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Pennsylvania Supreme Court Bolsters Public Workers' Pension Rights

November 29, 2011

On November 25, 2011, the Supreme Court of Pennsylvania issued a unanimous decision protecting the pension rights of public employees in a case litigated by Willig, Williams & Davidson and the Pennsylvania Labor Relations Board on behalf of firefighters in the City of Erie.
 
In a unanimous and strongly-worded opinion, the Supreme Court held that the City of Erie violated the rights of its firefighters when it eliminated a deferred retirement pension benefit without first bargaining with its firefighters over the change. The City had contended before the Pennsylvania Labor Relations Board that it had the unilateral right to amend its own employee pension ordinance, regardless of the objection of the firefighters, in order to comply with findings of the state Auditor General. The City had also contended the DROP elimination was proper because the benefit had been provided via the unilateral adoption of an ordinance, as opposed to collective bargaining.
 
The Supreme Court flatly rejected those arguments, which had previously been accepted by the Commonwealth Court in a 2009 unpublished opinion. "The plain and unambiguous terms of Act 111 obligate the parties to bargain over mandatory subjects of bargaining, including pension benefits. . . . Furthermore, an employer's unilateral change to a mandatory subject of bargaining, such as pension benefits, even though the enactment or repeal of an ordinance constitutes an unfair labor practice." Consequently, the Supreme Court held that the Pennsylvania Labor Relations Board properly determined that the City’s DROP-elimination was illegal, and ordered the City to restore the benefit.
 
The implications of the City of Erie decision are potentially far-reaching in an environment in which public employee pension benefits are at heightened risk, and employers have become increasingly aggressive in their attempts to weaken or eliminate DROP and other pension benefits for their employees. “The Erie decision should once and for all put this issue to rest – public pension benefits are an enforceable promise, they are subject to collective bargaining, and they simply cannot be eliminated absent the consent of  the affected employees,” said Philadelphia labor and employment attorney Richard Poulson, who represented the firefighters involved in the DROP dispute.
 
For more information on the City of Erie decision, or to discuss how Willig, Williams & Davidson may help to protect and improve your pension benefits, please contact one of the attorneys in our Labor and Employment or Employee Benefits departments.
 

   
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