Legislature Halts Automatic Wage Increases After the Expiration of CBA
A new Michigan law changes the collective bargaining landscape for
public employers with its mandate that wages and benefits be frozen
during contract negotiations once the existing contract has expired.
Furthermore, the law (PA 54, which took effect on June 8) requires
employees to pay any increased cost in insurance benefits after a
contract expires, until a successor agreement is reached.
During
hearings on the legislation, the Royal Oak School District
superintendent testified to automatic salary increases that occurred
during the two years of contract negotiations, costing the School
District more than $777,000. Together with increased health insurance
costs during bargaining, the District incurred increased costs of over
$1.7 million during the course of negotiations.
To address the
issue of compounding fiscal problems during the pendency of
negotiations, the new law also forbids a public employer and its union
from agreeing to retroactive wage or benefit increases to cover the time
between expiration and ratification of a new agreement; and forbids the
employer and the union to circumvent the new law by extending wage and
benefit provisions of an expired contract during negotiations.
Specifically,
Act 54 prohibits public employers from paying employees wages and
benefits higher than the amount the employees were receiving on the
expiration date of the collective bargaining agreement, including any
step increases or other automatic increases. Act 54 also requires that
any increase in the cost of health, dental, prescription, or other
insurance after the expiration date of a collective bargaining agreement
(until a successor agreement is reached) will be the responsibility of
the employees.
Requiring employees to pick up additional costs
associated with increased insurance costs and forgoing pay increases and
retroactive pay raises should provide an incentive to unions to reach
successor agreements in a shorter time period and not delay negotiations
for successor agreements.
