OWENS, J.
¶1 This case requires the determination of whether retirement health care and welfare benefits (welfare benefits) provided in a collective bargaining agreement vested for life with employees who reached retirement eligibility during the term of the agreement. The appellants are nine current or retired employees (Appellants) of the Port of Seattle (Port), who were eligible to receive retirement welfare benefits pursuant to a collective bargaining agreement (CBA) between the Port and the International Longshore and Warehouse Union Local 9 (Local 9). After the CBA expired, the Port ceased contributing to the welfare trust fund (Welfare Trust), which administered the welfare benefits provided for eligible employees and retirees. Upon ceasing contributions, the trustees terminated the Welfare Trust's coverage for all employees and retirees, including Appellants. The Port offered Appellants the opportunity to participate in the Port's own employee benefits plan but did not offer to pay the premiums for such coverage.
¶2 We hold that state law governs the vesting principles for retirement welfare benefits conferred through a CBA with a state employer and therefore decline to interpret such rights under Title I of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001- 1461. Applying the applicable vesting principles to the CBA, we further hold that the Port is obligated to provide retirement welfare benefits for life to Appellants who have satisfied the eligibility requirements to receive such benefits. Accordingly, we reverse the trial court's summary judgment order, enter partial summary judgment in favor of Appellants, and remand for further proceedings.
FACTS
¶3 In 1997, the Port and Local 9 entered into the CBA, which superseded the parties' previous CBAs covering the terms and conditions of employment. Clerk's Papers (CP) at 41-61. Under section XVIII of the CBA, the Port promised to "maintain the current level of medical, welfare, dental and related benefits during the duration of this contract and . . . continue to provide the same level of coverage currently provided to eligible employees, eligible retirees, and dependents." CP at 52.
Although originally scheduled to expire in 2000, the parties extended the CBA to June 30, 2002.
¶4 The Port further agreed in section XVIII "to be party to the Agreement and Declaration of Trust of the ILWU Local 9 Warehouse Welfare Trust Fund" (Welfare Trust Agreement or Trust Agreement) that would govern the terms of the Welfare Trust. CP at 52, 86-123. The Welfare Trust was created to receive contributions from participating employers in order to administer a welfare benefits plan for participating employees. CP at 91. The Welfare Trust Agreement stated that the terms of the CBA determined the employer's obligation to make contributions to the Welfare Trust. CP at 92. In section XVIII of the CBA, the Port agreed "to pay the premium necessary to maintain the current level of benefits to that Trust." CP at 52. The Port was the principal participating employer making contributions to the Welfare Trust for several years prior to the termination of the CBA. CP at 288.
As discussed below, Local 9 made contributions to the Welfare Trust for its secretary treasurer who participated in the trust. CP at 287-90.
¶5 The Trust Agreement further provided that the parties intended to organize and operate the Welfare Trust pursuant to the provisions of ERISA as well as other applicable federal and state laws. CP at 91. The Port and Local 9 each appointed three trustees to administer the Welfare Trust, and the Trust Agreement established procedures for participants to challenge a denial of benefits. The Trust Agreement stated that it would continue indefinitely but would "automatically terminate[] upon the expiration of all collective bargaining agreements and special agreements requiring the payment of contributions to the Trust Fund." CP at 91, 119.
¶6 In addition, the Welfare Trust Agreement defined an "employee welfare benefit plan" as "any lawful employee pension benefit plan created and administered by the Trustees." CP at 92. The parties signed a Warehousemen's Pension Trust Fund Industry Pension Agreement (Pension Agreement), which they incorporated by reference into the CBA, obligating the Port to make contributions for an employee pension trust fund. CP at 299-300. The Welfare Trust Agreement conditioned retiree eligibility for retirement welfare benefits on the eligibility requirements for the Pension Agreement. The Pension Agreement specifically provided eligibility requirements for pension as well as retirement welfare benefits: "[A]n employee who elects to retire before age 62 . . . shall not be entitled to retiree health and welfare benefits until such retiree reaches age 62. At that time, benefits will be provided under the terms and conditions that are in effect at the time of entitlement." CP at 300.
¶7 Local 9 provided participant-employees with a copy of a summary plan description (SPD), which described the terms of the welfare benefits plan that would be administered by the Welfare Trust. CP at 125-68. As with the Trust Agreement itself, the SPD contained a section purportedly explaining the participants' rights under ERISA. The SPD also contained a provision purporting to reserve the Welfare Trust trustees' right to terminate the trust:
The SPD stated that employees were eligible for retiree benefits as early as age 62 if they met the years of service requirement. CP at 134. For example, an employee with 15 years of service was eligible for benefits at a maximum monthly cost of $20.35 per employee beginning when the participant reached age 62.
The Retired Employee Program is not Guaranteed
The Board of Trustees is providing retiree health and welfare benefits to the extent that monies are currently available to pay the cost of such programs. The Board of Trustees retains sole and exclusive authority, at its discretion, to determine the extent, if any, to which monies are available for this program and to determine the manner of expenditure of such monies for the program. The program is not guaranteed to continue indefinitely. The Board of Trustees reserves the right to change the eligibility rules of the benefits, reduce the benefits, or eliminate the Plan entirely, as may be required by future circumstances.
CP at 166.
¶8 On March 3, 2003, the Port informed the trustees that it would immediately "cease paving for retiree Health and Welfare benefits." CP at 68. On April 1, 2003, the trustees then informed participants that retiree welfare benefit coverage would cease as of April 30, 2003. The Port advised participants they could obtain continued welfare coverage through the Port's own plan at a monthly cost ranging from $399.08 to $482.12 for an individual retiree not yet covered by Medicare.
Between October 2002 and April 2003, Local 9 filed several unfair labor practice charges against the Port, alleging that the Port improperly made unilateral changes to the terms of employment. The Welfare Trust trustees initiated arbitration concerning the Port's obligations to Local 9's members. The Port and Local 9 reached a settlement in which Local 9 agreed to adopt resolutions, stating "that the Port of Seattle owes no contribution(s) to the I.L.W.U. Local 9 Welfare Trust Fund relating to any maintenance of benefits thereunder." CP at 77. However, the Port did not terminate the pension plan and agreed to fund the pension plan "to the extent necessary . . . to pay the vested accrued benefits of participants." CP at 78.
¶9 Appellants filed a complaint against the Port, claiming a right to lifetime retirement welfare benefits under the terms of the CBA. Appellants fall into two categories: (1) those who have retired, have satisfied the length of service requirements for eligibility, and have been covered by the Welfare Trust and (2) those who have not yet retired but have completed sufficient length of service to qualify for retirement welfare benefits.
