Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

Companies Sue Retirees, Cut Promised Benefits
wall street journal ^ | Nov. 10, 2004 | Ellen E. Schultz

Posted on 11/12/2004 11:17:18 AM PST by epluribus unum1

When a deputy sheriff came to his door with a court summons, George Kneifel, a retiree in Union Mills, Ind., was mystified. His former employer was suing him.

The employer, beverage-can maker Rexam Inc., had agreed in labor contracts to provide retirees with health-care coverage. But now the company was asking a federal judge to rule that it could reduce or eliminate the benefit.

Many companies have already cut back company-paid health-care coverage for retirees from their salaried staffs. But until recently, employers generally were barred from touching unionized retirees' benefits because they are spelled out in labor contracts. Now, some are taking aggressive steps to pare those benefits as well, including going to court.

End Run: Firms Claim Right to Change Coverage, Attempt to Pick Sympathetic Jurisdictions

In the past two years, employers have sued union retirees across the country. In the suits, they ask judges to rule that no matter what labor contracts say, they have a right to change the benefits. Some companies also argue that contract references to "lifetime" coverage don't mean the lifetime of the retirees, but the life of the labor contract. Since the contracts expired many years ago, the promises, they say, have expired too.

(Excerpt) Read more at online.wsj.com ...


TOPICS: News/Current Events
KEYWORDS: generalmotors; healthbenefits; unioncontract
Navigation: use the links below to view more comments.
first 1-2021-4041-51 next last

1 posted on 11/12/2004 11:17:20 AM PST by epluribus unum1
[ Post Reply | Private Reply | View Replies]

To: epluribus unum1

Sorry guys but that just aint right.


2 posted on 11/12/2004 11:19:19 AM PST by Walkingfeather (q)
[ Post Reply | Private Reply | To 1 | View Replies]

To: epluribus unum1

I don't like this. It really sounds deceptive and unfair. To be able to change the contract, "no matter what the contract says"? I understand being in a pinch and I know premiums have probably gone up, but this seems kind of low.


3 posted on 11/12/2004 11:20:51 AM PST by DameAutour ("Go carefully. Be conservative. Be sure you are right - and then don't be afraid")
[ Post Reply | Private Reply | To 1 | View Replies]

To: epluribus unum1

A contract is a contract. If you don't like it sue the jerk that negotiated it or the lawyers who drew it up for being morons.

DO NOT go after retirees.


4 posted on 11/12/2004 11:21:34 AM PST by Bikers4Bush (Flood waters rising, heading for more conservative ground. Vote for true conservatives!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Walkingfeather
You're right, its not right to pull a retiree's pension. Though I dont think companies should be forced (because of unions and laws) to give workers unreasonable benefits. They can have benefits, but they should be reasonable.
5 posted on 11/12/2004 11:22:02 AM PST by zahal724 (I own a lumber company? Want some wood?)
[ Post Reply | Private Reply | To 2 | View Replies]

To: Walkingfeather; epluribus unum1

As a retiree this is a big fear for me.I worked years for the benefits and am terrified that they will take them away.


6 posted on 11/12/2004 11:22:03 AM PST by Mears
[ Post Reply | Private Reply | To 2 | View Replies]

To: epluribus unum1
I can appreciate the changing of benefits on current employees, but changing promised benefits on retirees goes into the breach-of-contract arena in my book.

These benefits were offered to entice people to stay with the company...and now that they've stayed and retired, the company wants to pull this nonsense? I don't think so.

7 posted on 11/12/2004 11:23:08 AM PST by Prime Choice (Hey-hey! Ho-ho! Arlen Specter's gotta go!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: epluribus unum1

these kind or practices are rampant, and its one of the reasons we are heading for some kind of dramatic health care system changes. our party should be out in front with some free market ideas - a worker should have a 401K style fund for retiree medical, that belongs to them, instead of relying on the corporation to "make good" on the promise of retiree medical, only to have the rug pulled out from under them.


8 posted on 11/12/2004 11:23:48 AM PST by oceanview
[ Post Reply | Private Reply | To 1 | View Replies]

To: zahal724

How is this different from buying a car and 15 years later the company suing you for another 15 grand because they didnt set a high enough price for the car 15 years ago?


9 posted on 11/12/2004 11:24:35 AM PST by Walkingfeather (q)
[ Post Reply | Private Reply | To 5 | View Replies]

To: epluribus unum1

Hmmm......union.


10 posted on 11/12/2004 11:25:57 AM PST by AppyPappy (If You're Not A Part Of The Solution, There's Good Money To Be Made In Prolonging The Problem.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Prime Choice
These benefits were offered to entice people to stay with the company...and now that they've stayed and retired, the company wants to pull this nonsense? I don't think so.

Lots of companies will declare bankruptcy just to eliminate these contracts.

You'd better get used to this. Company paid medical benefits for retirees are dinosaurs.

