Full Version: Should companies be able to alter benefits
Halliburton, like many other companies, is finding ways to cut down on costs by looking at benefits paid out to retirees. The following case ruled that Halliburton went to far in trying to cut back on benefits to retirees of a subsidiary it required in 1998.
Halliburton had wanted to end coverage for 4,000 Dresser retirees who are eligible for Medicare by the end of the year and cap its monthly prescription drug contribution at $22, according to the Houston Chronicle. Last year the paper reported that the company planned to cut the coverage so benefits offered to Dresser employees and retirees were in line with those offered under Halliburton's other plans.
Is this a question of courts restricting the free commerce of an open market unduly, or is it justice in having the courts stop actions to change an employees terms of retirement after they received their retirement benefits?
QUOTE
As more and more companies try to cut back on the benefits promised to their former employees, a federal judge ruled that Halliburton Co. cannot trim the medical benefits received by retirees of Dresser Industries Inc., which merged with a Halliburton subsidiary in 1998.
QUOTE
Halliburton had wanted to end coverage for 4,000 Dresser retirees who are eligible for Medicare by the end of the year and cap its monthly prescription drug contribution at $22, according to the Houston Chronicle. Last year the paper reported that the company planned to cut the coverage so benefits offered to Dresser employees and retirees were in line with those offered under Halliburton's other plans.
Is this a question of courts restricting the free commerce of an open market unduly, or is it justice in having the courts stop actions to change an employees terms of retirement after they received their retirement benefits?
Point of clarification, Eeyore - are Halliburton attempting to change the benefits of people who have already retired, or of current employees who have not yet done so?
If it's the former, surely there is a real legal issue here of unilaterally changing the terms of a contract partway through it? In spirit if not in letter - which must also be the case for current employees, though (alas) there is so much precedent for this latter action that they'll probably get away with it.
Either way, I think Halliburton's board of directors' pension funds should be fined to ensure every single retiree, current and future, will be able to retire on full benefits. I've never heard of directors cutting back on their own pension entitlements to avoid costing the company too much money, so no doubt there will be plenty of money in the fund to cover this.
So I'd have to say that it's justice and not restraint of trade.
If it's the former, surely there is a real legal issue here of unilaterally changing the terms of a contract partway through it? In spirit if not in letter - which must also be the case for current employees, though (alas) there is so much precedent for this latter action that they'll probably get away with it.
Either way, I think Halliburton's board of directors' pension funds should be fined to ensure every single retiree, current and future, will be able to retire on full benefits. I've never heard of directors cutting back on their own pension entitlements to avoid costing the company too much money, so no doubt there will be plenty of money in the fund to cover this.
So I'd have to say that it's justice and not restraint of trade.
My reading of this is that Halliburton is trying to use fine print in the merger agreement that put a cap on changing benefits to employees for three years after the 1998 acquisition and is arguing that it can change the benefits for retirees who are already able to receive medicare.
Is this a question of courts restricting the free commerce of an open market unduly, or is it justice in having the courts stop actions to change an employees terms of retirement after they received their retirement benefits?
I find it hard to answer the question, because I don't have enough legal knowledge to form a conclusion. Specifically, how did a federal judge rule against Halliburton for doing precisely what the federal government has done to its military members? The federal government itself changed the benefits promised to military retirees eligible for medicare. They also changed the benefits promised to dependents eligible for Social Security. How can they hold a separate legal standard for private companies, which they themselves don't abide by?
Do companies have an obligation to their agreements beyond those agreements backed by the (supposed) full faith and credit of the US government?
I find it hard to answer the question, because I don't have enough legal knowledge to form a conclusion. Specifically, how did a federal judge rule against Halliburton for doing precisely what the federal government has done to its military members? The federal government itself changed the benefits promised to military retirees eligible for medicare. They also changed the benefits promised to dependents eligible for Social Security. How can they hold a separate legal standard for private companies, which they themselves don't abide by?
Do companies have an obligation to their agreements beyond those agreements backed by the (supposed) full faith and credit of the US government?
QUOTE(Eeyore @ Dec 23 2004, 12:07 PM)
My reading of this is that Halliburton is trying to use fine print in the merger agreement that put a cap on changing benefits to employees for three years after the 1998 acquisition and is arguing that it can change the benefits for retirees who are already able to receive medicare.
I am sorry if this is a stupid question! But I thought that people who were 65 and older had to switch to medicare? So it wouldn't really matter if their private insurance changed. Am I totally off base?
QUOTE
Is this a question of courts restricting the free commerce of an open market unduly, or is it justice in having the courts stop actions to change an employees terms of retirement after they received their retirement benefits?
I would have to agree with Julian on this. On a simple level, Halliburton had a contract with employees, and therefore is obligated to see it through for those who have retired and who are probably in various states of physical and mental decline. You can still have a "free market" since Halliburton is not restricted in providing a service or selling goods. The question has to do with former employees obtaining due process rights and forcing their former employer to follow negotiated agreements to a "t" as they promised they would. The company should be seized by the government and everything sold piecemeal to competitors to help fund the benefits for those who made the riches possible in the first place.
This is a simplified version of our main content. To view the full version with more information, formatting and images, please click here.