In a 6-0 ruling (Justice Clement did not participate) the Michigan Supreme Court ruled that the state must return approximately $554 million to almost 275,000 school employees who had portions of their pay wrongfully deducted for retiree healthcare from July 2010 to until September 2012.
At issue in the case was a 2010 law signed by Governor Granholm and defended by Governor Snyder that the Court found violated the Contract Clauses of both the federal and state constitutions because the law substantially impaired the plaintiff/teachers employment contracts by involuntarily reducing the their wages by 3%, and the state failed to show that the law was reasonable and necessary to further a legitimate public purpose. As such, the Court ordered the refund of the unconstitutionally collected funds.Because the disputed funds were held in escrow during the pendency of the dispute, the refunds will not affect the state budget.
The decision is AFT Michigan v State of Michigan, Supreme Court 154117 (decided December 20, 2017).
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