An interesting case came before the Supreme Court of Washington recently requiring it to determine whether retirement health care and welfare benefits provided in a collective bargaining agreement (CBA) vested for life employees who reach retirement eligibility during the term of the agreement.

Appellants were nine current or retired employees of the Port of Seattle, who were eligible to receive retirement welfare benefits pursuant to a collective bargaining agreement between the Port and their union. After the CBA expired, the Port ceased contributing to the welfare fund, which administered the welfare benefits provided to eligible employees and retirees.

Upon ceasing contributions, the trustees terminated the welfare trust’s coverage for all employees and retirees. The Port offered appellants the opportunity to participate in its own employee benefits plan, but did not offer to pay the premiums for such coverage.

The Supreme Court held that state law governs vesting principles for retirement welfare benefits conferred through a collective bargaining agreement with a state employer, and therefore declined to interpret such rights under Title I of the Employee Retirement Income Security Act of 1974.

Applying the applicable vesting principles to the CBA, the Court held further that the Port is obligated to provide retirement welfare benefits for life to appellants who have satisfied the eligibility requirements to receive such benefits.

In reversing, the Court held that the lower court erred in finding that appellants had no vested right to receive retirement welfare benefits because the CBA did not “unambiguously” vest welfare benefits beyond duration of the CBA itself.

The lower court misconstrued Supreme Court precedent regarding creation of a vested right to retirement benefits. Conferral of compensatory retirement welfare benefits through a collective bargaining agreement creates a vested right for eligible retirees absent express language in the agreement specifically limiting the right to such benefits.

The decision to the Navlet v. Port of Seattle case was 5-4.  The opinion is on the Internet at http://www.courts.wa.gov/opinions/pdf/788669.opn.pdf.

The lengthy dissent opinion is at http://www.courts.wa.gov/opinions/pdf/788669.no1.pdf.