Arkansas – Court Upholds AFSCME Contract

Benton, Arkansas

In a landmark victory for 29 employees of the city of Benton and their union, Local 2957 (Council 38), a U.S. appellate court ruled in January that the city must continue to pay those workers' retiree health benefits, which were dropped in 2004.

Jim Nickels, Council 38's executive director and general counsel, says the basic issue is the city's contractual commitment to its retirees. “The city promised the employees would have health insurance when they retired and that the city would pay for it, but the city reneged on the promise,” he explains.

The members were vested in their retiree benefits before the city council passed two measures, in 2003 and 2004, which ultimately required all city retirees to pay the same premiums as if they were active employees.

Members of Local 2957 sued, winning two earlier lower court rulings. This time, the U.S. Court of Appeals, 8th Circuit, issued a decision favoring—and applying only to—the 29 AFSCME members.

Ruling that the city had violated the “contracts clause” of the U.S. Constitution, the three-judge panel declared that “there was a contractual relationship between the City and the plaintiffs that the City impaired through its 2003 and 2004 resolutions.”