October 17, 2007: The proposed tentative agreement would pull 44,000 full-timers out of the Central States Pension Plan and put them into a new UPS Plan.
That was the company’s number one goal in bargaining.
If this agreement is approved, how will it affect the benefits of UPS Teamsters in the Central States Fund, now and in the future?
The new plan would begin in January 2008. Under the new plan, Normal Retirement Age would be 65, with a six percent reduction for each year under 65 at retirement.
The benefits for unreduced 25-and-out are $2,000 per month; 25 years and age 57, $2,500 per month; 30-and-out, $3,000 per month; 35-and-out, $3,500 per month. These are the same as the pre-2004 Central States benefit levels. We won those benefits in 1997, and they would still be the same 16 years later in 2013 under this plan.
The company agreed to fund the plan only “as required by applicable law.” This means the company is not obligated to meet any specific contribution rate, but only to fund the plan to provide the benefit levels outlined above.
This is what the company is looking for. This provision will enable the company to save billions in reduced pension contributions and to keep a lid on future increases in benefits.
Pluses and Minuses
On the plus side, Teamsters can earn an unreduced 25- and 30-and out pension at any age. For a young retiree with 30 years who wants out now, it’s a plus.
On the minus side, a Teamster who retires at an older age loses a lot. The accrual rate is lower than Central States will be in the coming years. The accrual is the amount you can add to your monthly pension each year you work.
And a Teamster who retires several years from now, when pension accruals in Central States will be at $200 or more per month, will lose big.
There are also unknowns. For example, why is there no reciprocal agreement with other Teamster plans? If you change jobs, you cannot use your pension credits.
UPS management is not stupid. They are putting up $6.1 billion to buy their way out of Central States now because they will save a lot more than that by paying lower contributions, holding down pension increases, and weakening our union.
Teamster members need to think about the future too. Early negotiations were supposed to be about improving our pensions and benefits now and for the future. This proposal offers limited improvements for the short-term at the cost of long-term retirement security and union power.
October 17, 2007: Management and some union officials are selling the UPS Pension Plan in the Central States areas on the basis that it offers unreduced 25- and 30-and-out benefits of $2,000 and $3,000 respectively. That’s true, but also a very short term gain.
Looking into the future, this pension will pay less than Central States will pay, and far less than the Western Conference will pay. These are the two largest Teamster plans and cover most of the USA.
We won $3,000 30-and-out in the 1997 strike. Now UPS is offering the same thing in 2013, 16 years later.
By 2013, other Teamster pensions are going to be well beyond that figure and heading upward.
Look at this chart of pension accruals, the amount you can add to your monthly pension for a year of service.
Notice that by August 2012, the Western Conference Pension Fund, covering all UPSers in the West, will be paying an accrual of $464 for a year for UPSer with 20 years service. Payable at early retirement, in full.
Compare that to the $158.50 the UPS plan would offer! Even Central States will be well ahead of that with an accrual of $196. Central States will reduce that accrual by six percent for each year under age 62, but the UPS Plan would reduce it six percent for each year under age 65!
Do the math. You will see why UPS would pay $6.1 billion ($3.9 billion after a $2.2 billion tax write-off) to stick us in the plan. They will save billions in the long run, at the expense of your pension.
Why get into a plan that’s going to be paying a third rate pension to you, compared to the Teamster plans?
October 17, 2007: By late November, we will know if UPS has succeeded in breaking out of the Teamster Central States Pension Plan.
Big Brown’s pension grab affects hundreds of thousands of Teamsters at UPS and in at other Teamster employers, in the Central States and beyond.
If UPS succeeds, 44,000 UPSers will be pulled out of the Central States and the historic union plan will be down to just 100,000 remaining active Teamsters, and over 200,000 retirees.
UPS’s actions are part of a broad corporate attack on union pension plans. In the Teamsters, UPS is leading this charge, but they are not alone.
The big freight carrier ABF has announced it wants to break out of all Teamster plans. PepsiCo (Pepsi and FritoLay) has been doing it for years.
Increasingly, local unions face corporations that want to get out of Teamster benefit funds
Companies want to set up their own, cheaper plans. Or even worse, they want to just have a 401(k), and no real pension plan at all. The goal is to reduce costs, save money on benefit contributions, and undermine our union’s power.
UPS is willing to pay the $6.1 billion withdrawal liability to Central States that is required by law because they know they will save that many times over if they can bust our pension plan and lower their pension costs.
Vote in November
The split-off of 44,000 UPS Teamsters from Central States will be put to a contract vote in early November—but affected UPS Teamsters are not the only ones getting a ballot.
The Hoffa administration is allowing all 230,000 UPS Teamsters to vote on this deal, including those in other pension plans and part timers, most of whom are in a company plan.
Many more Teamsters directly affected by this vote will not get ballot—namely the 100,000 Teamsters in the Central States fund who work for other employers and will see their pension fund lose over $600 million a year in pension contributions if UPS succeeds in pulling out.
Why Hoffa Gave In
For years, Teamster leaders and members have said No to UPS’s attempts to get control over our pensions. This time Hoffa and chief negotiator Ken Hall gave in—and agreed to many more historic concessions as well. Why?
The answer is that UPS has made a deal. If the tentative UPS contract with this pension split is approved, they will give “card check” organizing rights to our union at UPS Freight. This means that our local unions can sign up a majority of UPS Freight workers at one terminal, and get the right to bargain.
We definitely need to organize UPS Freight. But many Teamsters believe we can achieve this goal without these monumental givebacks.
UPS’s stockholders want an early agreement. This gives our union leverage. Why not use it by telling UPS they get no early settlement unless they give us the right to organize at UPS Freight—while keeping the corporation’s hands off members’ pensions?
October 17, 2007: Rumors are flying about the Pension Protection Act, the pension legislation that starts to take effect on Jan. 1.
Does the UPS contract have to be settled by Jan. 1 to head off benefit cuts and win pension improvements? Is a new round of pension cuts on the way? The answer is NO.
TDU consulted with actuaries, attorneys and fund managers to cut through the rumors and provide members with the facts.
January 1: A Kickoff, Not a Deadline
Some provisions of the Pension Protection Act go into effect on Jan. 1. This date is the kickoff of a long-term timeline for strengthening funds over 10 to 15 years.
It is not a deadline by which the UPS contract needs to be ratified for UPS Teamsters to avoid pension cuts or win pension improvements. It also is not a date on which Teamster pension funds will change their benefits.
What Happens on January 1?
On Jan. 1, 2008, the funding portions of the Pension Protection Act go into effect.
As a result, Teamster pension funds will have to certify their funding levels (Green Zone, Yellow Zone or Red Zone) and inform participants and the government of their status. This process does not occur immediately on Jan. 1, but can take up to 90 days.
On April 1, 2008, fund actuaries have to certify the status of the plan. If a plan is under-funded, then it must notify participants, the union, the company, and the government by May 1, 2008—120 days after Jan. 1.
Yellow Zone and Red Zone
If a pension plan is under-funded, it will be certified by the fund actuary as in the “Yellow Zone” or the “Red Zone.”
The Yellow Zone means the fund is less than 80 percent funded.
The Red Zone means that the fund is seriously under-funded and also has a short-term credit balance deficiency (a technical calculation that indicates a more short-term problem than the funding level). Being under 65 percent funded will not automatically place a pension plan in the Red Zone.
Few, if any, Teamster plans will fall in the Red Zone. But some major Teamster funds, including the Central States Fund and the New England Fund, are expected to be in the Yellow Zone.
December 31, 2008: Deadline for Plans
If a plan is in the Yellow Zone or Red Zone, the plan’s actuary will then come up with at least two options to get the funding level up toward 80 percent over the next ten or 15 years.
These options include increasing employer contributions, and/or decreasing future pension accruals.
For any plan under 80 percent funded, the trustees will adopt a Funding Improvement Plan, based on the options prepared by their actuaries, to present to the union and the company. If the trustees deadlock (company vs. union trustees), the matter goes to expedited arbitration.
By Dec. 1, 2008 a pension plan must announce their improvement plan, unless there is an impasse.
That plan must go into effect by December 2009, two years from now.
The Central States Fund has already adopted its plan. They require contracts signed this year to have pension contributions go up at least eight percent a year. And they cut back benefits, by eliminating unreduced 25- and 30-and-out pension accruals.
Under the law, Teamster pension funds must adjust their funding plans based on any new pension money that is negotiated in contract bargaining. A new contract does not have to be ratified by Jan. 1.
When major contracts are settled, fund actuaries and trustees will adjust their Funding Improvement Plans based on the new money projected in the contract.
The Bottom Line
The goal of the Pension Protection Act is to get multi-employer plans to move their funding levels up to 80 percent over the next ten to fifteen years.
It is a long-term process. No plan needs to be adopted until Dec. 1, 2008, over a year from now, and none needs to be put into effect until a year after that.
Any contract improvements that are won—at any time—will be taken into account. The UPS contract does not need to be settled by Jan. 1 for us to prevent cuts or win pension improvements.
