Wow! Supreme Court Rules For Workers

[Gail Thaler]

Workers Aren't Traded For
Benefits

By LAURIE ASSEO
Associated Press Writer
Monday, May 12, 1997 12:01 pm EDT

WASHINGTON (AP) -- Employers cannot fire workers and
contract out their jobs to another company in an effort to
reduce their health and other benefits, the Supreme Court said
today.

The unanimous ruling keeps alive a claim by former
cargo-handlers at a Los Angeles railyard that their jobs were
moved to another company in a conspiracy to reduce their
benefits.

Employers often can unilaterally reduce or even cancel workers'
health insurance and other benefits, but they cannot achieve
the same goal by firing their employees and moving their jobs
elsewhere, the court said.

``The power to amend or abolish a welfare benefit plan does not
include the power to discharge, fine ... or discriminate against
the plan's participants and beneficiaries for the purpose of
interfering'' with their rights under the plan, Justice Sandra Day
O'Connor wrote for the court.

However, she added that ``when an employer acts without this
purpose,'' such actions are allowed as part of ``fundamental
business decisions.''

The case involves the Employee Retirement Income Security
Act, a federal law that governs employee pension and benefit
plans. The law requires pension benefits to be vested in five
years, which means a worker cannot be forced to give up those
benefits.

The law allows employers to reduce or cancel health insurance
and other benefits at any time. But it bars them from firing or
discriminating against workers in an effort to interfere with their
right to collect benefits.

Five former cargo-handlers at the Hobart railyard in Los
Angeles filed a federal lawsuit alleging a conspiracy to deprive
them of pension, health and other benefits.

The five had worked for Santa Fe Terminal Services, a
subsidiary of the Atchison, Topeka and Santa Fe Railway Co.
The lawsuit said that in 1990, Atchison canceled its contract
with Santa Fe Terminal Services and awarded the contract to
another company, In-Terminal Services.

The employees were fired by Santa Fe Terminal and were hired
by In-Terminal, which provided lower pension, health and other
benefits. The former employees sued all three companies.

A federal judge dismissed the lawsuit. The 9th U.S. Circuit
Court of Appeals reinstated the claim regarding pension
benefits, but it said the former employees could not sue over
health and other benefits because employers had the right to
reduce or cancel them.

Supported by the Clinton administration, the former employees
told the Supreme Court that employers' right to change benefits
does not allow them to fire workers to achieve such a change.

Today, the court agreed with the former employees. An
employer can reduce or cancel benefits, but it must follow
proper procedures in doing so, O'Connor wrote.

The justices returned the case to a lower court to consider other
issues raised by the rail company.

The case is Inter-Modal Rail Employees Association vs.
Atchison, Topeka and Santa Fe Railway Co., 96-491.

© Copyright 1997 The Associated Press

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