Police Officers and Firefighters Now Exempt From Public Act 54

On October 15, 2014, Governor Snyder signed into law a bill that will allow police officers and firefighters to receive wage and benefit increases during the time period after their union contract has expired and before a successor contract is in place.  Formerly House Bill 5097, the signed law is now Public Act 322 of 2014 and has immediate effect.  It amends Section 15b of the Public Employment Relations Act ("PERA"), MCL 423.215b, to make exceptions for public employees who are subject to compulsory arbitration of labor disputes under Public Act 312 of 1969 (public police and fire department employees).

Under Section 15b of PERA (also known as "Public Act 54 of 2011" or "PA 54"), after a union contract expires and before a new contract takes effect, a public employer must pay and provide wages and benefits at levels and amounts that are no greater than those in effect on the expiration date of the contract.  Employees who receive health, dental, vision, prescription, or other insurance benefits under the contract must bear any increased cost of maintaining those benefits that occurs after the contract expires.  Also, the public employer and union may not agree to, and an arbitration panel may not order, any retroactive wage or benefit increases.  Public Act 322 amends Section 15b in the following ways:

• Allows public police and fire department employees to receive wage and benefit increases following the expiration of a contract and before a successor contract is reached, if those increases were expressly authorized under the expired contract;
• Limits the increased cost to public police and fire department employees for maintaining insurance benefits (health, dental, vision, prescription, and other benefits) during the time period in which the parties are operating under an expired contract.  The increased cost cannot exceed the amount of the employee's share under 2011 Public Act 152; if the employer has exempted itself from PA 152, the increased cost to employees cannot exceed the higher of the minimum employee share required under either section 3 or section 4 of PA 152.
• Allows an Act 312 arbitration panel to award retroactive wage and benefit increases;
• Allows a public employer and a union representing public police or fire department employees to agree to retroactive wage and benefit increases in their successor contract.

As a result of PA 322, public employers will lose the leverage PA 54 gave them in their negotiations with the unions representing police and fire department employees.  The law will cause public employers to again bear the increased cost of maintaining employee health benefits and the cost of employee step increases after a contract has expired and until a new contract is reached.  By doing so, PA 322 removes the incentive PA 54 created for unions to enter into a successor contract before the parties' current contract expires, since the parties may now agree to retroactive wage and benefit increases and an Act 312 arbitration panel may award the same.  Please note, PA 322 applies only to public employees subject to compulsory arbitration of labor disputes under Act 312.  Other public employees, such as public school personnel, remain subject to Public Act 54 of 2011.

If you have questions about PA 322, please contact Eric Griggs at (616) 608-1147 or egriggs@clarkhill.com or a member of your Clark Hill Municipal and School or Labor and Employment practice groups.