Winston & Strawn LLP: Labor News December 2008

In This Issue

On December 12, employees of Smithfield Packing Company's meatpacking facility in Tar Heel, North Carolina, voted to unionize with the United Food and Commercial Workers. The vote was 2,041 for the UFCW and 1,879 for no union. Approximately 3,920 of the 4,524 employees eligible to vote participated in the election. UFCW has been working to organize this workforce since 1994.

Pilots at Atlas Air Holdings' subsidiaries voted to replace their current collective bargaining representative, the Air Line Pilots Association, with the International Brotherhood of Teamsters. Of those who voted, over 67 percent voted for the Teamsters. Throughout its organizing campaign, the IBT argued that ALPA lacked the "focus, strength and cargo experience of the Teamsters."

The Quebec Labor Relation Board certified UFCW Local 486 to represent Wal-Mart Canada employees at its Hull, Quebec store. Wal-Mart plans to appeal the Board's decision and will base their appeal on several grounds, including that the certification process did not give the store's employees an opportunity to participate in a secret ballot vote. The UFCW announced that they plan to commence contract negotiations with Wal-Mart as soon as possible, but no bargaining dates have yet been scheduled.

On December 10, 2008, the Illinois' Attorney General announced that cash commitments from Bank of America and JP Morgan Chase helped achieve a resolution to a five day sit-in at the Republic Windows factory that was staged by the United Electrical Workers union. The sit-in began after Republic issued notice on December 3 that the business was closing on December 5 because it lost its line of credit. Workers began their sit-in December 5, announcing they would not leave until Republic and its bankers arranged for the employees to receive vacation and severance payments. The agreement reached on December 10 provides employees with back wages, vacation pay, and compensation for an additional 60 days.

On December 3, 2008, the United Auto Workers announced that it is willing to renegotiate parts of its contract with the Big Three automakers in a bid to help the push for the federal bailout package. UAW President Ron Gettelfinger said that the union will allow the Big Three to delay $30 billion in payments to their Voluntary Employee Beneficiary Association (VEBA). The union will also suspend the job bank program, which provides laid-off autoworkers with up to 95 percent of their wages. Commentators noted that if the UAW did not begin making concessions, GM, Ford, and Chrysler may very well go bankrupt and a bankruptcy trustee could simply rip up the existing contracts.

Southwest Airlines and the Aircraft Mechanics Fraternal Association reached agreement on a four-year contract that will increase wages for about 1,500 mechanics in exchange for work rule changes and enhanced management rights, but the new terms also limit Southwest's right to outsourcing certain maintenance.

Members of United Steelworkers Local 11-0001 voted to accept a concessionary agreement with Stillwater Mining Co. at one of its plants after the company closed down the mine. After ratification of the new agreement, the mine hired back half of the bargaining unit workers.

Members of the Metal Trades Council at General Dynamic's Electric Boat division approved a new 65-month contract covering 2,400 employees and providing a 19 percent wage increase over term. Employees will also receive a $1,500 bonus and a 3.5 percent increase in hourly wages as part of the new agreement. Beginning in January 2010, the company will offer a new health plan that covers preventative care but requires employees to pay for other health costs up to a maximum of $4,000 per family.

The average first-year wage increase for all settlements negotiated in 2008, was 3.6 percent, the same increase as 2007. The average increase for manufacturing agreements was 2.6 percent compared with 3.1 percent in 2007. Construction settlements provided an average increase of 5.3 percent, compared with 5.1 percent in 2007.

Leaders of Teamsters locals representing over 40,000 YRC Worldwide Inc. employees unanimously endorsed a proposed modification of the national contract the union calls "an economic relief plan." If approved, the agreement would cut gross wages and mileage rates by 10 percent and eliminate the current cost-of-living adjustment increase. In exchange for these concessions, the Teamster represented employees would receive a 15 percent ownership stake in YRC Worldwide.

Members of Service Employees International Union Healthcare Illinois & Indiana employed at two health care agencies, Help at Home and Community Care Services, ratified a four-year agreement that provides wage increases to nearly 5,000 employees at Help at Home and 2,000 at Community Care Services. Additionally, the contract with Help at Home includes a neutrality agreement permitting SEIU to organize the company's other facilities located in several other states.

According to a study published by Human Resources and Social Development Canada, major collective agreements reached in Canada during October 2008 resulted in average base rate wage increases of 3.6 percent, down from the 4.0 percent average in September and 4.6 percent average in August.

Members of UAW Local 1243 voted to ratify a three-year extension to their collective bargaining agreement with Alcoa Howmet in Whitehall, Michigan covering 1,430 employees. The agreement was reached in an effort to bring back workers laid off earlier in the year, and it adds wage and benefit provisions which become effective after June 2010.

Members of United Steelworkers Local 752L employed at Cooper Tire and Rubber Company plant in Texarkana, Ark., ratified a three-year concessionary collective bargaining agreement intended to make the plant in more competitive as the company studies which of four plants it will close. Concessions include freezing wage rates for most employees and reducing the base rate for some employee groups.