¶10 On August 8, 2005, the trial court granted summary judgment in favor of the Port, determining that the CBA did not expressly grant Appellants with retirement welfare benefits for life:
[T]he Plaintiff's [sic] have no statutory basis for their claims to medical benefits. Nor do the unambiguous terms of the [SPD], or union contracts at issue in this case give rise to a contractual claim to the benefits sought by the plaintiffs. The fact that the plaintiffs may have become vested in their benefits does not change the nature and duration of the benefits, which are set forth and limited in the [SPD].
CP at 479-80. Appellants sought review by the Court of Appeals. Division One certified this case for review by this court pursuant to RCW 2.06.030. This court's commissioner accepted certification and transferred the entire case to this court for determination on the merits. RAP 4.4.
ANALYSIS I
¶11 We review summary judgment de novo, engaging in the same inquiry as the trial court. City of Sequim v. Malkasian, 157 Wn.2d 251, 261, 138 P.3d 943 (2006). Summary judgment is appropriate when "there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law." CR 56(c).
II
¶12 This case requires us to determine the extent to which the CBA obligated the Port to provide retirement welfare benefits to eligible retirees. The parties agree that the CBA created a right to retirement welfare benefits for certain eligible retirees. However, the parties disagree whether the CBA created a vested right in welfare benefits or whether the right expired at the termination of the CBA. The Port contends that the right to retirement welfare benefits was not expressly guaranteed for any definite period of time in the CBA or the Welfare Trust Agreement, and therefore the Port had no obligation to make contributions for such benefits beyond the duration of the CBA itself. In addition, the Port argues that its obligation under the CBA was limited to making contributions to the Welfare Trust and that the Welfare Trust Agreement and the SPD defined the extent to which the benefits would be provided. Conversely, Appellants urge that the welfare benefits promised in the CBA constituted deferred compensation for years of continued service to the Port and therefore they could not lose such benefits once they became eligible.
Generally, a "vested right" cannot be taken away once created. In the employment context, an employee who renders service in exchange for compensation has a vested right to receive such compensation. Leonard v. City of Seattle, 81 Wn.2d 479, 487, 503 P.2d 741 (1972). Upon vesting, such a right becomes a proprietary interest, even though created by contract. Id. at 486. A right to deferred compensation vests at the time it is created, although the right to payment does not accrue until a condition has been fulfilled in the future. Id.
¶13 While federal law generally preempts the field of labor law, it does not govern over collective bargaining agreements with state public employers. See 29 U.S.C. § 152(2); Davenport v. Wash. Educ. Ass'n, ___ U.S. ___, 127 S. Ct. 2372, 2376, 168 L. Ed. 2d 71 (2007) ("The National Labor Relations Act [(NLRA)] leaves States free to regulate their labor relationships with their public employees."). In Washington, the Public Employees' Collective Bargaining Act (PECBA), chapter 41.56 RCW, governs collective bargaining agreements with state public employers. See Peninsula Sch. Dist. No. 401 v. Pub. Sch. Employees, 130 Wn.2d 401, 407, 924 P.2d 13 (1996). However, we may look to the interpretation of federal labor law where the law is similar to state law. Allen v. Seattle Police Officers' Guild, 100 Wn.2d 361, 372, 670 P.2d 246 (1983) ("[W]here Washington's Public Employees Collective Bargaining Act is substantially similar to the NLRA, decisions under that act, while not controlling, are persuasive."). As a general principle, rights that vest in a collective bargaining agreement survive the term of the agreement. Litton Fin. Printing Div. v. Nat'l Labor Relations Bd., 501 U.S. 190, 207, 111 S. Ct. 2215, 115 L. Ed. 2d 177 (1991) ("Rights which accrued or vested under the agreement will, as a general rule, survive termination of the agreement."); Int'l Union, United Auto., Aerospace Agric. Implement Workers of Am. v. Defiance Indus., Inc., 251 F. Supp. 650, 653-54 (N.D. Ohio 1966); Rose City Transit Co. v. City of Portland, 18 Or. App. 369, 414-15, 525 P.2d 1325 (1974) ("[R]ights once vested may not be lost by the employe[e] when his collective bargaining agreement expires."), aff'd as modified, 271 Or. 588, 533 P.2d 339 (1975). Therefore, the vested nature of the retirement welfare benefits conferred in the CBA is the critical issue of the case.
The PECBA applies to "any political subdivision of the state of Washington," RCW 41.56.020, including port districts, RCW 53.18.015 ("Port districts and their employees shall be covered by the provisions of chapter 41.56 RCW except as provided otherwise in this chapter."); see Ryder v. Port of Seattle, 50 Wn. App. 144, 149, 748 P.2d 243 (1987).
¶14 Our determination of whether the retirement welfare benefits vested largely turns on what legal principles govern the vesting of retirement benefits conferred through collective bargaining. Although the CBA itself is governed by state law, the Port urges us to apply vesting principles consistent with ERISA in construing the rights conferred in the CBA. On the other hand, the Appellants contend that federal law is inapplicable and that vesting principles under our state employment law must apply. This court has construed retirement benefits conferred through collective bargaining as compensatory and therefore vested at the time they are created.
A
¶15 Congress enacted ERISA to provide comprehensive and uniform federal regulation for employee benefits plans. 29 U.S.C. § 1001; see generally Andrew M. Campbell, Construction and Application of Employee Retirement Income Security Act of 1974 ( 29 U.S.C.A. §§ 1001 et seq.) by United States Supreme Court, 150 A.L.R. FED. 441, 455 (1998). The Port seeks to apply federal law because retirement welfare benefit plans specifically do not vest under ERISA absent a clear expression of the employer's intent. This "clear intent" requirement derives from ERISA's distinction between pension and welfare benefits. ERISA requires automatic vesting of pension benefits, but not welfare benefits. See Int'l Union, United Auto., Aerospace Agric. Implement Workers of Am. v. Skinner Engine Co., 188 F.3d 130, 137-38 (3d Cir. 1999) ("Although ERISA contains elaborate vesting requirements for pension plans, it does not require automatic vesting of welfare benefit plans."). Federal courts have seized on this statutory distinction to apply a strict inference against vesting for welfare benefit plans. See id. at 139 ("`Courts may not casually infer the existence of vesting; doing so would undercut Congress' considered decision that, while pension benefits are strictly regulated and guaranteed, welfare benefits have no such protection.'" (quoting Sengpiel v. B.F. Goodrich Co., 970 F. Supp. 1322, 1337 (N.D. Ohio 1997), aff'd, 156 F.3d 660 (6th Cir. 1998))). Furthermore, ERISA requires welfare benefit plans to be governed by the express language of written benefit plan documents. 29 U.S.C. § 1102. The courts additionally have recognized this express language requirement as grounds for applying the inference against vesting absent a clear expression of the employer's intent. Gable v. Sweetheart Cup Co., 35 F.3d 851, 855 (4th Cir. 1994) (" [I]n recognition of ERISA's requirement that employee benefit plans be governed by written plan documents filed with the Secretary of Labor, any participant's right to a fixed level of lifetime benefits must be `found in the plan documents and must be stated in clear and express language.'" (emphasis added) (citations omitted) (quoting Wise v. El Paso Natural Gas Co., 986 F.2d 929, 937 (5th Cir. 1993))). The Port would have the benefit of such an inference if ERISA's vesting rules apply to the welfare benefits conferred in the CBA.
