October 17, 2007: In addition to wage and benefit improvements, UPS Teamsters are looking to the new contract to provide new language to protect Teamster members and their job security and to improve our quality-of-life on the job.

Here is a summary of some key changes in the proposed agreement

The complete text of the national language as well as many supplements is available online at www.makeupsdeliver.org.

TDU urges all UPS Teamsters to review the language carefully and get answers to your questions before you vote.

Excessive Overtime & 9.5 Grievances

The tentative agreement contains new language in Article 37 that increases the penalty UPS must pay for continually working a driver more than 9.5 hours from double time to triple time pay. That’s an improvement where the language is enforced.

But Article 37 also contains new restrictions that will disqualify some drivers from even filing 9.5 grievances and will make these grievances harder to win.

The proposed contract would establish two five-month periods “beginning on January 1 and June 1 of each year.”

To be eligible to even file a grievance during a five-month period, a driver has to sign an “opt-in” form.

Drivers who opt-out of the 9.5 language “will have no right to file a grievance alleging excessive overtime” for five months.

Another untested loophole has been added that gives the 9.5 Committee “the authority to adopt guidelines…to balance the Employer’s needs to protect the integrity of its operations with an employee’s legitimate need to avoid excessive overtime.”  

So new rules limiting 9.5 grievances could be coming down the pike.

Relief of Overtime /8-Hour Requests

Article 37 of the proposed contract establishes two-hour penalty pay at straight time when the company violates members’ contractual right to Relief of Overtime on a particular day.

In exchange, members must now submit their Relief of Overtime request five days in advance, instead of the day before, a big step backward.

The proposed language also includes loopholes that will make enforcement nearly impossible in some cases.

For example, the contracts states that UPS owes no penalty pay if the driver could “reasonably” have completed the dispatch within 8 hours.

UPS also doesn’t have to pay any penalty unless the driver works “in excess of 8.5 hours”—and even then the company doesn’t owe a dime if the excessive overtime is the “result of events beyond the Employer’s control.”

Subcontracting / Diverting Work to UPS Freight

Many UPS Teamsters are counting on the new contract to deliver tough new restrictions on all subcontracting—including diverting our work to UPS Freight.

The proposed deal contains no new language on subcontracting, except a Memorandum of Understanding at the end of the contract that says UPS will not subcontract feeder movements to outside trucking contractors “solely because it is less expensive.”

New Technology

UPS is introducing new technology that will enable management to monitor drivers location and functions like never before.  

To deal with this threat, our union proposed new language under Article 6 that would prohibit the company from using information obtained solely from the DIAD, GPS or any monitoring technology as evidence that an employee violated the contract or any Company policy.  

This strong language appears nowhere in the tentative deal. Instead, Article 6 states only that employees cannot be discharged “on a first offense” based on GPS technology “unless he/she engages in dishonesty.”

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?

Benefit Levels

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.

The Future

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.

Make UPS Deliver has posted the entire text of the tentative national deal online. Click here to read more and to download the agreement.

UPS and some Teamster officials are spreading rumors about new pension legislation and our contract. Get the bulletin at MakeUPSDeliver.org.

Click here to read the full story at MakeUPSDeliver.org.

October 8, 2007: Industry publications are saying UPS management got the agreement they wanted in 1997. Read more at MakeUPSDeliver.org.

October 5, 2007: From the BNA Daily Labor Report: Officers and members of a local Teamsters union must arbitrate with United Parcel Service of America Inc. (UPS) on the issue of whether UPS must contribute on union members' behalf to two UPS-sponsored and administered health and welfare plans at rates set out in bargaining agreements, the U.S. District Court for the District of New Jersey ruled Oct. 2 in an unpublished decision (Palumbo v. United Parcel Service of America Inc., D.N.J., No. 06-CV-5331 (DMC), unpublished 10/2/07).

Unlike most full-time Teamsters-represented employees at UPS who receive health and welfare benefits under jointly-trusteed plans, full-time employees of UPS who are represented by Teamsters Local 177 are provided health and welfare benefits from two plans that are funded, administered, and controlled solely by UPS. These two UPS-sponsored plans are funded through a voluntary employees' beneficiary association, according to the court.

Victor Palumbo, as the President and Secretary Treasury of Teamsters Local 177, along with seven Local 177 members filed a lawsuit against UPS in November 2006 contending that UPS had breached its fiduciary duties under the Employee Retirement Income Security Act by failing to make contributions to the UPS plans at rates specified in UPS's master labor agreement with the national Teamsters union. According to the court, the plaintiffs based their claim on a provision in the master agreement that dealt with UPS's obligation to make contributions to jointly-trusteed benefit plans.

Judge Dennis M. Cavanaugh granted UPS's motion to stay the plaintiffs' lawsuit for their failure to first initiate arbitration, as required under the master labor agreement. According to the court, although the plaintiffs framed their arguments as ERISA claims, their claims could not be resolved under ERISA but instead required resolution under Section 301 of the Labor Management Relations Act.

"Although the Complaint does not expressly reference the LMRA, Plaintiffs' claims--whether for breach of fiduciary duty or violation of ERISA's prohibited transaction provisions--turn on a threshold contractual determination, namely whether UPS owes contributions at a specified rate under the CBA. The LMRA requires that this threshold determination be resolved pursuant to the grievance and arbitration procedures contained in the CBA," the court said.

The plaintiffs were represented by Robert A. Fagella of Zazzali, Fagella, Nowak, Kleinbaum & Friedman, Newark, N.J. Jody S. Riger of Proskauer Rose, Newark, N.J., represented UPS.

The full text of the opinion is at https://d3n8a8pro7vhmx.cloudfront.net/teamstersforademocraticunion/pages/6158/attachments/original/1434125644/06cv5331.pdf?1434125644.