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BlogsPublications | February 8, 2017
2 minute read

MSC grants leave to appeal as to whether percentage allocation of premium contributions is a mandatory subject of bargaining

In Shelby Township v Command Officers Association of Michigan, No 323491, the Michigan Supreme Court granted leave to appeal to address bargaining requirements related to public employees’ contributions to medical benefit plans pursuant to the Publicly Funded Health Insurance Contribution Act and the Public Employment Relations Act. The Publicly Funded Health Insurance Contribution Act, MCL 15.561 et seq., limits how much public employers may pay toward healthcare costs for employee medical benefit plans.  There are two alternatives available: the “hard cap” option, which gives employers the option to pay a specific amount per employee, and the “percentage” option, which gives employers the option to pay not more than 80% of total healthcare costs for all employees and elected public officials.  When the contract between the supervising law enforcement officers and the Township expired on December 31, 2010, the Township adopted the “percentage” option for only the Union’s members and dispatchers, but applied the “hard cap” option to non-union employees and other bargaining units.  

Following a hearing, MERC ruled that the Township did not violate its duty to bargain by unilaterally choosing the “percentage” option instead of the “hard cap” option.  However, MERC concluded that the Township had failed to bargain about the calculation of the Union members’ premium shares and ordered the Township to recalculate the employees’ premiums as of February 1, 2012. The Township appealed and the Court of Appeals affirmed, holding that the percentage allocation of premium contributions is a mandatory subject of bargaining and that the Township had improperly calculated the employees’ premiums on the basis of bundled rates that included retirees’ insurance costs.

In granting leave to appeal, the Michigan Supreme Court directed the parties to address the following issues:

(1) whether the calculation of payments for medical benefit plan costs among employees under the Publicly Funded Health Insurance Contribution Act is a mandatory subject of collective bargaining pursuant to the Public Employment Relations Act; and

(2) whether the Publicly Funded Health Insurance Contribution Act precludes a public employer’s use of illustrative insurance rates that include retiree health insurance costs.