See In re Unisys Corp. Retiree Med. Benefit "ERISA" Litig., 58 F.3d 896, 901 (3d Cir. 1995) ("In rejecting the automatic vesting of welfare plans, Congress evidenced its recognition of the need for flexibility with regard to an employer's right to change medical plans."); Gable v. Sweetheart Cup Co., 35 F.3d 851, 855 (4th Cir. 1994) ("Because such an obligation constitutes an extra-ERISA commitment, however, courts may not lightly infer the existence of an agreement to vest employee welfare benefits."); Adams v. Avondale Indus., Inc., 905 F.2d 943, 947 (6th Cir. 1990) ("[W]e must avoid any rule that would have the effect of undermining Congress' considered decision that welfare benefit plans not be subject to a vesting requirement."); Hozier v. Midwest Fasteners, Inc., 908 F.2d 1155, 1160 (3d Cir. 1990) ("`[T]o require the vesting of these ancillary benefits would seriously complicate the administration and increase the cost of plans whose primary function is to provide retirement income.'" (quoting H.R. REP. NO. 93-807, 93d Cong., 2d Sess. 60 (1974), reprinted in 1974 U.S.C.C.A.N. 4670, 4726)); Moore v. Metro. Life Ins. Co., 856 F.2d 488, 491 (2d Cir. 1988) (same); Poole v. City of Waterbury, 266 Conn. 68, 84, 831 A.2d 211 (2003) ("The courts imposing a presumption against vesting base that approach largely on their construction of ERISA-drawing an adverse inference from Congress' decision to require vesting for pension rights, but not to include a comparable requirement for welfare benefits.").
See Sprague v. Gen. Motors Corp., 133 F.3d 388, 400 (6th Cir. 1998) ("[T]he intent to vest `must be found in the plan documents and must be stated in clear and express language.'" (quoting Wise, 986 F.2d at 937)); Unisys Corp., 58 F.3d at 902 ("ERISA's framework ensures that employee benefit plans be governed by written documents and [SPDs], which are the statutorily established means of informing participants and beneficiaries of the terms of their plan and its benefits. Accordingly, any retiree's right to lifetime medical benefits under a plan can only be found if it is established by the terms of the ERISA-governed employee benefit plan." (citations omitted)); Alday v. Container Corp. of Am., 906 F.2d 660, 665 (11th Cir. 1990) ("[A]ny retiree's right to lifetime medical benefits at a particular cost can only be found if it is established by contract under the terms of the ERISA-governed benefit plan document."); Moore, 856 F.2d at 492 ("Congress intended that plan documents and the SPDs exclusively govern an employer's obligations under ERISA plans."); Catherine L. Fisk, Lochner Redux: The Renaissance of Laissez-Faire Contract in the Federal Common Law of Employee Benefits, 56 OHIO ST. L.J. 153, 173 (1995) ("[C]ourts infer not only that ERISA does not require vesting, but that . . . in the absence of some explicit written agreement, ERISA directs courts to presume that welfare benefits do not vest.").
¶16 ERISA generally preempts state law relating to employee benefit plans. 29 U.S.C. § 1144(a). However, ERISA does not apply to "a governmental plan," 29 U.S.C. § 1003(b)(1), meaning "a plan established or maintained for its employees by the Government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality of any of the foregoing," 29 U.S.C. § 1002(32). A "governmental plan" includes a plan established pursuant to a collective bargaining agreement and jointly maintained by an employer and union representatives so long as the governmental entity exclusively funds the plan. See, e.g., Gualandi v. Adams, 385 F.3d 236, 243-44 (2d Cir. 2004) ("[E]xclusive governmental funding is enough to constitute governmental establishment of a plan."); Feinstein v. Lewis, 477 F. Supp. 1256, 1262 (S.D.N.Y. 1979) ("[I]t is apparent that Congress intended through [ 29 U.S.C. § 1003(b)(1)] to exclude public employees from coverage."), aff'd, 622 F.2d 573 (1980).
¶17 The parties do not dispute whether the Port is a state government entity. Instead, the Port maintains that it did not exclusively maintain the Welfare Trust because private employers had made contributions to the trust in previous years. However, the status of a plan is determined by the entity that currently maintains the plan. See Rose v. Long Island R.R. Pension Plan, 828 F.2d 910, 920 (2d Cir. 1987). Therefore, the Welfare Trust became a governmental plan when the Port began exclusively funding the trust.
¶18 The Port further argues that it did not exclusively maintain the Welfare Trust because Local 9 made contributions to the trust for its secretary treasurer, who was the only non-Port employee to participate in the trust's plan. The participation in a plan by a "de minimis" number of nongovernmental employees does not defeat a plan's status as a governmental plan. Dep't of Labor, Employee Benefits Sec. Admin., Op. 2005-21 A, 2005 ERISA LEXIS 23, at *1 (Dec. 21, 2005), Op. 2005-17 A, 2005 ERISA LEXIS 18, at *4 (June 22, 2005); Dep't of Labor, Pension Welfare Benefit Programs, Op. 2002-11 A, 2002 ERISA LEXIS 4, at *5 (Oct. 17, 2002); see also Nowell v. Cent. Serv. Ass'n, 106 F. Supp. 2d 888, 891-92 (S.D. Miss. 2000). Therefore, the Welfare Trust constituted a governmental plan within the meaning of 29 U.S.C. § 1002(32).
The Port claims that the governmental plan exemption is inapplicable because Appellants "can not establish that all or substantially all the participants who are or may be entitled to retiree medical benefits under the Trust are governmental employees." Suppl. Br. of Resp't at 12. This claim is unfounded. Attached to Appellants' cross motion for summary judgment is an affidavit from Tony Hutter, the secretary treasurer of Local 9. CP at 287-90. Hutter attested that "[t]o my knowledge, since the mid-1990's, no contributions have been made to the Welfare Plan other than the contributions by the Port of Seattle, and the contributions on my behalf by Local 9." CP at 288. The Port has offered no evidence to rebut Hutter's assertion. Thus, the Port's evidentiary argument is without merit.
