Do Changes in Benefits for Public Employees Violate the Contracts Clause?

Posted on Categories Labor & Employment Law, Legal Scholarship, Wisconsin Law & Legal System

Paul Secunda has a new paper on SSRN that considers under what circumstances statutory changes affecting public-employee benefits might violate constitutional restrictions on the impairment of contracts.  Paul particularly focuses on a very timely case study: Wisconsin’s recent budget-repair bill and its impact on city employees in Milwaukee.  Here is the abstract:

The recent spate of high profile efforts by state governors to roll back public employee pension rights in light of recent budgetary challenges has shone the light directly on the importance to public employees of the Contracts Clause provisions of the federal and state constitutions. Using as an example the controversial budget repair bill in Wisconsin and the application of the bill’s pension provisions to Milwaukee City employee pension rights, this article has sought to show how, under certain specified circumstances, such legislative attempts may be constitutionally impermissible if such laws substantially impair employee contracts with the state without the necessary legal justification.

Although such Contracts Clause litigation might be successful in a suit brought by the City of Milwaukee on behalf of its employees, it is unclear w.hether such arguments will be successful in other parts of Wisconsin or in other states. As the examination of pending pension litigation in other states underscores, there will also be different types of state legislation that may run afoul of public pension rights under the particular provisions of a state’s pension laws. Because of the lack of legal uniformity in public pension regulation from one state to the next, the only possible way to determine whether state curtailment of public employee pension rights will be constitutional is by undertaking an in-depth legal analysis of the applicable pension laws, regulations, ordinances, court opinions, and prior case settlements.

Entitled “Constitutional Contracts Clause Challenges in Public Pension Litigation,” Paul’s paper will appear in the Hofstra Labor and Employment Law Journal.


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