Workers Comp, Retirement and Federal Pre-emption

As workers’ compensation attorneys, we repeatedly remind injured employees that if they take a regular retirement, it will drastically effect their workers’ compensation rights.  The Michigan Legislature amended the law in 1981 so that persons injured after March 31, 1982 will have their weekly workers’ compensation benefits reduced by the after-tax value of their regular pension benefits.  For some employees, that set-off will wipe out completely an employee’s weekly workers’ compensation benefits. 

An interesting case, Foster v Integrated CE Services, was decided by the Michigan Workers’ Compensation Appellate Commission this year.  This case gives unions the power to avoid the reduction of workers’ compensation benefits by regular pension benefits.  In this case, the International Brotherhood of Boilermakers, Ironship Builders, Blacksmiths, Forgers and Helpers, ALF-CIO Local Lodge No. 169 negotiated language into their Collective Bargaining Agreement that barred pension benefits from being used to coordinate, or reduce, other benefits.

State law doesn’t let employers and employees contract or negotiate their way out of the coordination rules regarding regular pensions.  In Mr. Foster’s case, the employer argued that comp should be reduced, that the law is the law and coordination or reduction of benefits is mandated and inevitable under state law.

Mr. Foster advanced the argument that the terms of the Collective Bargaining Agreement negotiated under federal labor law must override any conflicting state law, that federal law trumps state law.  The Workers’ Compensation Appellate Commission agreed with Mr. Foster. 

This may not be the last word on this issue; higher state and federal courts will probably have their say on this too.  This case does present an opportunity for unions throughout Michigan and the country to strengthen the rights and benefits of injured workers through the collective bargaining process to prevent workers’ compensation benefits from being reduced by hard earned pension dollars. 

Unions have difficult choices they must make as they balance the competing interests of securing new and better wages and benefits and staying competitive to secure new work.  But this decision, if it is not overturned, does give unions the power to bring this matter to the bargaining table. (2004)

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