The UAW strike against GM represents the latest strike in a string of labor disputes between management and union workers. Continuation of health benefits during a strike is always a consideration in such situations.
After initially stating it would not pay for striking workers’ health care benefits, GM reversed its decision. GM’s decision to terminate health benefits would have shifted the burden of paying for striking workers’ health insurance benefits to the employees under COBRA. The GM situation brings to the forefront the legal issue of who is responsible for the payment of the health insurance benefits for workers who have stopped working to exercise their right to participate in a union strike.
The answer depends, in large part, on the terms of the collective bargaining agreement (CBA), but also on the National Labor Relation Board’s (Board) application of the principles of contract law. Recently, there’ve been dramatic shifts in the Board’s interpretation of the law as the composition of the members of the policy-making Board changes to align with the policy agenda of the current administration. GM’s decision to continue payment of health insurance benefits and the prospect of future strikes by other employees in other industries make this issue ripe for consideration by the current Board.
In the 2017 case, Hawaiian Telecom Inc., the NLRB concluded that the employer’s termination of medical benefits for strikers during a one-day strike constituted an unfair labor practice. The Board found that the terms of the expired CBA obligated the employer to continue to pay medical benefits. At play were two competing tenets of labor law: that an employer is not required to finance a strike against itself, but also that an employer may not terminate accrued benefits from strikers based upon their participation in a strike. In determining that the medical benefits were accrued or “due and payable at the time the benefits were denied,” the Board engaged in an expansive reading of the CBA.
The CBA at issue in Hawaiian Telecom Inc., contained no time-in service provision and only two circumstances which allowed the employer to terminate the benefits: by agreement or upon 30 days after termination. The Board also minimized the significance of a durational clause in the agreement. As a result, the Board concluded that the benefits were accrued, and the striking employees were entitled to receive health benefits paid by the employer throughout the duration of the strike. The lone dissenter, Acting Chairman Miscimarra, disagreed with the majority’s assessment of the case. He argued that the majority’s decision ignored several principles of labor and contract law, namely that:
- Contractual obligations cease upon the termination of a CBA;
- A general durational clause limits a party’s obligations to the term of the agreement; and
- Courts should not construe ambiguous writings to confer lifetime benefits.
Miscimarra also argued that medical benefits provided for in CBA’s are considered welfare benefits under ERISA, which are not considered to be vested. Additionally, welfare benefits must be established under a written agreement, which employers may modify or terminate at any time. As such, a commitment by an employer to vest such benefits must not “be inferred lightly” and must be “stated in clear and explicit language.”
The arguments raised by Miscimarra find support in the 2015 U.S. Supreme Court decision, M&G Polymers USA, LLC v Tackett (Tackett). The 9-0 opinion, with Justices Ginsburg, Sotomayor, Kagan and Breyer concurring, was relied on by Miscimarra in his dissent. It held that ordinary contract principles, without presumptions, must be applied to determine whether retiree health benefits survive the expiration of a CBA, and the entire agreement must be examined to determine the intent of the parties, which Miscimarra argued the Board failed to do.
While former acting chairman Miscimarra’s term on the Board has expired, a Republican majority currently controls the Board. If presented with the issue of an employers’ obligation to pay health benefits of striking workers, the current Board likely would adopt Miscimarra’s analysis. Consequently, unfair labor practice claims based on termination of health benefits by the employer during a strike would have to be supported by clear and explicit language in the CBA to prevail.
Tracey Oakes O’Brien is a contributing author of this content.