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UPS Freight Tentative Agreement Background and Highlights

Bargaining commenced in December 2017 and the parties met over a seven-month period before reaching a tentative agreement on July 12. Bargaining was extremely complex and difficult. Economic and business information was requested and obtained from the company. Some of it was made up of sensitive internal corporate information that is covered by a legal “non-disclosure” agreement. Additionally, multiple attorneys, economists and consultants were used by the committee to sift through the data.  

Obviously, the goal of the Teamsters National UPS Freight Negotiating Committee was at all times to obtain the best possible contract from the company. Throughout bargaining, the union committee was focused on trying to improve contractual language, increasing compensation, protecting and improving health, welfare and pension benefits, and protecting and preserving bargaining unit work opportunities. The tentative agreement accomplishes those objectives.

The union’s bargaining committee itself was composed of business agents and other local union leaders from across the country who represent employees in all types of UPS Freight operations. Additionally, two Teamster members who are employed at UPS Freight also served on the committee. The people on the bargaining committee were dedicated to obtaining the best possible agreement for the members. The union committee was open, democratic, transparent and engaged in vigorous discussions among themselves.

The union negotiating committee was aggressive at the bargaining table. At times, things became heated with the company. More than one session abruptly ended with loud and “spirited” exchanges. As Kris Taylor, the union’s UPS Freight coordinator, said, “Negotiations are frequently a roller coaster ride and we certainly had our share of bumps. In the end, however, I believe we achieved a very solid tentative agreement that provides and improves upon outstanding wages, benefits and protections for the workers.”  In fact, the union was able to secure dozens of significant contractual improvements in the tentative agreement.

Despite the fact that the tentative agreement represents only the third national agreement with UPS Freight, the protections and benefits in the contract are extremely good and are reflective of a much more mature bargaining relationship.

The challenge in any negotiations is to achieve the best possible agreement without putting the company in a financial situation where it cannot sustain itself.   Labor costs are one of the most significant cost centers of any LTL operation. As an LTL carrier, UPS Freight participates in a highly competitive industry driven by customer cost and service reliability.  UPS Freight’s non-union competitors include FedEx Freight, Old Dominion, XPO and SAIA.

Under the tentative agreement, UPS Freight’s wage and benefit packages will continue to be among the highest in the LTL industry. Furthermore, contractual protections and benefits to the bargaining unit have been greatly enhanced. In fact, it is estimated that the overall costs of the tentative agreement to the company are more than 33 percent higher than the costs under the current agreement.  

CLICK HERE to read the UPS Freight Tentative Agreement

There are currently nearly 12,000 employees covered by the National UPS Freight Agreement. During bargaining, the company committed to adding more bargaining unit drivers and growing the bargaining unit.

Highlights of the Tentative Agreement

New Restrictions on Subcontracting: One of the primary objectives of the union’s negotiating committee was the reduction in the amount of subcontracting, particularly of road work. Over the past five years, the company had used an increasing amount of road contractors and frequently road drivers would be forced to work their weekly guarantees out of their classification while contractors performed driving work. The tentative agreement addresses the issue and makes significant improvements.  

First, the company will affirmatively and significantly reduce the amount of road contracting it currently does. In the first year alone, we estimate that this will likely amount to the insourcing of over three million (3,000,000) miles back to our road drivers.

A formula was devised to reduce the percentage of total miles that the company uses on subcontracting. Over the life of the contract, it is anticipated that the amount of subcontracting currently done will be reduced by 18-20 percent because of the required reductions.  

Second, the company agreed to hire a minimum of 100 new road drivers over the first three years of the agreement. 

Third, any terminal that averages one subcontracting load into or out of that terminal per day over the course of the contract year will be a “red-circled” terminal by number for road drivers. The red circled bargaining unit road drivers in that terminal will be guaranteed eight hours a day and 40 hours a week in their classification as road drivers. If, for some reason, however, a red circled road driver is forced to work out of his/her classification (i.e. on the dock), he/she will be paid $37.61 per hour. That is a $300.85 daily guarantee and $1,504.25 weekly guarantee. This is a tremendous incentive for the company to work its road drivers in their classification. It is not likely that the company will be willing to pay $37.61 per hour for road drivers to either sit at home or work out of classification. 

Fourth, if the company fails to meet the targeted reduction in contracting in any year, the new language requires it to add additional red circle road jobs above the 100 new road jobs.  

