Below is an urgent memo written by POAM General Counsel Frank Guido in regards to HB5097:

The Governor has signed into law legislation amending PA 54 of 2011 (Enrolled House Bill No. 5097). The amending language was materially and substantively written by POAM.

The original enactment did not exempt PA 312 eligible employees from the punitive terms of the statute. The provisions of the original statute mandated that when a collective bargaining agreement expired, public employee wages and benefits were to be frozen at the level in effect as of the date of CBA expiration. The statute also stated that wages and benefits, such as “step increases,” could not be provided after expiration of the CBA. In addition, the original statute provided that after expiration of a CBA, public employees had to bear the full cost of any increase in health, dental, vision, prescription, or other insurance benefit premiums.

That measure, when compounded with the already existing PA 152 of 2011 premium cost sharing legislation (aka the hard-cap/80-20 law), reflected a legislative backlash against public employees which, unfortunately, also adversely impacted PA 312 eligible employees. The final problematic aspect of the original legislation was the prohibition on seeking, through negotiation or arbitration, any retroactive restoration of lost wages and benefits, including insurance related costs. The punitive language in the original statute, of course, did not solve the alleged reason for the legislation, i.e., to force unions to settle contract negotiations in a timely manner, to the contrary, those provisions became used as a weapon by public employers to stall and/or to slant in their favor the negotiation process.

At our insistence, or perhaps persistence, amendment to the original legislation has now occurred. The amendment carves out PA 312 eligible employees (Police, Fire, Dispatch and EMT) from the more punitive aspects of the original legislation.

The following constitute the most significant changes from the original law:

  1. PA 312 eligible employees are not subject to a freeze on wages and benefits at the expiration of a CBA. The amendment includes removal of the prohibition on “step increases.”
  2. PA 312 eligible employees, after expiration of a CBA, are not required to bear the cost of the increase in insurance benefits (health, dental, vision, prescription, or other insurance benefit). The provisions of PA 152 remain in effect. If an employer has opted out of PA 152 participation in a given year, PA 312 eligible employees, at the expiration of a CBA, will still bear the cost of insurance premiums under the hard-cap/80-20 law (higher of the two), as if the employer were subject to the act. Again, it should be noted, through negotiation or compulsory arbitration, the adverse impact of this provision may be minimized or eliminated, directly or through retroactive restoration of wages and benefits.
  3. The right to seek retroactive restoration of wages and benefits, as provided in section 10 of PA 312, is not diminished.
  4. The right to negotiate and/or utilize the compulsory arbitration process to reach an agreement/arbitration award, with terms mutually agreeable to the parties/awarded in compulsory arbitration, is fully restored.

Due to the passage of the amending legislation, it is the position of POAM that any freeze on wages and benefits, or pass-through of insurance premium increases, which have occurred after expiration of a CBA, must be discontinued with the effective date of the legislation (@10/15/2014).

There will be no automatic restoration of lost wages and benefits, nor automatic restoration of the added cost of premiums for insurance, that were incurred by an employee after expiration of a CBA and prior to the effective date of the amending law. With that said, the parties now have the right to negotiate and/or utilize compulsory arbitration to seek retroactive wages and benefits, which could provide a mechanism to address the period after expiration of a CBA and prior to passage of the amending law.

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