¶19 The Port goes on to argue that even if the Welfare Trust is a governmental plan, we should nevertheless determine the applicability of ERISA by examining the intent of the parties. The Port concedes that the parties cannot contractually confer ERISA jurisdiction on a governmental plan. Resp't's Answering Br. at 9; see, e.g., Hightower v. Tex. Hosp. Ass'n, 65 F.3d 443, 448 (5th Cir. 1995) (quoting Roy v. Teachers Ins. Annuity Ass'n, 878 F.2d 47, 49 (2d Cir. 1989)). However, the Port contends that the Welfare Trust Agreement expressed the parties' intent to have the Welfare Trust interpreted in accordance with ERISA. Specifically, the Port points out that the Trust Agreement stated that the parties intended to organize and operate the trust "pursuant to the provisions of [ERISA], the Internal Revenue Code, as applicable, and the Labor-Management Relations Act of 1947, as applicable, as well as any other applicable federal or state laws." CP at 91.
¶20 This language indicates the parties' intent to interpret the operation and organization of the Welfare Trust, not how to interpret the rights created under the CBA. As discussed below, the underlying obligation to provide welfare benefits derives from the CBA, not the Welfare Trust. The interpretation of the Trust Agreement does not determine the vested nature of the benefits conferred in the CBA.
¶21 In any event, the Welfare Trust Agreement language itself does not establish that the parties intended to restrict our interpretation of the Welfare Trust exclusively under ERISA. The language expressly includes the intent to organize and operate the Welfare Trust under ERISA "as well as any other applicable federal or state laws." Id. State law would apply here because the Welfare Trust is expressly exempted from coverage under ERISA, and nothing in the Trust Agreement indicates that the parties intended to prevent us from applying state law in the absence of ERISA jurisdiction. Tellingly, the parties significantly deviated from ERISA's own requirements in the Welfare Trust Agreement, indicating their intent that ERISA would not exclusively control the interpretation of the Welfare Trust. For example, the Trust Agreement defines an "employee welfare benefit plan" as "any lawful employee pension benefit plan created and administered by the Trustees." CP at 92 (emphasis added). As discussed above, ERISA defines "welfare benefits" separately from "pension benefits" and applies different vesting requirements for each type of benefit. 29 U.S.C. § 1002(1), (2)(A). Here, the parties rejected application of ERISA's distinction between pension and retirement welfare benefits by defining a welfare benefits plan as concomitant with a pension benefits plan.
¶22 We hold that ERISA does not govern our determination of whether the retirement welfare benefits were vested. As the benefits were created under the CBA, which is governed as a matter of state law, we look to applicable state law to determine the vested nature of the welfare benefits at issue in this case.
B
¶23 This court has a long history of protecting an employee's vested right to retirement benefits, prior to and independent of any reliance on federal law. See Crabtree v. Dep't of Ret. Sys., 101 Wn.2d 552, 556, 681 P.2d 245 (1984) ("[D]ecades before the federal government acted in this area [through ERISA], our courts recognized the importance of pension benefits and applied our own safeguards."). We have recognized that retirement benefits vest at the time they are created if they are properly considered compensatory. "Washington law is clear that the contractual obligation to fund a retirement system arises from the employment relationship when the employee's right to the retirement benefit exists at the outset of the employment relationship." Int'l Ass'n of Firefighters, Local 1789 v. Spokane Airports, 146 Wn.2d 207, 222, 45 P.3d 186, 50 P.3d 618 (2002). "[T]he duty . . . flows from the compensatory nature of the [benefit conferred] in the employment relationship, and does not necessarily flow from the collective bargaining agreement." Id. at 221. The obligation arises independent of any required showing of the employer's express intent to provide retirement benefits.
¶24 In the seminal Bakenhus case, this court held that pension benefits conferred in an employment relationship constitute deferred compensation. Bakenhus v. City of Seattle, 48 Wn.2d 695, 698, 296 P.2d 536 (1956). The right to such compensation vests at the moment that the employee accepts an offer to work in exchange for the promise of pension benefits. Id. at 700; see Crabtree, 101 Wn.2d at 557 ("`the rights in and to it [the pension] commence to vest with the first day of employment or service, and continue to vest with each day's service thereafter.'" (alteration in original) (quoting Tembruell v. City of Seattle, 64 Wn.2d 503, 506, 392 P.2d 453 (1964))). While the Bakenhus court admitted that applying contract theory to secure a vested right in pension benefits "may not be flawless in a purely legalistic sense," such a conclusion "gives effect to the reasonable expectations of the employee." 48 Wn.2d at 701. The court explained that "[t]he promise on which the employee relies is that which is made at the time he enters employment; and the obligation of the employer is based upon this promise." Id. at 700. Therefore, the court focused its analysis on the expectations of the employee at the time the retirement benefits are conferred, rather than the express language of the contract, to determine whether the benefits vested.
¶25 Later, in Dorward v. ILWU-PMA Pension Plan, 75 Wn.2d 478, 452 P.2d 258 (1969), this court applied the Bakenhus analysis to pensions specifically created through collective bargaining. The Dorward court examined the employment relationship and recognized that pension benefits are presumably deferred compensation because of the "`give and take'" nature of collective bargaining through which pension benefits "become irrevocably merged with wage increases in the finished product of the collective bargaining agreement." Id. at 483. Specifically, the court took judicial notice of the fact that the employee obtains a pension benefit in collective bargaining as compensation for lost "job mobility and possible wage increases." Id. The employee forgoes present wage value in exchange for a future benefit that will accrue after the employee has given up his or her potential to seek a better job or better wages. The employee's decision to continue to work for the employer after negotiating for pension benefits provides the consideration for the promise to pay the pension. Id. ("The consideration rendered for the promise in the pension contract of the employer to pay a pension is established when the employee is shown to have knowledge of the pension plan and continues his employment."). Therefore, the expectation of the employee at the beginning of the relationship determines the compensatory nature of the benefit because the promise of a pension induces the employee to complete his or her required services before he or she receives the benefit. See Jacoby v. Grays Harbor Chair Mfg. Co., 77 Wn.2d 911, 915, 468 P.2d 666 (1970) (recognizing the generally accepted rule in most jurisdictions that "[a] retirement pension is pay withheld to induce continued faithful service").
¶26 As with Bakenhus, the Dorward court rejected a strict interpretation of the contractual language of the agreement itself and recognized that the compensatory nature of the pension created a vested right once the employee continues working under the contract. The court went on to hold that the obligation "will arise in such instances even though the pensioner does not know the precise terms of the pension agreement." Dorward, 75 Wn.2d at 483. A year after Dorward, the court again applied the Bakenhus rule to include completely voluntary, employer-financed pension plans. Jacoby, 77 Wn.2d 911.