11 posted on 11/12/2004 11:26:59 AM PST by sinkspur ("It is a great day to be alive. I appreciate your gratitude." God Himself.)
[ Post Reply | Private Reply | To 7 | View Replies]

To: Walkingfeather
How is this different from buying a car and 15 years later the company suing you for another 15 grand because they didnt set a high enough price for the car 15 years ago?

Its different because in one you are screwed after having worked for years - and poured in your blood and sweat. In the other you're screwed after using the money you earned - after pouring in your blood in sweat - to buy a car.

12 posted on 11/12/2004 11:27:55 AM PST by zahal724 (I own a lumber company? Want some wood?)
[ Post Reply | Private Reply | To 9 | View Replies]

To: epluribus unum1

If this is really happening, it's pretty damned low. It's companies like this that give the 'rats ammunition, and votes.


13 posted on 11/12/2004 11:30:34 AM PST by Chad Fairbanks (Facsists Unhappy Concerning Kerry's Election Defeat.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: sinkspur
Company paid medical benefits for retirees are dinosaurs.

And today's corporations wonder why employees aren't loyal to them like they were in the mid-20th century...

14 posted on 11/12/2004 11:38:11 AM PST by Prime Choice (Hey-hey! Ho-ho! Arlen Specter's gotta go!)
[ Post Reply | Private Reply | To 11 | View Replies]

To: Bikers4Bush

i generally don't like to comment on the boards, but what these companies are doing is so foul...to go after those who are least empowered to combat, basically what is a total breach of contract by relying on obscure clauses in the contract that few of the empoyees ever see. As the reporter later stated, the companies have little to loose by attempting to go back on their promises:

"They have little to lose by trying. Typically, as such legal cases drag on, the employers save money as some of the retirees, who have to pay growing portions of their health-care costs, forgo costly care, drop out of the plans or die. If companies lose in court, the worst that happens is they have to resume paying benefits. They don't face punitive damages or penalties. And they may not have to resume benefits for those retirees who dropped out of the health plans.


What's more, their earnings get a pop. That's because at the same time as they sue, employers typically announce reductions in the retirees' benefits. Doing so entitles them to lessen the liabilities carried on their books. Lower liabilities translate to higher earnings.


The retirees, by contrast, often find themselves in a bind -- unsure of their recourse and facing, as they age, the court system's typical long waits for legal resolution. The U.S. Labor Department is of little help. Retired workers "aren't our constituents anymore," says a spokeswoman for the department."


15 posted on 11/12/2004 11:39:01 AM PST by epluribus unum1
[ Post Reply | Private Reply | To 4 | View Replies]

To: epluribus unum1
GM pays more for annual employee retirement benefits than it spends for steel to make automobiles. The pot of money set aside to pay for future benefits isn't growing, but the cost of benefits is rising. Private companies can't just print money like the government. Deficit spending is a politician's wet dream...something the rest of us are not permitted to do.

Start working on those resumes. There is a reason for all those senior citizens greeting customers at Walmart. Few of us who work for private companies will have the luxury of actually retiring.

16 posted on 11/12/2004 11:40:15 AM PST by Myrddin
[ Post Reply | Private Reply | To 1 | View Replies]

To: Myrddin

hi - no one is denying that the cost of benefits are skyrocketing , but that doesn't give these Fortune 500 companies the right/excuse/opportunity to breach promises made to employees.


17 posted on 11/12/2004 11:43:28 AM PST by epluribus unum1
[ Post Reply | Private Reply | To 16 | View Replies]

To: epluribus unum1
The problem for many companies is that there was no money set aside for retiree medical benefits. Unlike pensions, which are funded with tax-deductible contributions and are generally (but by no means always) in better shape, retiree medical benefits get paid out of current earnings. For many companies, rising costs and competition have so eroded earnings that there is no money to pay for these promises. It's a tragic problem that is going to get worse.

Many companies, such as mine, no longer offer retiree medical benefits for new workers, and we're a decent-sized company. This benefit is going to disappear in the future.

18 posted on 11/12/2004 11:46:15 AM PST by You Dirty Rats (31 Red States - All Your Senate Are Belong To Us!!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: zahal724

AHhhh ... thats what I thought.... wouldnt it be cheaper for the retirees to organize and then hire someone to kill the board of directors or CEO? ( im not endorsing such a plan) And then plead insanity after the fact? Wouldnt that be along the same lines?


19 posted on 11/12/2004 11:47:03 AM PST by Walkingfeather (q)
[ Post Reply | Private Reply | To 12 | View Replies]

To: epluribus unum1

It's ugly.


20 posted on 11/12/2004 11:49:54 AM PST by Bikers4Bush (Flood waters rising, heading for more conservative ground. Vote for true conservatives!)
[ Post Reply | Private Reply | To 15 | View Replies]


Navigation: use the links below to view more comments.
first 1-2021-4041-51 next last

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson