BNA Daily Labor Report: Teamsters Vote Down Costco Contract Offer

April 2, 2007: Members of the International Brotherhood of Teamsters March 30 voted to reject a contract offer from Costco Wholesale Corp. to cover about 3,300 East Coast employees, according to an IBT official.

Rome Aloise, chairman of the union's Costco contract negotiating committee, said about 89 percent of union members participating in the mail ballot voted against the Costco proposal. About 40 percent of those eligible to vote participated, he said.

The current contract expired March 15 but members are continuing to work under a temporary extension. IBT members at Costco are service clerks, service assistants, and truck drivers.

The union's contract negotiating committee had agreed unanimously against recommending the Costco offer for ratification, Aloise told BNA, based on what the committee regarded to be substandard pension provisions.

"We are requesting that the company meet to attempt to find a resolution to the agreement and come to an offer that can be recommended by the union negotiating committee," Aloise said March 30. He said he expected negotiations to resume in mid-April.

Costco officials did not immediately return calls from BNA seeking comment on the Teamsters vote.

The rejected offer would have covered about 3,300 employees represented by IBT at 16 Costco locations in New York, New Jersey, Maryland, and Virginia.

The rejection does not affect the much larger Teamsters Costco unit on the West Coast, which approved a new three-year contract in early March. The West Coast agreement covers about 10,000 Teamsters-represented employees at 40 Costco locations in California, Aloise said.

Although the wage increases offered to the East Coast unit were not as high as those offered to the West Coast, the main source of dissatisfaction with the rejected offer was the pension provisions, according to the Teamsters leader, who is also secretary-treasurer of IBT Local 853 in San Leandro, Calif.

The wage increase for the West Coast averaged 45 cents per hour in each of the three years of the contract, Aloise said. The hourly average is inclusive of the semi-annual bonuses that are a feature of the Costco compensation system, he said.

"Wages are always important, but you have to remember that Costco has the best wages in the entire retail industry. You'd have to work at Wal-Mart for five years to earn the same as the starting rate at Costco," Aloise said.

IBT wants Costco to scrap the current system of 401(k) savings plans for East Coast Teamsters-represented employees and bring those employees into the Western Conference of Teamsters Pension Trust Fund, which currently provides the pension benefits under the contract covering Costco employees on the West Coast, Aloise said.

The Western Conference Fund would provide East Coast Costco workers with a defined benefit pension plan that is not currently available to them, according to Aloise. Costco is already the ninth largest employer contributor to the Western Conference Fund, he said, based on its longstanding contract for the West Coast employees.

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