Solidarity NOT Forever: How the Supreme Court Kicked Retirees Into the Gutter

The Supreme Court’s decision in Allied Chemical Workers v. Pittsburgh Plate Glass to give employers complete control of retiree benefits undercuts the purpose of the National Labor Relations Act and leaves vulnerable, retired employees powerless to protect themselves from costly changes in benefits.

Congress enacted the National Labor Relations Act to balance the power of employers – who could operate as corporations or partnerships – by giving employees the right to band together and deal with their employer as a group. A second way Congress gave employees power was by giving them the legal right to support any employee, whether or not they were employed by the same employer. In other words, the NLRA gave employees the right to make common cause with other workers, just as employers had the right to form industry groups to support one another.

The courts, however, have judicially limited employees’ rights to make common cause by deciding that certain types of employees are not actually employees under the law. In 1971, the Supreme Court decided to remove NLRA protections for retirees.

Deciding that retirees were not employees might seem reasonable, because we usually think of employees as active workers. But Congress wanted the NLRA to provide broad protections to workers. Broad protections were only possible if the definition of employee was broad. As a result, Congress defined “employee” in the NLRA to include “any employee,” and, to make it clear that Congress meant what it said, the NLRA says that “employee” is not “limited to the employees of a particular employer.”

Despite this broad definition, the US Supreme Court has decided certain categories of workers are not employees. With each exclusion, those excluded have had less power to protect themselves. In addition, the workers still protected by the NLRA also lose power. Here is how defining retirees as non-employees weakened the rights of all.

For years, unions negotiated retirement benefits to provide employees income and insurance during their retirement. These benefits are deferred compensation, like putting money into the bank to use in later years. The benefits compensated retirees for their years of dedicated work for the employer. The two most important retiree benefits were – and still are – pensions and health insurance. As inflation eroded those benefits for retired workers, unions negotiated increases or resisted decreases.

Active employees support benefits for retirees for several reasons. A strong bond exists between active and retired workers, who usually remain retiree members of the union. The retired workers are often family, either literally or based on years of shared working life. In addition, active workers know that their future retirement depends on protection of benefits for current retirees.

The NLRB recognized the reality of this practice and also viewed current employees negotiating for retiree benefits as consistent with the purpose of the statute. As a result, the NLRB held that bargaining over retiree benefits was required. In 1971, however, a judicial amendment reversed this interpretation, with no acknowledgment of the adverse impact this “amendment” would have on the NLRA’s purpose, on worker solidarity, and on bargaining power. It is easy to see that retirees have almost no bargaining power. They no longer work for their former employer. The employer no longer depends on their labor. The only people retirees can turn to for help in bargaining benefits for a secure retirement are their former co-workers who are still employed. The current workers can see that they, too, will need the bargaining power of the next generation of workers to be certain of a secure retirement.

In Allied Chemical Workers v. Pittsburgh Plate Glass, the Supreme Court allowed the employer to change the benefits of retired workers without bargaining with the union or the retirees. Today, this judicial amendment prevents unions from negotiating benefits for existing retirees unless the employer voluntarily agrees to bargain. The decision also prevents the union from striking over benefit changes or insisting on including retiree benefits in any collective-bargaining agreement.

The Supreme Court’s decision to give employers complete control of retiree benefits undercuts the purpose of the law. In doing so, it leaves the most vulnerable, retired employees living on fixed incomes, without the power to protect themselves from costly changes in benefits like health insurance.

An illustration of how Allied Chemical destroys solidarity comes from a strike where the unionized employees were protesting the employer’s attempts to reduce all wages and benefits. At the end of the strike, the employer refused to put the striking workers back to work, because, it claimed, the strike was illegal. Why? Because the union and employees had mentioned to reporters the employer’s devastating termination of health insurance for almost 1,000 retirees.

How, you might ask, could expressing concern for people you had worked with get you fired? The short answer is that the Allied Chemical decision meant that since retirees were not employees under the NLRA, going on strike to protect retiree benefits was bad-faith bargaining (another judicial amendment – but that is a tale for another day). As a result, the employees had lost the NLRA’s protections.

While some of these employees were eventually able to get their jobs back, the threat to solidarity is clear and frightening. If workers even suggest they are striking to help retirees, they risk losing their jobs for striking illegally.

Although the Supreme Court expressed concern about unions sacrificing the interests of retirees to those of active workers, the end result is that retirees have no advocate at all and no legally protected right to join together and negotiate with their employer. The employer holds all the cards.

Was this exclusion of retirees required by the law? It clearly was not. The NLRA’s broad definition of employee was intended to encourage employees to make common cause with one another, regardless of whether they share an employer. Although many retirees are not employed after retirement, benefits for retirees are unquestionably based on the employment relationship. After all, employers do not provide retirement benefits to people who never worked for them. The widespread practice of negotiating these benefits before the Allied Chemical Workers decision shows that they are important to active workers as well as retirees.

Allied Chemical Workers is a sad tale of forcing fellow workers to stand idly by while their former coworkers suffer in retirement. Unfortunately, it is but one of many sad tales to be found among the judicial amendments.