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Contract Expiration: What it Could Mean for Your District

Kacie Kefgen

By Kacie Kefgen, MASB Assistant Director of Labor Relations and Legal Services

DashBoard, June 28, 2017

Here are some financial impacts that occur if a district does not have a new contract with a bargaining group before the previous contract expires:

School employee compensation may not increase due to step or lane changes or for longevity payments. MCL 423.215b(1) states:

. . . after the expiration date of a collective bargaining agreement and until a successor collective bargaining agreement is in place, a public employer shall pay and provide wages and benefits at levels and amounts that are no greater than those in effect on the expiration date of the collective bargaining agreement. The prohibition in this subsection includes increases that would result from wage step increases.

Lane changes are included in the prohibition in accordance with Bedford Public Schools v. Bedford Education Association MEA/NEA, 305 Mich App 558; (2014), appeal denied 497 Mich 989 (2015).

School employees must pay for any increases in health care and other insurance costs, and school districts should make the necessary increased payroll deductions to pay for any increase in those benefit costs. MCL 423.215b(1) states:

Employees who receive health, dental, vision, prescription or other insurance benefits under a collective bargaining agreement shall bear any increased costs of maintaining those benefits that occur after the expiration date. The public employer may make payroll deductions necessary to pay the increased costs of maintaining those benefits.

After an agreement has been reached, school employees may not receive retroactive pay to make up for the increases they would have received had the new contract been effective when the last one expired. In other words, if the contract expired on June 30, and a new agreement was reached on Aug. 1, the district may not apply wage or benefit increases retroactively to cover the month of July. MCL 423.215b(2) states:

. . . the parties to a collective bargaining agreement shall not agree to, and an arbitration panel shall not order, any retroactive wage or benefit levels or amounts that are greater than those in effect on the expiration date of the collective bargaining agreement.

What happens if there is a new agreement right at the deadline, but it comes too late to change payroll?

As long as a new agreement is in place before the new increased rate of pay applies, employers may pay their employees at the higher rate for work done after the agreement is ratified by the parties. Depending on your payroll cycle, that may mean that employees are initially paid at their old rate for a week while payroll is updated. It would not be a violation of MCL 423.215b(2) if an employer in this situation paid the employee retroactively to make up for the smaller paycheck caused by the old rate of pay being applied after the contract was ratified.

If you have questions about these or other bargaining issues, please contact MASB Assistant Director of Labor Relations and Legal Services Kacie Kefgen at 517.327.5914 or kkefgen@masb.org.

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