October 17, 2007: On Oct. 5, Local 726 Teamsters working for the City of Chicago ratified their contract overwhelmingly after pressing hard to get what they deserved. The 2,100 members rejected two earlier proposals before the union and city addressed concerns regarding job classifications, layoff procedures, and subcontracting provisions.
The Fighting for the Future Slate, currently running to unseat the incumbent slate in Local 726, led the campaign to win changes in the proposed contract.
Vince Tenuto, candidate for Local 726 Secretary Treasurer explained, “Members knew the issues and what they needed. It helped to have a network in place to spread the word. It shows what a united membership can do when they put it in gear. We didn’t get everything we wanted and ten years is a long time, but we did make a real difference in the outcome.”
Following the earlier contract rejections, Fighting for the Future leaders offered to meet with Local 726 officials to explain what members needed to get the ten-year contract passed. Local 726 officers refused to meet directly, claimed they negotiated the necessary improvements, then argued that nothing had been changed from the initial proposal.
“Now we need to roll this membership concern into a strong turnout for change when it comes to our election in Local 726,” said Duke Clark, candidate for vice president on the Fighting for the Future Slate.
Ballots in the Local 726 election were mailed in mid-October and will be counted in early November.
You can learn more about the movement at www.fightingforthefuture.com
October 17, 2007: Over 10,000 jobs are on the line for the Teamsters who deliver Twinkies, Wonder Bread, and other products for Interstate Bakeries Corporation (IBC).
IBC is seeking new concessions from Teamster drivers. On Oct. 3, a U.S. Bankruptcy Judge extended the deadline for the company and the union to agree on contract changes by 30 days.
Teamster members first made concessions in 2004, when IBC declared Chapter 11 bankruptcy. Now IBC says those concessions are not enough and is demanding more from members—even though the head of the company is pulling down $75,000 a month.
IBC wants to cut wages, and it is asking for all Teamsters to pay $20 a week for healthcare.
The company also wants to implement a “path to market” distribution system that will eliminate many Teamster jobs and change work rules. The company complains that its current distribution system—cobbled together from mergers with other bakeries—is antiquated.
Four Plants Close
The bankruptcy judge has already allowed the company to close down its operations in Southern California, eliminating 800 Teamster jobs.
IBC wrung out new concessions from the other major union, the Bakery, Confectionary, Tobacco Workers and Grain Miller’s International Union on Sept. 28. The BCTGM represents 10,000 IBC bakers.
The Teamsters are promoting the investment company Yucaipa as a potential savior for the company.
Yucaipa and its billionaire head Ron Burkle got concessions from Teamster carhaulers at Allied earlier this year after Burkle took over ownership and control of Allied.
For now, IBC is balking at a Burkle takeover, and the Teamsters are still threatening to strike. Industry experts believe that a strike could doom the company. Even if the company folds, its brands are likely to be sold off and survive—but the effect on Teamster jobs could be disastrous.
The government had asked for a 12-month stay, with the intention of trying for a third time to convince the same court that their regulations are in compliance with the intent of the law.
Employers will likely push the FMCSA to issue a new notice and a new explanation, a new comment period, and rush through the same regulations to once again present to the court. Hopefully they will not take that approach.
The Federal Motor Carrier Safety Administration (FMCSA) should do the right thing and use this 90-day period to direct the industry to transition to the 10-hour limit. It's time for the carriers to make plans to operate under the 10-hour driving time.
September 6, 2007: The National Labor Relations Board ordered the reinstatement of a fired Teamster reform activist.
The board has also ruled that a Local 854 official violently threatened a TDU member and shop steward.
This victory for Teamster reform activists came when the National Labor Relations Board overturned on appeal an earlier ruling by an NLRB administrative law judge.
The case shows that even under the worst of circumstances, TDU members can enforce their legal right to organize for fairness on the job and in the union.
Beating a Campaign of Terror
When school bus drivers and Local 854 members began organizing in 2002 to elect their shop stewards and enforce their contract, Consolidated Bus Transit and Local 854 responded with a wave of retaliation against Teamster reformers.
Drivers were followed. Their tires were slashed and windshields smashed. Drivers were suspended and even fired.
TDU took legal action and won numerous decisions against both Consolidated Bus Transit and Local 854, protecting the rights of working Teamsters to organize on the job and in their union.
On Aug. 31, the National Labor Relations Board ruled in favor of TDU members on two final issues that were in front of the board on appeal.
As a result, driver and TDU leader Juan Carlos Rodriguez won the right to return to his job at Consolidated Bus Transit. Rodriguez had been fired in March 2003 in retaliation for his union reform activity.