¶27 Most recently, in Firefighters, this court again focused on the compensatory nature of the benefits as defining the contractual obligation to provide a vested benefit. 146 Wn.2d at 219-23. As in Dorward, the Firefighters court recognized that such a contractual obligation may arise even if not included as an express term of a collective bargaining agreement. Id. at 220-21; Dorward, 75 Wn.2d at 483. Importantly, the Firefighters court did not distinguish between pension benefits and other kinds of retirement benefits in determining the compensatory nature of the benefits. Indeed, the court's analysis focused on all benefits within the "`total compensation package,'" for which the parties negotiated in the collective bargaining process. 146 Wn.2d at 222. The court concluded that the parties considered Social Security and Medicare contributions compensatory when negotiating the collective bargaining agreement. Id.
The dissent attempts to distinguish Firefighters by pointing out that the benefits in that case were limited to the duration of the collective bargaining agreement. The dissent then jumps to the conclusion that " Firefighters shows that other benefits can be limited to the terms of a collective bargaining agreement." Dissent at 869. However, in that case the duration of the benefits was limited because the union had specifically sought the employer's contributions only up to the expiration of the current collective bargaining agreement. Firefighters, 146 Wn.2d at 212. Furthermore, Firefighters recognized that retirement benefits vest if properly considered compensatory in the employment relationship, even if not included as term of the collective bargaining agreement. Id. at 221 ("[T]he duty to fund social security accounts flows from the compensatory nature of the social security contributions in the employment relationship, and does not necessarily flow from the collective bargaining agreement."). Indeed, the Social Security and Medicare benefits that we determined to be part of the total compensatory package were not included as a term of the collective bargaining agreement. The dissent's focus on the terms of the collective bargaining agreement therefore is misplaced.
¶28 Despite our holding in Firefighters, the Port argues that the Bakenhus line of cases applies only to pension benefits and should not extend to retirement welfare benefits. However, our precedent under Bakenhus and its progeny offers no distinction between pension and other compensatory retirement benefits similarly negotiated though collective bargaining.
¶29 Collective bargaining creates a relationship through which the employee who negotiates for retirement benefits forgoes the full present value of his or her service with the expectation of receiving that value after he or she completes the service. Dorward, 75 Wn.2d at 483. If pension benefits irrevocably merge with negotiation for wage increases, id., then the same would hold true for welfare benefits similarly negotiated as part of the total compensatory package. See Firefighters, 146 Wn.2d at 222; Farver v. Dep't of Ret. Sys., 97 Wn.2d 344, 346, 644 P.2d 1149 (1982) ("Pension and other retirement plans are unique property rights . . . in the nature of deferred compensation. As such they are not mere expectancies but are vested rights possessed by employees." (emphasis added)). See Frank v. Day's, Inc., 13 Wn. App. 401, 404, 535 P.2d 479 (1975) ("In this jurisdiction, pensions or retirement programs, whether public, established by collective bargaining, or voluntarily employer-funded, constitute deferred compensation for services rendered." (emphasis added)); Abels v. Snohomish County Pub. Util. Dist. No. 1, 69 Wn. App. 542, 552, 849 P.2d 1258 (1993) ("It is the law of this State that an employee has a vested right in the pension or retirement system in effect when he becomes a qualified employee, or which becomes effective during his employment, and that system cannot be altered to his detriment without a corresponding benefit to him." (emphasis added)). Either type of retirement benefit presumably results from the negotiation of some present wage value in exchange for a future benefit obtained upon completion of the required term of service. As succinctly stated in Jacoby, "`[c]learly . . . an employer cannot offer a retirement system as an inducement to employment and . . . withdraw or terminate the program after an employee has complied with all the conditions entitling him to retirement rights thereunder.'" 77 Wn.2d at 916 (emphasis added) (quoting Cantor v. Berkshire Life Ins. Co., 171 Ohio St. 405, 410, 171 N.E.2d 518 (1960)). In addition, the Ninth Circuit Court of Appeals has reached the same conclusion that this court's treatment of pension benefits would apply to all employee benefits:
We think that that same form of reasoning [that pension benefits are deferred compensation]
applies to all employee benefits. Few of them are mere gratuities or a result of unadulterated altruism. Most are for services rendered or for
the purpose of inducing the further rendering of services. They help to guarantee a competent and happy labor force.
Vizcaino v. Microsoft Corp., 120 F.3d 1006, 1014 (9th Cir. 1997) (emphasis added) (applying
Bakenhus to an employee stock purchase plan).
We reject the Port's argument that Washington law does not provide for vesting of welfare benefits under RCW 41.04.208, a statute governing local government retirees. RCW 41.04.208 applies only to "[d]isabled" and "[r]etired" employees — those employees satisfying the eligibility and years of service requirements under the "Washington law enforcement officers' and firefighters' retirement system plan 2 and the public employees' retirement system [(PERS)]." RCW 41.04.208(1)(a), (c). Appellants did not participate in PERS. Moreover, the aforementioned statute did not go into effect until January 1, 2003, and explicitly states that its provisions do not affect any health plan contained in a collective bargaining agreement in existence as of January 1, 2003. RCW 41.04.208(11). Thus, RCW 41.04.208 does not apply and the Port's reliance on RCW 41.04.208 is unavailing.
¶30 In the reality of the employment relationship, welfare benefits make up part of the core compensatory benefits package offered in exchange for continued service. See, e.g., Cockle v. Dep't of Labor Indus., 142 Wn.2d 801, 823, 16 P.3d 583 (2001) (recognizing employer-provided health care benefits as "core, nonfringe benefits" provided in consideration for services rendered for purposes of calculating lost wages in the workers' compensation statute); see Thorning v. Hollister Sch. Dist., 11 Cal. App. 4th 1598, 1606-07, 15 Cal. Rptr. 2d 91 (1992) (holding that health and life insurance benefits were similar to pension benefits, served as an inducement for continued employment, a factor in the decision whether to retire, and could not be unilaterally terminated); McMinn v. City of Oklahoma City, 1997 OK 154, 952 P.2d 517, 521-22 (holding that retirement benefits include pension, medical, and other benefits rather than pension benefits alone). Both welfare and pension retirement benefits can take the form of deferred compensation when negotiated through collective bargaining.
