December 29, 2014

By:  Alan M. Levy

On December 19, 2014, the Wisconsin Supreme Court issued its decision in Stoker v. Milwaukee County and Milwaukee County Pension Board.  In 2011, the County had amended its previous ordinance to reduce the multiplier used to calculate the amount of a person’s pension payments from 2% to 1.6% for years of service which began after January 1, 2012.  The employees challenged this on the theory that they had a vested right to contributions at the higher multiplier because of state law and County ordinances which, they argued, gave them vested rights to benefits when they were hired, and that these vested rights could “not be diminished or impaired” thereafter.

By a 5-2 majority, the Court reversed the decisions of both lower courts and ruled that the employees’ vested benefit was what had been earned prior to the effective date of the amendment.  Because subsequent benefits were earned by the performance of subsequent service, the prospective change could be made.  This position relied on Loth v. City of Milwaukee and several other decisions in which Lindner & Marsack represented the municipal employer.  While not overruling the earlier cases (Welter v. City of Milwaukee and Rehrauer v. City of Milwaukee), the Court limited them to disability benefits, distinguishing them from benefits based on periods of service, such as pensions, paid sick leave, and retiree health insurance.  In short, a benefit based on years of service can be modified and reduced in regard to service not yet performed.

Should there be any questions about these rules and the impact of the Stoker decision, please contact Alan Levy, who is the Lindner & Marsack attorney who represented the employers in these cases.