SAG-AFTRA, Officials Hit with Class Action Over Aug. 2020 Health Plan Benefits Cuts

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The Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) faces a proposed class action in the wake of apparent age-based cuts the union made last year to its collectively bargained, earnings-based health insurance plan. 

Filed in California federal court against the union and nine officials, the 52-page lawsuit centers on certain cuts to the SAG-AFTRA health insurance plan that were announced last August. Per the case, the cuts increased eligibility requirements for many union members and disqualified residual earnings toward earnings-based eligibility for members 65 and older who are taking a union pension. The benefits cuts also eliminated from the plan senior performer coverage and age and service eligibility, specifically for members 40 and older with 10 years vested and $13,000 in earnings, and negatively impacted those who previously earned healthcare coverage under a lower plan threshold, the complaint claims. 

Further, the benefits cuts modified the earnings period for all SAG-AFTRA members 65 years and older to run from October 1 to September 30, thereby cutting short the time available to these members to obtain the sessional earnings needed to meet the increased eligibility requirements and retroactively cutting coverage for some who already qualified, the lawsuit relays. 

According to the case, the residual earnings of union members 65 and older who receive a pension will continue to prop up the plan even though the individuals themselves will be blocked from coverage. From the lawsuit (emphasis added): 

“The Benefits Cuts effectively eliminated benefits under the SAG-AFTRA Health Plan for thousands of Union members and their families who are now unable to qualify based on earnings where residual earnings are no longer credited toward SAG-AFTRA Health Plan eligibility, and many members face the dramatically increased hurdles for eligibility under the Health Plan in the future. The employer contributions to the SAG-AFTRA Health Plan bargained for members under the operative [collective bargaining agreements] are based on a percentage of all earnings of each member and will continue to fund the Health Plan. Thus, the residuals of members age 65 and older receiving a Union pension are being credited as earnings for contributions to the Health Plan and will continue to fund the Health Plan but are and will be effectively worthless to the member to qualify for coverage under the Health Plan. Union dues, likewise, will continue to be assessed based on both sessional and residual earnings of each member.” 

The plaintiff, who has served as First Vice President of the SAG-AFTRA Los Angeles Local and sits on union’s national board, alleges the defendants have fallen short of their duty under the federal National Labor Relations Act to fairly represent union members.

The SAG-AFTRA health plan is a collectively bargained, joint-trusteed labor-management trust that provides healthcare benefits to union members, the suit relays. The plan was created in the wake of the merger of SAG and AFTRA in 2012 and the entities’ health plans five years later, a move touted at the time as one that would “strengthen the overall financial health of the plan” and ensure members would receive comprehensive benefits.  

The plan is funded primarily by employer contributions based on total compensation paid to employed union members pursuant to the terms of SAG-AFTRA’s collectively bargained agreements, the lawsuit notes. Earnings-based employer contributions are made to the health plan “regardless of the member’s age or whether the member is taking a Union pension,” the case states. 

Per the lawsuit, the SAG-AFTRA health plan announced “dramatic” changes to its benefit structure, targeting participants age 65 and older, on August 12, 2020. A week after the announcement of the cuts, SAG-AFTRA Health Plan Trustee Richard Masur admitted that they had been in the works for two years, a time during which “the 2019 Commercials, 2019 Netflix and 2020 TV/Theatrical CBAs” operative on August 12 were negotiated by some of the defendants and approved by the union, the suit says. 

The plaintiff alleges the defendants knew through their service as trustees or negotiators that the SAG-AFTRA plan faced urgent funding issues and were aware of the level of funding necessary to sustain the plan’s health benefit structure. They also knew that the union proposals and bargaining terms could not sustain that structure and that massive cuts were coming that would effectively eliminate benefits for thousands of union members and their families under the negotiated CBAs. 

Per the plaintiff, the negotiator defendants nevertheless accepted what the lawsuit alleges are “fundamentally unfair and harmful negotiating objectives and proposal packages” and “failed to disclose this vital information to the other participants in the Union’s collective bargaining process,” the suit charges.  

“In doing so and acting as designated agents of the Union, [the collective bargaining] Defendants and the Union violated the Union’s duty of fair representation under the NLRA, breached their fiduciary duties to the Union and its members as Union officials under Section 501(a) of the [Labor-Management Reporting and Disclosure Act of 1959], and exposed the Union to liability for their breaches and breaches of the Union’s duty of fair representation,” the case reads. 

The lawsuit goes on to scathe that knowledge of impending health benefit cuts was of vital importance to union members in light of the COVID-19 pandemic. Although a three-month suspension of Union health premiums was announced in early April 2020, SAG-AFTRA said nothing in regard to the “eligibility crisis” faced by thousands of members and their families, the complaint says, adding that the defendants, in the wake of the announcement of the benefits cuts, further misused their positions as fiduciaries to “advocate in support of and defend” the cuts and “to protect their personal interests.” 

Named as defendants in addition to the union itself are SAG-AFTRA President Gabrielle Carteris; National Executive Director, chief negotiator and health plan trustee David P. White; union COO and general counsel Duncan Crabtree-Ireland; SAG-AFTRA chief contracts officer Ray Rodriguez; national senior advisor John T. McGuire; and health plan trustees David Hartley-Margolin, Michael Pniewski, Linda Powell and John Carter Brown. 

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