¶31 An employee has a legitimate expectation that retirement benefits vest when conferred as compensation through a CBA. Collective bargaining is a term of art, authorizing employees to negotiate their conditions of employment through a single representative at the bargaining table with their employer. RCW 41.56.080; see Wash. State Patrol Lieutenants Ass'n v. Sandberg, 88 Wn. App. 652, 656, 946 P.2d 404 (1997). However, the union's duty of fair representation for each employee terminates once the employee retires. See Allied Chem. Alkali Workers of Am., Local Union No. 1 v. Pittsburgh Plate Glass Co., 404 U.S. 157, 172, 92 S. Ct. 383, 30 L. Ed. 2d 341 (1971) ("retirees could not properly be joined with the active employees in the unit that the Union represents"). Furthermore, the PECBA limits collective bargaining agreements to a three-year term. RCW 41.56.070. Without vesting, an employee who retires during the course of any one collective bargaining agreement would lose his or her ability to protect any retirement benefit conferred in that agreement less than three years after receiving the benefit. Therefore, the current collective bargaining agreement offers the retiring employee the only opportunity to ensure that retirement benefits will survive the term of the agreement. An employee would reasonably expect that negotiated retirement benefits will continue beyond the current agreement because the employee has no real ability to negotiate for the continuation of such benefits after he or she retires.
In fact, a union would likely breach its duty to fairly represent its current members if it attempted to secure benefits for retirees out of the employer's resources that otherwise would be spent on compensation for the current employees. See Pittsburgh Plate Glass Co., 404 U.S. at 173 ("[T]he risk cannot be overlooked that union representatives on occasion might see fit to bargain for improved wages or other conditions favoring active employees at the expense of retirees' benefits.").
¶32 The implications of the limitation on retiree representation in collective bargaining were examined in International Union, United Automobile, Aerospace Agricultural Implement Workers of America v. Yard-Man, Inc., 716 F.2d 1476 (6th Cir. 1983), which recognized the vested nature of retirement welfare benefits provided in collective bargaining agreements. See also Keffer v. U.K. Porter Co., 872 F.2d 60, 64 (4th Cir. 1989); United Steelworkers of Am. v. Connors Steel Co., 855 F.2d 1499, 1504-05 (11th Cir. 1988). Similar to this court's focus on the employment relationship, the Yard-Man court determined that "examination of the context in which these benefits arose demonstrates the likelihood that continuing insurance benefits for retirees were intended." 716 F.2d at 1482 (emphasis added); cf. Firefighters, 146 Wn.2d at 221 ("[T]he duty . . . flows from the compensatory nature of the [benefit conferred] in the employment relationship, and does not necessarily flow from the collective bargaining agreement."). The court noted that "the union owes no obligation to bargain for continued benefits for retirees," and therefore "it is unlikely that such benefits . . . would be left to the contingencies of future negotiations." Yard-Man, 716 F.2d at 1482. We find this reasoning persuasive and supportive of our determination that the Bakenhus vesting principle applies to retirement welfare benefits conferred through collective bargaining.
Notably, Yard-Man established an opposite conclusion from Skinner and other cases adopting an inference against vesting. Whereas those cases are based on ERISA's distinction between pension and welfare benefits, Yard-Man and its progeny more closely resemble our case law by focusing directly on the collective bargaining process as the foundation for the employee's expectation.
¶33 We hold that retirement welfare benefits conferred in a collective bargaining agreement constitute deferred compensation where the parties negotiate for such benefits as part of the total compensatory package. The compensatory nature of the benefits creates a vested right in the retirees who reached eligibility under the terms of the applicable CBA. Once vested, the right cannot be taken away and will survive the expiration of the agreement. See Litton, 501 U.S. at 207. This vesting principle applies to our interpretation and construction of the CBA.
III
¶34 Applying our vesting principle, we now must determine whether the Port fulfilled its obligation to provide retirement welfare benefits conferred in the CBA. The Port maintains that the CBA required it to contribute to the Welfare Trust only for the duration of the CBA itself. We apply contract law to the interpretation and construction of collective bargaining agreements created under the PECBA. Barclay v. City of Spokane, 83 Wn.2d 698, 700, 521 P.2d 937 (1974). The purpose of contract interpretation is to determine the intent of the parties. Berg v. Hudesman, 115 Wn.2d 657, 663, 801 P.2d 222 (1990). We search for intent though the objective manifest language of the contract itself. Hearst Commc'ns, Inc. v. Seattle Times Co., 154 Wn.2d 493, 503, 115 P.3d 262 (2005) ("[W]e attempt to determine the parties' intent by focusing on the objective manifestations of the agreement."). Contract construction involves the application of legal principles to determine the legal effect of contract terms. Id. at 502 n. 9.
A
¶35 The CBA does not express the parties' intent to alter the vesting of the retirement welfare benefits conferred in the CBA. The CBA created the obligation to provide retirement welfare benefits but does not express a durational limit on the Port's obligation to provide welfare benefits to eligible retirees. Under section XVIII of the CBA:
The Port shall maintain the current level of medical, welfare, dental and related benefits during the duration of this contract and shall continue to provide the same level of coverage currently provided to eligible employees, eligible retirees, and dependents.
CP at 52. While the first clause creates a right to the current level of coverage for the duration of the CBA, the second clause provides only that the Port "shall continue to provide" the same level of coverage to eligible employees and eligible retirees. The phrase "shall continue to provide" is unmodified.
¶36 This phrase cannot simply relate back to the duration period of the first clause, as such an interpretation would render the second clause redundant. See Wagner v. Wagner, 95 Wn.2d 94, 101, 621 P.2d 1279 (1980) ("An interpretation of a writing which gives effect to all of its provisions is favored over one which renders some of the language meaningless or ineffective."). If the parties merely intended that the Port would continue to provide benefits to eligible employees and retirees "during the duration of this contract," then the second clause would have been incorporated into the first clause. For example, the combined language could read: "The Port shall maintain the current level of benefits for eligible employees, eligible retirees, and dependents during the duration of this contract." As the parties intentionally separated the "duration of this contract" language from the "continue to provide" language, we must give individual meaning to each temporal period. See id. (holding that the rule of interpretation giving effect to all provisions is "especially true when the writing is the product of a long period of negotiation with both parties having been represented by competent counsel").
¶37 The "continue to provide" language more directly relates to the eligibility requirement in the second clause. The obligation of the Port to continue to provide benefits for eligible employees and retirees limits the obligation to provide benefits so long as the employee or retiree is eligible to receive such benefits. An employee maintains eligibility to receive benefits as long as he or she continues employment with the Port. The Port would end its obligation to provide coverage for an employee when the employee loses eligibility explicitly by ending work for the Port or necessarily by negotiating a new collective bargaining agreement with the Port. See Litton, 501 U.S. at 206 (noting that the unfixed terms and conditions of a collective bargaining agreement have no force beyond the expiration of the agreement "in order to protect the statutory right to bargain"). On the other hand, a retiree obtains eligibility at the time of his or her retirement and remains retired until death. The CBA offers no language indicating that a retiree loses eligibility at the expiration of the agreement, or at any other time. As vested rights cannot be altered once created, a retirees' eligibility for vested retirement benefits cannot be taken away. A retiree presumably loses such eligibility only upon his or her death. See Int'l Union, United Auto., Aerospace Agric. Implement Workers of Am. v. BVR Liquidating, Inc., 190 F.3d 768, 773 (6th Cir. 1999) ("[T]o what other date than the death of the retiree . . . could the word `continue' apply?").
