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Heading to bargaining table? Review contract language before changing benefits

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If your organization has a collective-bargaining agreement with a union, make sure you check with counsel before you make any changes to benefits. In some cases, promises made in past contracts—such as a promise to provide retiree health benefits—may be a binding, vested promise that cannot be undone, at least for those who have already qualified.

Recent case: Rockwell International announced in 2005 that, with the expiration of the union contract then in place, it would stop providing retiree health benefits. The benefits had been part of previous contracts for many years.

Retirees sued, claiming the earlier contract provisions were permanent and amounted to vested benefits similar to a pension. The 6th Circuit Court of Appeals looked at the language and agreed. It said the company had to continue the health benefits. (Cole, et al., v. Rockwell International, No. 06-2224, 6th Cir., 2008)

Advice: If you already have a similar clause in your contract, talk to your attorney about how you can at least eliminate the obligation for future employees. And remember that the cost of prior commitments can be a basis for demanding take-backs in other areas, such as wages.

Final note: This case illustrates why you need extremely skilled and experienced legal counsel to help negotiate union contracts. This is not a do-it-yourself project. The union will have language in mind that may sound innocuous, but that could create permanent rights for employees that you can never take away—at least for current employees.

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