In the 1980’s Michigan Workers’ Compensation law was changed allowing employers to coordinate Workers’ Compensation benefits with Social Security pension disability benefits, thus potentially lowering employers’ Workers’ Compensation costs. At the time General Motors (GM) and the UAW agreed that they would not seek coordination of benefits thereby allowing GM workers to collect both benefits at full amounts. But after the 2009 recession and the US government bailout of GM, restructuring conditions were put in place.  One of these conditions was the allowance to coordinate Workers’ Compensation and Social Security benefits.

The Plaintiff in this case was a GM autoworker, Clifton Arbuckle, who injured his back on the job in 1991. GM awarded Arbuckle Workers’ Compensation disability benefits in 1993. Arbuckle received benefits of $362.78 per week or 80% of his wages at that time. However, after the auto bankruptcy bailout and restructuring, GM reduced Arbuckle’s weekly benefit to $262.55 because he was also receiving Social Security disability benefits.

Arbuckle, and subsequently his estate, argued that his benefits were protected because they should be considered vested under the original labor contract agreed to at the time of his employment.  The original contract allowed for both Workers’ Compensation and Social Security disability benefits. They argued those benefits were not subject to changes made in future labor contracts. 

Michigan’s appellate court agreed with Arbuckle, but Michigan’s Supreme Court found that there was no language in the labor agreement addressing the vesting of benefits. Therefore, the union and employer could change benefit terms with each new contract.

To arrive at what seems like a somewhat straightforward decision, Michigan’s Supreme Court had to first establish its jurisdiction over federal collective bargaining law. The Court decided that the case, although involving §301 of the Labor Management Relations Act, was rightfully in state court. The Plaintiff did not attempt to bring this case to federal court, and state courts can have concurrent jurisdiction when collective bargaining issues are involved (normally the purview of federal courts). The Court stated that Michigan law was “inextricably entwined” with Michigan Workers’ Compensation law, and although the state court can and should have jurisdiction, they should apply federal labor law to the case.

The Court then turned its analysis to A) the Michigan Workers’ Disability Compensation Act and the changes made to the law allowing for coordination of benefits, B) the GM-UAW contract terms that were changed under a 1990 Letter of Agreement outlining whether benefits were vested or non-vested and C) whether the collective bargaining agreement modified during the 2009 bankruptcy and temporary federal oversight of GM properly allowed for coordination of benefits.

The Supreme Court held that Michigan’s law addressed coordination of benefits, and the 1990 Letter of Agreement explicitly stated that the terms were only in effect for the duration of the collective bargaining agreement. Therefore, the uncoordinated benefits were not vested. With these matters settled, the Court ruled that the coordination of benefits was permissible under Michigan law.

Sources: Arbuckle v General Motors LLC No.151277 (7/15/2016); Detroit Free Press, Workers’ comp case decided in GM’s favor (7/16/2016). Gongwer, Supreme Court Allows for Coordination of Benefits in Workers’ Compensation Case (7/15/2016)