Health Insurance and Collective Bargaining

Collective bargaining over health insurance has become more complicated in light of the phased-in implementation of the Patient Protection and Affordable Care Act (the “ACA”) and the fact that some labor unions are placing increasing emphasis in bargaining on securing the agreement of employers to agree to replace employer-provided insurance coverage with union-administered Taft-Hartley insurance plans.  The Administrative Law Judge’s Recommended Decision and Order in International Union of Operating Engineers Local 150 and County of Lee, ILRB Case No. S-CA-11-157 (issued as non-precedential by the ILRB on Aug. 13, 2014), provides guidance on pitfalls to avoid in conducting such negotiations.

In County of Lee, the Union placed a priority on convincing the County to accept the Union’s health insurance plan for public works employees represented by the Union.  The County was willing to listen, but wanted to know if the Union would agree to cover all employees, including those not represented by the Union.  In addition, the County was concerned about two things:  1) the effect of the “me-too” clause in the police (FOP) contract; and 2) the effect on costs if the population covered by County-provided health insurance were to drop below 100.  After months of bargaining, the Union was still insisting on its insurance plan, for public works employees only, and the County was still resisting.  Finally, out of “frustration”, the County proposed to keep the existing collective bargaining agreement, with no changes.  The Union then filed refusal-to- bargain and regressive bargaining charges against the County.

After a hearing, the Administrative Law Judge ruled that the County had not refused to bargain about the insurance issue – it had simply refused to agree, which was its right.  But the ALJ found that the County had engaged in regressive bargaining by proposing to return to the status quo.  “While there is no doubt that contract negotiations can be frustrating,” the ALJ said, “a party fails in its obligation to bargain in good faith when it attempts to go back to square one after months of bargaining.”

Bargaining over insurance issues is difficult, especially when, as here, one party is insisting on a Taft-Hartley Plan (a private sector plan which, by law, allows no employee contributions) and the other party is concerned about the effects of a “me too” provision in another of its contracts (the invocation of which, the County feared, would lead to a reduction of the FOP contract employee contribution from 25% to zero).  While there are a number of lessons to be drawn from this case, three are primary: first, while employee unions have unit-wide concerns, health insurance is always a city-wide concern for the public employer; second, because of the many variables involved, employers should avoid “me too” clauses, especially with respect to health insurance benefits;  and third, while hard bargaining is allowed, a public employer cannot give in to frustration by making a formal offer to abandon previous offers in order to return to “square one” without facing possible regressive bargaining charges.