Collective bargaining requires the employer and employee representative to meet at reasonable times, negotiate, and execute a written agreement that covers certain terms of employment. RCW 41.56.030(4). While the obligations created in a CBA may cease at some point beyond the termination of the agreement, RCW 41.56.123, an employer must continue to bargain with the employees' certified representative beyond the term of any one CBA, RCW 41.56.100. Therefore, the negotiation of terms for a current CBA necessarily contemplates the perpetuation of such rights in future negotiations.
¶38 As discussed above, an employee reasonably would expect that retirement welfare benefits in effect at the time he or she becomes eligible will survive the expiration of the agreement, given that the employee has no right to negotiate for continued benefits once he or she retires. See Allied Chem. Alkali Workers of Am., 404 U.S. at 172-73. Even a vested right only fully accrues once the recipient becomes eligible to receive the benefit. See Leonard v. City of Seattle, 81 Wn.2d 479, 486-87, 503 P.2d 741 (1972). If the obligation to provide the benefit extended only for the term of the agreement, then the entire retirement benefit would be limited to the brief period from which the employee became eligible until the expiration of the agreement. Poole v. City of Waterbury, 266 Conn. 68, 94-95, 831 A.2d 211 (2003) ("In the context of retiree benefits, a construction of the phrase `shall continue' limited to the duration period set forth in the agreement often would render the benefit inconsequential, lasting months or weeks, as the plaintiffs no longer would be in a position to negotiate with the city over future benefits."). If the Port's obligation to provide retirement welfare benefits were limited to the duration of the CBA, then such a limit would effectively negate the compensatory nature of the deferred benefit altogether. As the parties originally negotiated a three-year agreement, the Port's total obligation to provide retirement welfare benefits would have lasted less than three years. Such a benefit could hardly be considered compensation for an employee who must work 15 to 25 years just to reach eligibility. The Bakenhus vesting principle does not permit such a narrow interpretation of the benefits conferred in the CBA. See Bakenhus, 48 Wn.2d at 700 ("Unless the services are rendered in reliance on an offer, they are consideration for nothing, and any pension received thereafter can only be a gratuity").
B
¶39 Beyond the terms of the CBA itself, the Port argues that the right to retirement welfare benefits conferred in the CBA could not have vested because the Welfare Trust Agreement and SPD specifically reserved the right to such benefits. Under section XVIII of the CBA, the Port agreed to be a party to the Welfare Trust Agreement and to pay the necessary premiums to the Welfare Trust in order to maintain the current level of benefits. CP at 52. The Welfare Trust Agreement provided that the trustees could terminate the Welfare Trust at any time, but in any event the Welfare Trust would terminate "upon the expiration of all collective bargaining agreements and special agreements." CP at 119. The SPD also contained language explaining that "[b]enefits under this Retired Employee Program are not guaranteed for any definite period of time and benefits will be provided only to the extent that sufficient funds are available in the Trust." CP at 134. The Port concludes that such language unambiguously indicates that welfare benefits were not guaranteed for life.
The dissent argues that the CBA should be interpreted as incorporating the Welfare Trust Agreement and SPD by reference. However, "[i]ncorporation by reference must be clear and unequivocal." W. Wash. Corp. of Seventh-Day Adventists v. Ferrellgas, Inc., 102 Wn. App. 488, 494, 7 P.3d 861 (2000). While the parties expressly incorporated the Pension Agreement into the CBA, they did not express a similar intent with the Welfare Trust Agreement. In addition, the CBA does not even mention, much less incorporate, the terms of the SPD. While these documents are required components of an ERISA plan, see 29 U.S.C. § 1102, they do not hold the same weight as a matter of state contract interpretation.
¶40 On the other hand, in the SPD the trustees informed participants that they "fully intend[ed] to continue this Plan indefinitely," and that they reserved the right to terminate it only in order "[t]o guard against unforeseen circumstance." CP at 166. The Port's decision to stop making contributions to the Welfare Trust would not seem to be an unforeseen circumstance that would give rise to the trustees' stated purpose for reserving the right to terminate the trust. Furthermore, the SPD statement that the benefits would be provided only to the extent to which funds were available simply directs the focus back to terms of the CBA, under which the Port promised to continue to provide retirement welfare benefits. Moreover, as discussed above, the Trust Agreement defined "employee welfare benefit plan" as "any lawful employee pension benefit plan." CP at 92. The Pension Agreement also sets eligibility requirements for retirement welfare benefits. CP at 300. The definition of a welfare benefits plan as a pension benefits plan and the establishment of welfare benefits eligibility in the Pension Agreement strongly indicate the parties' intent to treat both welfare and pension benefits as part of the total compensation package. Firefighters, 146 Wn.2d at 222.
¶41 Apart from the internal inconsistencies with the reservation language, the Port's argument ultimately fails because it incorrectly assumes that the terms of the Trust Agreement and SPD could define the Port's underlying obligation to provide welfare benefits conferred in the CBA. The termination language in the Trust Agreement only defined the duration of the Welfare Trust, not the underlying contractual obligation to provide the benefits. See id. ("[T]he contractual obligation to fund a retirement system arises from the employment relationship."). The Trust Agreement stated its purpose as creating "an entity to which contributions from participating employers . . . can be paid." CP at 91. It expressly defined the CBA as the source of the Port's obligation to make such payments. CP at 92 ("`Collective bargaining agreement' — a written agreement . . . by the terms of which the employer is obligated to make contributions to the Trust Fund."). The Port agreed in the CBA to contribute to the Welfare Trust to the extent necessary to maintain the current level of benefits. Therefore, the terms of the CBA determined the extent of the Port's obligation to provide benefits, not the Welfare Trust Agreement. While the Trust Agreement granted the trustees the power to terminate the Welfare Trust, such discretion did not affect the Port's obligations arising under the CBA to provide welfare benefits. The Trust Agreement could not limit the vested rights conferred in the CBA.
Likewise, the CBA limited the trustees' authority to establish eligibility requirements. While the Trust Agreement contained specific eligibility requirements, the Welfare Trust did not determine the employees' right to eligibility. The CBA obligated the Port to continue to provide the same coverage that was currently being provided to eligible retirees. CP at 52. Therefore, the CBA fixed eligibility to the requirements in effect at the time the CBA went into effect. The Pension Agreement also established requirements for retirement welfare benefits eligibility. CP at 300.
