Topic:
EMPLOYEE BENEFIT PLANS; LABOR (GENERAL); STRIKES; HEALTH INSURANCE;
Location:
STRIKES;

OLR Research Report


November 10, 2004

 

2004-R-0868

EMPLOYEE HEALTH COVERAGE DURING STRIKES

By: John Moran, Associate Analyst

You asked if state or federal law requires a private employer to continue employee health insurance coverage for striking unionized employees.

The Office of Legislative Research is not authorized to provide legal opinions and this report should not be construed as one.

SUMMARY

No federal or state law requires an employer to continue employee health insurance coverage for unionized employees while they are out on strike. This subject falls under the National Labor Relations Act (NLRA) and the administrative case law emanating from the National Labor Relations Board (NLRB)'s decisions. The board has ruled that, generally, employers cannot change the terms of employee heath insurance for strikers, but the employer is not obligated to provide compensation, such as insurance coverage, during a strike. The employer must maintain any accrued benefits to strikers once they return to work (such as pension credit and vacation time), but ongoing health insurance during a strike is not considered an accrued benefit.

A union contract may contain provisions addressing how health insurance coverage is to be handled in the event of a strike, but that is a contractual matter, not a question of law.

The federal Consolidated Omnibus Budget Reconciliation Act (COBRA) requires employers who provide group health insurance to give employees the option to purchase continued coverage under the plan if they are separated from work. Under COBRA the employee must pay the full premium (including what would normally be the employer's share) for his coverage; the employer has no financial obligation.

NLRB OVERVIEW

The NLRA is the federal law giving private-sector employees the right to form and join labor unions, to bargain collectively, or to refrain from these activities. It authorizes the NLRB to weigh complaints and issue decisions on, among other things, what constitutes an unfair labor practice either by labor or management.

Under the act it is an unfair labor practice for an employer to treat employees differently, threaten them, or punish them due to their union activities. It also requires the employer and the union to bargain faithfully, and both sides must follow certain rules in the process. For example, the employer cannot make significant changes to the terms and conditions of work without first negotiating with the union.

The NLRA for the most part preempts any state legislation regarding private sector collective bargaining and labor organizing issues. Therefore the state has no jurisdiction in this area (the federal law leaves state and local government employee collective bargaining in the hands of the states).

HEALTH INSURANCE COVERAGE DURING A STRIKE

If there is no contract provision to the contrary, an employer is not obligated to compensate union employees during a strike and this includes providing ongoing health insurance coverage. At the same time the employer cannot eliminate any accrued benefits the striking employees have earned such as preferred work schedules or vacation or sick time.

In Advertiser's Manufacturing Co., 294 NLRB 740 (1989) the NLRB affirmed a judge's decision making a distinction between compensation during a strike and other rights or benefits earned as an employee:

“It is well settled that an employer has no obligation to compensate striking employees in any way, whether by wage payments or the continuation of fringe benefits during a strike. However, employees may not be subjected to a forfeiture of rights and benefits which they would otherwise enjoy because of their strike activity. This basic policy has been applied in a number of situations….”

The NLRB has ruled repeatedly that an employer must treat strikers returning to work with all rights due an established employee and not subject them to requalifying time periods before they can be eligible for health insurance coverage (Textron, Inc., 257 NLRB 1 (1981) and Advertiser's Manufacturing Co). In these cases the companies, among other things, imposed 60-day or 90-day waiting periods on returning strikers before they would be eligible for health insurance coverage. The board ruled against the companies in both cases and ordered that employees returning from a strike do not have to requalify before gaining coverage. The board found the companies' action violated the NLRA.

The board ruled, and the courts have affirmed, that the NLRA protects legitimate strikers from punishment or threats triggered by their striking or other union activity. But if an employer can prove an action that harms strikers was done for justifiable business reasons and not motivated by anti-union animus, then the NLRB may not find the action a violation of the NLRA. In both cases cited above, the companies did not convince the board there was a legitimate business reason for depriving returning workers of health insurance coverage during a waiting period after the strike.

COBRA

COBRA requires employers, with 20 or more employees, who provide group health insurance to give employees (and their covered dependents) the option to purchase continued coverage under the plan if they are separated from work. Under COBRA the employer is not obligated to pay its share of the premium; the employee pays the employee share plus whatever the employer normally contributed. COBRA allows the employer to charge the employee up to 102% of the price of the premium. The additional 2% is intended to cover administrative costs.

JM:ro