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Sterling Employment Law

Detroit firefighter union in court over pension benefits

Ever since the City of Detroit filed for bankruptcy and sought restructuring to emerge debt free from financial distress, a number of the city's labor unions have gone through discussions with city authorities about the various implications of this plan on their employment contracts. The city has been able to seal the deal with all major labor unions except for the Detroit Fire Fighters Association, which was recently in court alleging that the city's proposed changes to their pensions violates the union members' collective bargaining rights.

Detroit plans to reduce debt amounting to $7 billion, along with long-term liabilities such as hybrid pension plans for city employees, which went into effect from July 1, 2014. The new plan was less generous than the previous plan and would require employees to contribute to their own retirement accounts.

According to the DFFA's attorney, the city's debt cutting plan would effectively suspend the union's right to bargain for better pension benefits for the next 10 years. He argued that the bankruptcy court does not have the authority to allow the city to ignore Michigan's employment laws pertaining to public employees' collective bargaining rights.

In his reply, the attorney representing the city stressed the point that Detroit's debt cutting plan relied upon the expectations that pension plans costs for city employees will remain unchanged for at least a decade, and allowing unions to bargain for increased benefits could hamper the city's efforts to recover from debt. He also mentioned that the measure to keep pension benefits stagnant for a decade was not an absolute abolition of bargaining rights and that the DFFA would be free to bargain on other economic issues.

The dispute between the City of Detroit and the DFFA is one of the numerous concerns that surround Detroit's restructuring plan and a number of hearings are scheduled before a final trial over the plan will be held in August.

Source: The Detroit News, "Firefighters union seeks to stop Detroit restructuring over bargaining rights," Chad Livengood, July 16, 2014

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