When the 1963 Constitution was considered, SERA had been in place for twenty years. In Kane v. City of Flint, 342 Mich. 74, 83, 69 N.W.2d 156 (1955), our Supreme Court upheld the city's authority to take into account the additional retirement pension benefits granted firefighters and police officers when the city created for its employees a โlike compensationโ pay system that differentiated the compensation of firefighters and police officers from other city employees. The Court noted that the applicable ordinance mandated that, โ[l]ike classifications of work are to receive like compensation,โ and the plaintiff-firefighters argued that the pay differential violated this requirement.
The conclusion that our courts now recognize an expanded view of a city's police power different from the view espoused in Lennane is buttressed by cases that have upheld a city's authority to enact ordinances pertaining to wages. See, e.g., Brimmer v. Village of Elk Rapids, 365 Mich. 6, 12โ13, 112 N.W.2d 222 (1961) (declaring that salaries paid by municipalities are a matter of local concern); Gildersleeve v. Lamont, 331 Mich. 8, 12, 49 N.W.2d 36 (1951); Kane v. City of Flint, 342 Mich. 74, 77โ78, 69 N.W.2d 156 (1955); Olson v. Highland Park, 312 Mich. 688, 695, 20 N.W.2d 773 (1945). In Olson, 312 Mich. at 695, 20 N.W.2d 773, our Supreme Court upheld a city's regulation of overtime compensation for certain city employees.
Although our Supreme Court has never decided whether health insurance qualifies as compensation, it has held in a different context that some fringe benefits (including pensions, clothing allowances, and life insurance premiums) are "compensation" because they were "not a gratuity, but a part of the stipulated compensation" pursuant to their contracts. Kane v City of Flint, 342 Mich 74, 80-83; 69 NW2d 156 (1955). This Court previously held in an older case that "hospitalization, medical, and dental insurance should not be included" as compensation.
Other cases addressing "compensation" in other contexts, as well as the Court of Appeals below, recognize this. See, e.g., Kane v City of Flint, 342 Mich 74; 69 NW2d 156 (1955) (addressing municipalities' authority to define pensions as compensation). However, we are here concerned with the entire phrase, "rates of compensation," as that phrase is used in its constitutional context and as specifically understood by the ratifiers of our Constitution.
See also, Philbrick v Dust, 178 Mich. 605, 607; 146 N.W. 175 (1914). Cf. Kane v Flint, 342 Mich. 74, 79; 69 N.W.2d 156 (1955). IV
The discontinuance was permitted on other grounds but the court did find that it normally was part of his compensation protected by the constitution. In Kane v City of Flint, 342 Mich. 74; 69 N.W.2d 156 (1955), policemen and firemen sought equal pay for their classifications. They claimed they were being underpaid.
Other cases addressing โcompensationโ in other contexts, as well as the Court of Appeals below, recognize this. See, e.g., Kane v. City of Flint, 342 Mich. 74, 69 N.W.2d 156 (1955) (addressing municipalities' authority to define pensions as compensation). However, we are here concerned with the entire phrase, โrates of compensation,โ as that phrase is used in its constitutional context and as specifically understood by the ratifiers of our Constitution.
This Court has construed the word "compensation" as used presently in section 236 of the Flint charter. The Court was required to interpret the phrase "Like classifications of work are to receive like compensation" in Kane v. City of Flint (1955), 342 Mich. 74. Holding that strict dollar equality was not necessary, the Court said at p 78: "The city commission, in fixing the `compensation' to be paid to firemen and policemen took into consideration certain benefits afforded them by the city which were not shared in by other city employees."
It cannot be doubted that a retirement allowance, financed over a period of years by the joint contributions of the employer and the employees, represents compensation rather than a mere gratuity. Kane v. City of Flint, 342 Mich. 74, 69 N.W.2d 156; Salz v. State House Com'n, 18 N.J. 106, 112 A.2d 716; Retirement Bd. of Allegheny County v. McGovern, 316 Pa. 161, 174 A. 400. Cases might also be cited to show that compensation embraces the furnishing of group insurance, medical benefits, work uniforms, meals, housing, and anything else of value that the employer provides in return for the work done by his employees. The question, however, is not whether retirement pay comes within the definition of compensation; it is whether the legislature may fairly be said to have had such pay in mind when it enacted the statute relied on by the district.
See, also, Philbrick v. Dust (1914), 178 Mich. 605, 607. Cf. Kane v. City of Flint (1955), 342 Mich. 74, 79. While ยง 7 (see footnote 2) confers upon the commission powers and duties " necessary to carry out the provisions hereof," and it may adopt rules "adapted to carry out the purposes of this chapter and not inconsistent with its provisions for the examination and selection of persons to fill the offices and positions in the classified service, which are required to be filled by appointment and for the selection of persons to be employed in the service of the city" the commission does not under the quoted words have powers or duties not necessary to carry out "the provisions hereof" or to promulgate rules unrelated to examination and selection of employees.