Finally, the language in Article 44(c) now will also affirmatively and expressly provide that the protection of bargaining unit work is a central purpose of the agreement. 

Wage Increases: Even though UPS Freight already pays some of the highest wages in the LTL industry, the tentative agreement continues to provide for increases. Both hourly and mileage rates are increased. For employees on the local cartage seniority list who have completed their progression, annual wage increases range from 40 cents to 50 cents per year for a total of $2.20 in wage increases over the life of the contract. For casuals in local cartage and clerical the total wage increases are $1.95 over five years.

For road drivers, the increase is a quarter-cent-per-mile per year.

Additionally, the progression rates for new hires have been significantly increased so that the company can attract and hold new employees and rely less on contractors. Protections were put in place so that existing employees would move to the higher progressions if the new progression is greater than their existing progression plus their general wage increase. 

Pension Multiplier Increases: The tentative agreement contains a significant increase in the pension multiplier. Starting January 1, 2019, full-time and casual employees will earn a monthly accrued benefit equal to their benefit as of December 31, 2018 plus $110 per year times years of service for years going forward. The current rate is $105 per year. Starting January 1, 2021 the $110 goes to $115 per year. This means that a worker who starts in 2021 will have a monthly pension of $3,450 per month after 30 years of service ($115 x 30). Furthermore, this is well funded plan that is stable financially. To receive a full year, an employee needs to work a minimum of 1,800 hours in a year. However, if an employee works fewer than 1,800 hours, the accrual will be prorated. 

No Increase for Health Care Premium Co-Pays: The contractual co-pay premium rates from Article 25, Section 1 of the last contract have been maintained for the life of the new agreement. In other words, there will be no increases in premium co-pays despite the fact that the cost for health care has increased substantially. The company will bear 100 percent of the increase in medical insurance costs. The increase in medical costs are estimated to cost the company more than $100 million over the life of the contract on top of current rates.

Until the very end of negotiations, the company sought to pass on a portion of those increases to the employees. The union committee stood firm and would not allow the company to increase the premiums even by only a few dollars per month. The rates will stay at $45 for single coverage, $90 for employee plus, and $135 for employee and family. Likewise, retiree health insurance co-pays remain the same at $150 (single) and $300 (retiree plus) for the duration of the agreement. In other words, the cost to the retiree does not increase. 

Increased Paid Leave for Casuals: After five years of service, casual employees will receive paid jury duty and bereavement leave. Also, all casual employees will receive two discretionary days off after one year of service per year. Also, casual employees will receive one week of vacation time after one year of service and two weeks of vacation after five years.

Vacation Blackout Weeks: Under the current contract, the company could “black out” significant numbers of weeks during which employees could not take vacation. The tentative agreement limits the number of blackout weeks to five. In addition, at least one worker or two percent of the workers per classification per terminal (whichever is more) is allowed to take time off during a blackout.

CDL Training: Under the tentative agreement, an employee who trains his or her coworkers for CDL training will be paid at the applicable rate to train non-CDL employees. In the past many people volunteered to do this on their own time.

Supervisors Working: The new language prohibits supervisors from doing bargaining unit work. If they are found to be doing this, monetary damages (applicable rate of pay) will be paid to the bargaining unit employee for all time worked by the supervisor.

Penalty Pay: For the first time, the union was successful in negotiating penalty pay provisions for various circumstances. Specifically, penalty pay will apply in the following:

1.Verified payroll errors mistakes of fifty dollars ($50.00) or more for full-time employees or twenty-five dollars ($25.00) or more for casual employees, twenty dollars ($20.00) or more will be paid within seventy-two (72) hours (excluding Saturdays, Sundays and holidays) on the next business day if requested in writing by the employee. If the company fails to make payment available or it has not been received by the employee within seventy-two (72) hours, the employee will notify management in writing of the non-payment. He/she will be entitled to an additional amount equal to one-quarter (1/4) of his/her daily guarantee at his/her applicable rate of pay for every full pay period, until corrected

2. For penalty pay involving grievance settlements or decisions, the company must pay the employee within 14 calendar days of the date of the decision or settlement. If the company fails to pay on time, the employee can notify the company in writing and the company will then have seven days to pay. If the company fails to do so, the employee is entitled to receive one-half of his or her guaranteed daily rate as a penalty on top of the amount originally owed.   

