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The ordinary meaning of "employee" does not include retired workers; retired employees have ceased to work for another for hire.
Petitioner Union, certified as the bargaining representative of an employer's employees "working on hourly rates", negotiated an employee group health insurance plan under which the employer agreed to contribute specified amounts toward the cost of premiums for retired employees. After the enactment of Medicare, the employer unilaterally offered each retired employee to pay the supplemental Medicare premium if the retired employee would withdraw from the negotiated plan. The NLRB held the employer guilty of refusal to bargain unfair labor practice charges but the United States Court of Appeals for the Sixth Circuit denied enforcement of the NLRB's order. According to the Court of Appeals, the mid-term unilateral modifications in a retired employee's retirement benefits were not embraced by the bargaining obligation under the National Labor Relations Act (Act), 29 U.S.C.S. § 151 et seq., and did not constitute an unfair labor practice in violation of §§ 8 (a)(5), (1) of the Act. Certiorari was granted.
Did the employer’s refusal to bargain with the retired employees constitute an unfair labor practice?
The United States Supreme Court affirmed and held that retirees were not considered employees within the meaning of § 8 (a)(5) and that respondent employer was under no duty to collectively bargain improvement in retirees’ benefits with petitioner. In addition to the fact that retirees were not employees within the meaning of the collective-bargaining obligations of the Act, retirees were not and could not be considered employees in the bargaining unit either, since they did not share a community of interests broad enough to their inclusion in the bargaining unit. The Court also held that the ordinary meaning of “employee” did not include retired workers because retired employees ceased to work for another for hire. The Court further held that benefits accorded retirees were not, as vitally affecting the terms and conditions of employment of active employees, a mandatory subject of collective bargaining. Even if the employer's conduct constituted a unilateral modification of the collective bargaining agreement, it was not an unfair labor practice, because an employer's unilateral modification of a collective bargaining agreement was an unfair labor practice only when it changed a term that was a mandatory rather than a permissive subject of bargaining.