A law that requires state employees with defined benefit retirement plans to put 4 percent of their salaries toward their pensions is constitutional, the Michigan Supreme Court ruled Wednesday.
The change was made by a 2011 law that state employee unions heavily opposed. Under the law, employees could choose to remain in the defined benefit plan but contribute 4 percent or switch to a defined contribution 401(k) plan.
The Michigan Coalition of State Employee Unions sued the state, arguing parts of the law were unconstitutional because the Civil Service Commission has the sole authority to change rates of compensation or conditions of employment.
The Supreme Court in its majority opinion found, while the Civil Service Commission regulates “rates of compensation,” the ratifiers of the 1963 constitution did not understand that phrase to include fringe benefits such as pensions.
The 2011 law that spurred the lawsuit does nothing to alter the actual wages or salaries of state employees, noted the majority opinion, authored by Chief Justice Robert Young and signed by Justices Stephen Markman, Brian Zahra and David Viviano.
The majority’s opinion reversed the Court of Appeals decision before it and remanded the case to proceedings consistent with the Michigan Supreme Court opinion.
Justice Richard Bernstein filed a dissenting opinion, saying he would have affirmed the lower court’s decision in favor of the unions.
“I would hold that pensions fall under the commission’s plenary authority over conditions of employment,” Bernstein wrote.
Justice Mary Beth Kelly and Justice Bridget McCormack filed separate opinions concurring in part and dissenting in part with the majority opinion.
In a separate opinion released Wednesday, the court ruled Michigan’s Right to Work applied to state employees.