The Electrical Worker online
January 2013

Calif. Court Protects Retiree Health Care
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In November, public sector workers won an important victory for retirement security when a California court found that the City of Redding was bound by its past promise to fund retiree health costs.

The Third District Court of Appeals in Sacramento ruled that the city could not back out of its contractual agreement with Vacaville Local 1245 to help pay retirees' health insurance costs.

The appeals court decision overturned a trial court's earlier decision ruling for the city.

Since 1979, the IBEW's contract with Redding provided that the city would pay 50 percent of insurance premiums for retirees and their dependents.

But in 2010, facing a major budget crunch in the wake of the Great Recession, city managers slashed their contributions to retiree health care, prompting Local 1245 to sue.

Says Local 1245 Business Manager Tom Dalzell:

"If an employer can't be counted on to honor its written commitments, the whole foundation of collective bargaining is undermined. When we give our word, we have to keep it. We are extremely pleased that the court agreed with us that employers have to keep their word too."

City officials claimed that the health care cuts didn't violate the contract because they were made as part of a final offer made after an impasse in negotiations.

But Justice George Nicholson disagreed, saying that a labor contract can provide vested rights that remain in effect after the agreement expires.

According to the court's ruling, the city and the IBEW "intended to provide a future benefit to active employees, not just during the term of the [contract]."

Although an important victory for California public workers, Redding officials haven't given up. They are asking the state Supreme Court to review the ruling.

Local 1245 members are hopeful that the appeals court decision will be upheld.

"We have a lot of proud and very happy members in Redding right now," says Assistant Business Manager Ray Thomas. "The court's decision will help all public sector unions in California."