Emergency Manager Cuts Retirees’ Health Care Benefits

May 05, 2014

The ACLU believes that the rights of public employees to organize and bargain collectively are important aspects of the First Amendment right to freedom of association. The value of collective bargaining, however, would be seriously diminished if the state were free to abandon its obligations under a collective bargaining agreement.

Public Act 4 gives Michigan’s “emergency managers” unchecked authority to cancel or modify collective bargaining agreements, even when there are other alternatives for dealing with local budget shortfalls.

In 2011 and 2012, the state-appointed emergency manager for the City of Pontiac drastically cut the lifetime health care benefits that had been promised to city retirees, many of whom are living on fixed incomes and can’t afford to continue health coverage on their own. The retirees’ motion for a preliminary injunction against the cuts was denied.

In 2013 the ACLU of Michigan filed a friend-of-the-court brief in the U.S. Court of Appeals for the Sixth Circuit, which heard the retirees’ case in an “en banc” appeal. The ACLU’s brief argued that the emergency manager’s actions violate the provision of the U.S. Constitution that prohibits the impairment of contracts.

In May 2014 the Sixth Circuit remanded the case to the district court for additional fact-finding and analysis on the contracts claim and other issues.

(City of Pontiac Retired Employees Ass’n v. Schimmel; ACLU Attorney Dan Korobkin; Cooperating Attorney Avani Bhatt.)

Related Issues: