, any such language contained in an existing collective bargaining agreement is now invalid, and an illegal subject of bargaining during any future negotiations. With the removal of these prior contractual restraints, Wisconsin’s municipal employers now have important decisions to make regarding the health insurance benefits offered to their public safety employees. 

If you have any questions regarding the WERC’s rulings, or their implications for your municipality’s collective bargaining agreements, please contact Brian Waterman at bwaterman@buelowvetter.com or 262-364-0257, Mark Olson at molson@buelowvetter.com or 262-364-0256, or your Buelow Vetter attorney.

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