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Willig, Williams & Davidson Gets Injunction to Stop Pension Changes

January 10, 2012

On Dec. 29, 2011, Alaine S. Williams of Willig, Williams & Davidson obtained a preliminary injunction on behalf of the American Federation of State County and Municipal Employees (AFSCME) District Council 85 to stop planned pension changes by Erie County, Pa. Specifically, the Erie County Council, which also serves as the Board of Trustees for two County nursing homes, passed a resolution on Nov. 17, 2011 calling for a freeze of monthly pension benefits payable at retirement for many nursing home employees at their current amounts, and for the creation of a 401(k) plan to replace their defined benefit pension plan.

AFSCME responded by filing a charge of unfair labor practices with the Pennsylvania Labor Relations Board (PLRB) against the County, alleging that it refused to first bargain with AFSCME over these changes, as required by the Public Employee Relations Act of 1970 (Act 195). Further, AFSCME filed for a preliminary injunction in the Erie County Court of Common Pleas to stop the County’s planned pension changes pending resolution of this unfair labor practice charge and/or a decision by the Court.  AFSCME won an order granting a preliminary injunction on Dec. 29, 2011.

In addition to AFSCME’s claim that the County failed to fulfill its bargaining obligations under Act 195, AFSCME asserts (1) that the Pennsylvania Constitution’s Contracts Clause forbids unilateral changes of pension benefit rights for current public employees, as set forth in a long line of Pennsylvania Supreme Court cases; and (2) that state and local governments like Erie County cannot create 401(k) plans for their employees, but rather must rely upon another section of the Federal Tax Code (section 457(b)) to have retirement savings plans funded by employee paycheck deferrals.  

There will be further proceedings in this case before both the PLRB and the Erie County Court of Common Pleas. But as this case shows, it is critically important to act quickly to try to stop pension changes before they happen. Therefore, if your employer is changing your pension plan without first bargaining with the Union, you should contact the Labor Group and Benefits Group at Willig, Williams & Davidson immediately to see what options the Union has available.       

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