SJC Rules That Public Employers Must Fulfill Promise to Provide Post-Retirement Insurance

In O’Neill v. School Committee of N. Brookfield, the SJC confirmed that a City, Town or School Committee cannot escape promises it made to provide postretirement benefits to a former public employee. This case involved an agreement between the School Committee and Superintendent to reimburse the Superintendent for a fixed percentage of retirement insurance premiums. Only a few months after the Superintendent retired, the Town and School Committee refused to honor the agreement.

The defendants set forth various defenses to its repudiation of the agreement, including that the agreement violated state law. The Supreme Judicial Court unanimously rejected the efforts of the Town and School Committee to take back its written promises. The SJC found that the six-year limitation on contracts between school committees and superintendents, per G.L. c.71, Section 41, did not apply to post-retirement benefits. Moreover, the SJC rejected the Town’s claim that it cannot be liable for contracts negotiated by the School Committee.

The Court wrote, “At oral argument, the attorney representing the defendants argued that the school committee did not have the authority to bind the town to perform a contract. We agree that the school committee may not bind the town to perform a contract that is beyond the school committee's statutory authority or otherwise illegal. If, however, the argument being advanced is that the town as a general matter is not bound to perform any contract executed solely by the school committee because the town itself is not a party, the argument clearly is without merit; the school committee is in substance an agency of the town.”

This case is the latest example of a Massachusetts public employer asking courts to save public employers from themselves and that they cannot be trusted to write contracts. Public employers frequently negotiate contract or collective bargaining language that it promises to enforce, and then later asks a court to invalidate the language as being beyond the scope of the employer’s negotiating authority, in violation of public policy, or language that the employer is free to void at will. This behavior can occur even with language that the public employer itself proposed. This pattern can make one skeptical about the promises and proposals of a public employer at the bargaining table.