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A little known fact about PA 322 (HB 5097)

Posted by: Jennifer Gomori Posted date: January 21, 2015

— By Jennifer Foley, POJ Editor

HB 5097 (amended to PA 322) was hailed as a victory for Act 312 employees, allowing Michigan Police Officers and Firefighters to receive full wages and benefits agreed upon in contract negotiations. However, public safety unions have identified a little known fact, which could change the outcome for some.

The rules change a bit when an employer opts out of PA 152, the Health Insurance Contribution Act. That Act requires employers to choose between paying 80 percent of health care costs while employees pay 20 percent or the Hard Cap, in which employees pay the cost that exceeds the cap established by law to purchase health insurance.

PA 54 of 2011 amended the Public Employment Relations Act, which had prohibited public employers from granting any wage increases beyond the expiration of the contract, including traditional step increases. Additionally, employees had to pick up any increases in health, dental, vision, prescription, or other insurance benefits under the contract that occurred after the expiration date.

PA 322 exempts Act 312-eligible employees from those provisions and allows employees to bargain for retroactive application of a wage or benefit increase after the expiration of the contract.

The exception comes when an employer opts out of the Health Insurance Contribution Act. In those cases, Act 312-eligible employees are responsible for the cost of health insurance benefit increases after the collective bargaining agreement expires. However, employees would only have to pay up to what the limit would be under 80/20 or the Hard Cap – they would not pay more than the higher of the two.

POLC Labor Attorney Tom Zulch said this exception would not impact most Act 312 employees since the majority of Michigan employers opt into the 80/20 or Hard Cap.

“If a group opts out and the contract expires employees will pay more for health care if there is an increase in cost,” Zulch said. “You are still responsible, but instead of an 100 percent increase, you would pay 20 percent.”

Zulch added that the POLC could negotiate to reduce that cost increase even further by seeking retroactivity for wage and benefit increases.

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