Protections Against Excessive Forced Overtime for Full-Time Local Cartage and Clericals:

New language was added to Article 18 providing that no full-time Local Cartage or Clerical employee will be required to work more than an eleven (11) hour workday. If the company needs to work employees more than eleven (11) hours, this work will be offered as extra work by seniority to the employees in the classification. No employees will be disciplined for refusal to work past eleven (11) hours.

Pick-up and delivery drivers need to finish their daily run. If they return after 11 hours, the company cannot force them back out or force them to work the dock. Where service requirements exist and there are no other shifts scheduled to work, the company can force junior employees to finish a work assignment in order to meet those service requirements. For example, the company may direct the last shift on any workday to stay until work is completed, provided no other employees are scheduled to report at that time.

Identified Serious Accidents: Under new Article 7 language, the company can no longer force drivers out of classification for minor accidents. The new language will allow drivers to stay on the road for minor accidents.

Trigger for Creating New Full-Time Clerical Jobs Added: The employer will now be required to create new full-time clerical positions if it uses excessive clerical casuals. Specifically, when a casual clerical employee or a combination of casual clerical employees works the same shift for eight (8) continuous hours forty-five (45) days in ninety (90) consecutive calendar days, other than a temporary replacement for an employee on vacation or leave of absence, the company shall create a full-time clerical position.

All bids Will Now Have Full Bump and Roll Monitored by Union Stewards: Article 5 now contains language provided that the bidding process will be a true “bump and roll.”  The steward will coordinate and monitor the process. 

Provisions Added to Allow Transfer for Spouses of Military Persons Who are Relocated: Article 14, Section 4 was added to make it easier for employees whose spouses are full-time active duty military personnel to transfer to other company facilities if the military spouse is relocated.

Change of Operations Language Improved: Additional language was added to Article 40 to expressly state that the change of operations process is not intended to be used to divert work outside the bargaining unit. 
 

Q and A

 

Q: Could a new hire actually make more per hour than an existing employee in progression?

A: No. It is important to remember that employees working under the old progression still receive their general wage increases. It is unlikely that a new hire progression would be higher than the old progression rates plus the applicable general wage increases. If that situation were to occur, however, the tentative agreement provides that the employee working under the old progression would move to the higher rate under the new progression. 

Q: What is the key part of the new subcontracting restrictions?

A: A multi-pronged approach was used to curtail subcontracting and to protect unit work.   Thus it would be misleading to focus only on one aspect of the new language. First, the company will affirmatively and significantly reduce the amount of road contracting it currently does. In the first year alone, we estimate that this will likely amount to the insourcing of over three million (3,000,000) miles back to our road drivers. A formula was devised to reduce the percentage of total miles that the company uses on subcontracting. Over the life of the contract, it is anticipated that the amount of subcontracting currently done will be reduced by 18 to 20 percent because of the required reductions.

Second, the company agreed to hire a minimum of 100 new road drivers over the first three years of the agreement.

Third, any terminal that averages one subcontracting load into or out of that terminal per day over the course of the contract year will be a “red-circled” terminal by number for road drivers. The red circled bargaining unit road drivers in that terminal will be guaranteed eight hours a day and 40 hours a week in their classification as road drivers. If, for some reason, however, a red circled road driver is forced to work out of his/her classification (i.e. on the dock), he/she will be paid $37.61 per hour. That is a $300.85 daily guarantee and $1,504.25 weekly guarantee. This is a tremendous incentive for the company to work its road drivers in their classification. It is not likely that the company will be willing to pay $37.61 per hour for road drivers to either sit at home or work out of classification.

Fourth, if the company fails to meet the targeted reduction in contracting in any year, the new language requires it to add additional red circle road jobs above the 100 new road jobs.

Finally, the language in Article 44(c) now will also affirmatively and expressly provide that the protection of bargaining unit work is a central purpose of the agreement. 

 

Q: Excessive overtime has been an issue, was that addressed in the tentative agreement?

A: Yes. New language was added to Article 18 providing that no full-time Local Cartage or Clerical employee will be required to work more than an eleven (11) hour workday. If the company needs to work employees more than eleven (11) hours, this work will be offered as extra work by seniority to the employees in the classification. No employees will be disciplined for refusal to work past eleven (11) hours. Pick-up and delivery drivers need to finish their daily run. If they return after 11 hours, the company cannot force them back out or force them to work the dock. Where service requirements exist and there are no other shifts scheduled to work, however, the company can force junior employees to finish a work assignment in order to meet those service requirements. For example, the company may direct the last shift on any workday to stay until work is completed, provided no other employees are scheduled to report at that time.

 

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