The NLRB ordered that Consolidated Bus Transit reinstate Rodriguez and pay him “for any loss of earnings and other benefits he may have suffered as a result of the unlawful action against him, plus interest.”
Rodriguez will return to work with full seniority and tens of thousands of dollars in backpay.
Teamster Official Guilty of Violent Threat
If Juan Carlos Rodriguez was the big winner as the result of the NLRB’s ruling, then Local 854 President Danny Gatto is the big loser.
After shop steward Jona Fleurimont’s windshield was smashed by hammer-wielding thugs, Gatto told Fleurimont, “If I had a beef with you, I wouldn’t break your windshield. I’d break something else.”
The NLRB ruled that Gatto illegally and violently threatened Fleurimont, saying “Gatto’s comment was a thinly-veiled threat of assault. Whatever remained implicit in that comment about the immediate and physical nature of the threat quickly became explicit when Gatto tried to goad Fleurimont into starting a fight.”
Gatto’s persecution of Fleurimont didn’t end there. After Consolidated Bus Transit fired Fleurimont in retaliation for his union activity, Gatto instructed Local 854 legal counsel to oppose a settlement reinstating Fleurimont to work. Gatto failed—and legal action by TDU won Fleurimont his job back with more than $20,000 in backpay.
Local 237 launched an internal probe after Teamsters for a Democratic Union (TDU) brought the improper payments to light.
As part of our preparations of the $150,000 Club, our annual report on Teamster salaries, TDU uncovered that Haynes received a $54,500 "stipend" in 2006 from the Health Insurance Plan of Greater New York (HIP). Further investigation has revealed that Haynes received more than $106,000 in payments from HIP and Emblem Health since 2005—not including payments he received in 2007.
Following an investigation by outside counsel hired by Local 237, Haynes will return the payments. The final amount is still being determined.
"Did Local 237 officials really need to pay for an outside investigation to realize that it's wrong for our President to take $100,000 in payoffs from a health insurance company? That just shows how out of touch they are with the members," said Bernadette Bradley, a Local 237 member and leader of the reform group, Members for Change. "Thankfully, we've got TDU to be a watchdog for us."
It remains to be seen what, if any, action our International Union will take on the matter. This is the second time that TDU has caught Haynes taking improper payments. In 2003, Haynes was forced to pay back thousands of dollars after he took total salaries in 2001 in excess of the General President's salary—a violation of the Teamster Constitution.
"Making a millionaire pay back the money he was caught taking is not much of a deterrent," TDU Organizer David Levin told The Chief, a weekly newspaper for New York public employees. "What happens to him is going to send a message to other Teamster officials. Will Hoffa's message be, 'You will be held accountable,' or 'Go ahead, take your shot at the cookie jar because nothing really bad happens if you get caught'?"
Click here for The Chief's report "Ex-Local 237 Head Got Improper Fees"
Freight ‘08: Raise the Wages
I’m 58 years old now and I’m back to working casual. Our dock rate is just $16 an hour—that’s unreal.
I hope the new contract will bring better wages and stop giving back to these companies.
The CEOs are making an outrageous amount of money. We need to get higher wages, increase the pension, and protect our retirees.
Local 397, Yellow
Ashamed of Hahs
Don Hahs has shamed our union. I smelled a rat a few years ago when he said that Michael Ward, President and CEO of CSX Transportation, was a very close and personal friend.
When our union sells out to CSX like it has over the last several years you have to wonder. You have to wonder when the BLET endorses the most recent Single System Agreement with CSX: Our medical co-pays have gone up, and we’re having to pay a big portion for our medical premiums. Before we did not have to pay any of the premium.
We keep giving and getting nothing in return for our services to the company. Who are our top leaders working for? We definitely know who Don Hahs is for—himself.
Angry and Ashamed
in the Midwest
Can a New Truck Organize?
At our last union meeting, our local voted to spend over $100,000 on a new truck.
We’ve got a big new challenge in the Southern California grocery industry: Tesco is coming in with plans to open a nonunion warehouse and nonunion stores.
Paul Kenny, our secretary treasurer, says the new truck will help us organize new members. But we already have one truck, and it hasn’t helped us organize. A truck doesn’t talk to workers or sign cards. We need to spend this money on more organizers, not toys.
Phil Richards, Steward
Local 630, Unified Grocers
Hands Off Central States
I can’t believe our leaders would even consider letting UPS or anyone out of the Central States pension fund.
We should be getting more contracts into the fund—not less.
UPS is not looking out for our best interests. They’re only looking at their bottom line.
Local 24, Retired