¶42 Our interpretation of the CBA does not imply that the Welfare Trust was an ineffective tool to deliver the Port's underlying obligations during its existence. We note that the Welfare Trust was structured to protect the interests and rights of plan participants by including an equal number of employer and union representatives on the board of trustees and creating an administrative procedure for challenging the denial of benefits. When the Port stopped contributing to the Welfare Trust, the trust could not continue to offer welfare benefits to eligible retirees. These eligible retirees still have the right to receive benefits even though they can no longer be provided through the Welfare Trust.
Our conclusion disposes of the Port's justiciability claims as well. The Port argues that the Welfare Trust is the proper defendant in a suit for retirement welfare benefits, not the employer. See Madden v. ITT Long Term Disability Plan for Salaried Employees, 914 F.2d 1279, 1287 (9th Cir. 1990). The Port further argues that the Welfare Fund is an indispensable party to the present action. However, the Bakenhus principle establishes that the conferral of retirement benefits creates an implied contract directly between the employee and employer. Appellants do not complain about the administration of benefits under the Welfare Trust. The trustees' obligations presumably expired with termination of the Welfare Trust itself. Appellants assert a right to benefits that outlived the term of the Welfare Trust, a right that the Trust itself could not fulfill once the Port decided to stop funding it. Furthermore, Appellants were not required to exhaust the procedures requirements of the Trust Agreement to contest the denial of benefits as the termination of the Welfare Trust rendered such procedures useless. The federal case law cited by the Port relies on ERISA and does not apply as a matter of state law. See Diaz v. United Agric. Employee Welfare Benefit Plan Trust, 50 F.3d 1478, 1483 (9th Cir. 1995); Sarraf v. Standard Ins. Co., 102 F.3d 991, 993 (9th Cir. 1996).
¶43 Even assuming that the reservation of rights language in the Trust Agreement and the SPD indicated the Port's intent to not provide a vested right to retirement welfare benefits in the CBA, we cannot give effect to such an attempted reservation of rights by an employer. In Jacoby we held that:
"[E]ven though the employer has reserved the right to amend or terminate the plan, once an employee, who has accepted employment under such plan, has complied with all the conditions entitling him to participate in such plan, his rights become vested and the employer cannot divest the employee of his rights thereunder."
77 Wn.2d at 916 (quoting
Cantor, 171 Ohio St. at 410). The obligation to provide a vested right becomes irrevocable when the employee satisfies the eligibility conditions.
See McGrath v. R.I. Ret. Bd., 88 F.3d 12, 18-19 (1st Cir. 1996) ("[o]nce an employee fulfills the service requirements entitling him or her to retirement benefits under a pension plan, the employee acquires a contractual right to those benefits, and the employer cannot abridge that right despite its aboriginal reservation of a power to effect unilateral amendments or to terminate the plan outright.");
see also 1 ARTHUR LINTON CORBIN, CORBIN ON CONTRACTS § 3.16 (Joseph M. Perillo rev. ed. 1993); 25 DAVID K. DEWOLF ET AL., WASHINGTON PRACTICE: CONTRACT LAW AND PRACTICE § 1.4, at 8 (2007) (noting that a unilateral contract becomes enforceable and irrevocable "when performance has occurred in response to a promise"). The invalidity of reservation clauses is consistent with the compensatory nature of retirement benefits. An employer cannot expect to accept the benefit of continued service from its employees while reserving the right not to compensate those employees once
it has received the full benefit of their service.
See generally Kulins v. Malco, 121 Ill. App. 3d 520, 526, 459 N.E.2d 1038, 76 Ill. Dec. 903 (1984) ("When services are rendered, the right to secure the promised compensation is vested as much as the right to receive wages or any other form of compensation, and the lack of a promise to vest does not revoke the employer's obligation to pay." (citation omitted)).
¶44 If the Port wanted to limit its obligation to provide welfare benefits, then it could have insisted on limiting the right to retirement welfare benefits in the CBA itself. Instead, it chose to accept the benefit of the employees' long-term service without establishing that eligible retirees would have no continued right to receive benefits from the Port after the expiration of the CBA. The conferral of such benefits induced the employees to provide service to the Port for the requisite number of years under the reasonable expectation of receiving welfare benefits once they retired. See Jacoby, 77 Wn.2d at 915 ("A retirement pension is pay withheld to induce continued faithful service."). The inducement prevented these employees from finding alternative ways to prepare for retirement, either by finding other employment with greater benefits or by negotiating with the Port for higher wages in exchange for the lack of retirement benefits so that they could start their own personal retirement accounts in order to pay for retirement welfare benefit premiums. See Dorward, 75 Wn.2d at 483. The employees' agreement to work under such expectations created the vested right to the benefits promised in the CBA. Bakenhus, 48 Wn.2d at 701.
¶45 Without limiting the vested right to retirement welfare benefits in the CBA, the Port remains obligated to provide such benefits for the lives of the eligible retirees who satisfied the years of service and contribution requirements before April 30, 2003, the period through which the terms of the CBA extended. The obligation must be comparable to the level of benefits provided at the time the CBA was signed.
C
¶46 We recognize that administration of a welfare benefits plan requires flexibility to account for changing economic conditions. The Bakenhus court specifically recognized that pension plans themselves are flexible concepts that may be modified "for the purpose of keeping the pension system flexible and maintaining its integrity." Id. The court was mindful not to impose strict contractual guarantees on employers who provide pensions in order to allow "the freedom necessary to improve the pension system and adapt it to changing economic conditions." Id. We believe that the Port's ongoing obligation to provide welfare benefits will require the same kind of flexibility.
¶47 We hold that the obligation to provide vested retirement welfare benefits does not require the Port to revive and fund the Welfare Trust. While the Port used the Welfare Trust as the tool to deliver its obligation to provide benefits, it may continue to fulfill its obligations through another vehicle that provides a sustainable way of delivering benefits reasonably commensurate with the level of benefits promised in the CBA. Id. at 701-03. In fact, the Port already offered to enroll Appellants in its own employee benefits plan. The Port could fulfill its obligation by paying the premiums for Appellants to participate in that plan, assuming it offers a reasonably comparable level of benefits. On remand, the trial court may consider the need for flexibility in determining how the Port will fulfill its obligation.
CONCLUSION
¶48 The trial court held that Appellants had no vested right to receive retirement welfare benefits because the CBA did not "unambiguously" vest the welfare benefits beyond the duration of the CBA itself. The court misconstrued our precedent regarding the creation of a vested right to retirement benefits. The conferral of compensatory retirement welfare benefits through a CBA creates a vested right for eligible retirees absent express language in the agreement specifically limiting the right to such benefits. For these reasons, we reverse the trial court and remand for further proceedings consistent with this opinion.
ALEXANDER, C.J., and C. JOHNSON, CHAMBERS, and FAIRHURST, JJ., concur.