The Minnesota legislature has provided certain retiree health insurance benefits to public employees through state statute. For example, former public employees and their dependents must be allowed to continue to participate indefinitely in the employer-sponsored insurance group that the employee participated in immediately before retirement. Additionally, until the former public employee reaches age 65, they must be permitted to be pooled in the same group as active employees for purposes of establishing premiums for health insurance. Finally, public employers and employee unions may negotiate over employer contributions to retiree health insurance premiums. It is safe to say these statutorily created benefits are unique to the public sector, and not typically available in the private sector.
In today’s economy, health insurance costs are crippling the budgets of public employers. Limited to income from property tax revenues, levy referendums, and in some cases local government aid, public employers are struggling to control mounting costs of employee health insurance. My law partner blogged about a recent arbitration case she presented where retiree health insurance was the central issue in dispute. In that case, the arbitrator put a sunset on retiree health insurance, persuaded by the mounting unfunded liability facing the city.
The issue of retiree health insurance benefits is now going up on appeal to the Minnesota Supreme Court. This class action lawsuit, filed by 800 retired Duluth, Minnesota city employees, challenges the changes the City made to health benefits provided to retirees at the time of their retirement. The City had been faced with overseeing about 100 different health plans for former employees, who had retired over the years. The City streamlined the system, taking the position the labor contracts required the employer to provide the same coverage to retirees as it does to current employees, not the coverage the retirees had when they retired. Over the span of 30 years, Duluth Mayor Don Ness estimated the changes would save the city approximately $205 million dollars.
District Court Judge Sandvik ruled in favor of the City of Duluth in October 2009, which was upheld by the Court of Appeals in 2010. The Supreme Court accepted review and oral arguments are scheduled for May 2, 2011. I will of course keep my eyes on the case and update you with the results. This is going to be an important decision for public employers.
I am excited to be a presenter at an LRIS conference about “Collective Bargaining” in Las Vegas this week. I will be presenting management’s position, and attorney Rob Wexler from California will be presenting the union’s side. Will Aitchison is serving as the moderator. We will be discussing the “Nuts and Bolts of Collective Bargaining.”
I’ve blogged in the past about other businesses found to have violated the Federal Fair Labor Standards Act (FLSA), including 
