Union employees of the former University Hospital dropped a lawsuit against the University last week, just days before the hospital’s merger with Fairview.
The lawsuit, filed in November by the American Federation of State, County and Municipal Employees, alleged breach of contract by the University. The two sides agreed to a compromise package in lieu of a contract.
AFSCME officials filed the lawsuit to guarantee that workers would receive severance pay when the University Hospital completes its merger with Fairview Health System this month.
AFSCME alleged that the University had breached its contract with union Local 1164, which allows for severance benefits when University employees are laid off.
Before the issue was resolved, University officials said that AFSCME employees were not being laid off because they were being offered new jobs at the Fairview-University Medical Center after the merger took place.
“Unless we gave layoff notice to an employee, that person would not be eligible for a severance package,” said Carol Carrier, University associate vice president for human resources.
The compromise agreement states that employees who choose not to take jobs offered to them by the new medical center will receive the severance benefits outlined in AFSCME’s contract with the University.
Those benefits include a week’s pay for each year the employee worked for the University in addition to 18 months of insurance under the same terms they received as University Hospital workers.
The employees who transfer to Fairview will share in a transition fund allocated by the state Legislature and the University to help ease the transition for workers who have suffered a loss of wages and insurance coverage as a result of the transfer.
The University is only required to match the $1.8 million that the Legislature contributed. However, the fund could contain as much as $7.4 million, which employees will receive based on a formula not yet determined.
“The lawsuit was a catalyst for reaching the successful settlement,” said Marshall H. Tanick, the attorney for AFSCME Local 1164. “I think the settlement really characterizes a win-win situation for both sides. The union members are getting substantial benefits — those who make the transfer and those who don’t — and the University is resolving a difficult situation without having to engage in expensive and divisive litigation.”