SEIU and Wackenhut Corp. reached a two-year neutrality and card-check authorization agreement. The agreement allows certain employees of the security guard company to choose union representation by a private process without opposition by company managers. The agreement also specifies that workers are not required to use a card-check procedure and instead can choose union representation through a secret ballot election. As part of the agreement, both parties agreed to withdraw pending litigation against each other.

Frontier Airlines reached a tentative agreement with the union that represents its 700 pilots. The agreement includes long-term wage and benefits concessions and was made in an effort to allow Frontier to survive in the near term and eventually flourish in the long term. No details about the contract have yet been disclosed.

The Washington Education Association will pay $975,000 to settle a years-long dispute over its use of nonmembers' agency fees for campaign finance expenses. WEA will divide payment of the settlement between reimbursing nonmembers and paying a civil judgment to the state. This settlement occurred after the Supreme Court upheld the constitutionality of the requirement that unions obtain nonmembers' consent before using their fees for campaign finance purposes. Washington State Pub. Disclosure Comm'n v. Washington Educ. Ass'n.

Delta Air Lines and Northwest Airlines agreed upon a plan to merge the seniority lists of their pilots by integrating the lists on the basis of comparable status and type of plane flown. A three-person arbitration panel approved the plan finding that while prior arbitration boards have used a date-of-hire method for merging lists, there is a seniority mismatch in combining the two lists that would "dramatically overload" Northwest Airlines pilots in premium categories because most Northwest pilots are older than Delta pilots. In re Seniority Integration Arbitration Between the Pilots of Northwest Airlines Inc. the Pilots of Delta Air lines Inc.

The U.S. Court of Appeals for the Seventh Circuit held that an Illinois law guaranteeing rest and meal periods to hotel room attendants and authorizing them to seek damages in court is preempted by federal labor law. According to the Seventh Circuit, a statute that "applies to only one occupation, in one industry, in one county" could not be called a law of general application. The court, therefore, invalidated the law noting that legislation targeting specific occupations results in decreased collective bargaining and increased lobbying. 520 S. Mich. Ave. Assocs. v. Shannon.

The Fourth Circuit dismissed a claim alleging that Freightliner LLC and the UAW violated Section 302 of the LMRA by entering into a neutrality/card-check agreement that, among other things, gave union representatives access to plant workers during an organizing campaign. According to the court, Freightliner's willingness to sign the neutrality/card-check agreement in exchange for certain bargaining concessions did not involve the payment or delivery of a "thing for value" and therefore did not violate the Act. Adcock v. Freightliner LLC, No. 06-2287.

An NLRB administrative law judge found that Starbucks violated the rights of employees under the NLRA by prohibiting employees at four stores from wearing union buttons, using bulletin boards, and discussing issues concerning unions and working conditions. Starbucks Coffee Co.

All of the nearly 300 decisions handed down this year by the NLRB are in danger of being nullified as legal challenges mount against the ability of the Board to decide cases with only two members. At issue is Section 3(b) of the NLRA, which stipulates that the Board "is authorized to delegate to any group of three or more members any or all of the powers which it may itself exercise." Currently 10 lawsuits pending in various federal appeals courts allege that the NLRB must have a properly constituted group of three members in order to issue decisions or orders.

On December 19, 2008 President Bush approved a plan to provide General Motors and Chrysler with a combined $17.4 billion in loans from the Treasury Department's bailout fund. This loan is contingent upon both companies proving they are "on a path to profitability" by March 31, 2009, reducing their debt by two-thirds, and gaining certain concessions from the UAW. Those concessions include accepting half of the funding for the VEBA fund in stock, eliminating the jobs bank program for idled workers, and making work rules and wages "competitive" with foreign-owned rivals Toyota, Nissan, and Honda.

On December 1, 2008, President Bush issued an executive order removing, on national security grounds, collective bargaining rights from employees at several government agencies including the Energy, Homeland Security, Justice, Transportation, and Treasury departments. According to the order, the agencies and subdivisions are now exempt from the federal government's labor-management relations program. Union representatives at the National Treasury Employees Union and the American Federation of Government Employees said that they expect President-elect Obama to reverse this executive order and others that similarly restrict federal employees' rights to bargain within his first week in office.

President-elect Obama has chosen California congresswoman Hilda Solis to serve as his administration's labor secretary. Solis, a representative from Southern California, is a favorite of the AFL-CIO and has spent much of her eight years in Congress focusing on environmental and labor issues. Solis co-sponsored the Employee Free Choice Act which would, among other things, allow employees to form unions through card checks, thus eliminating secret ballot elections. She also supported the Paycheck Fairness Act and serves on the board of American Rights at Work, a labor policy and advocacy organization that receives funding from the AFL-CIO. Obama and Solis will face many important labor issues when they arrive in Washington including whether or not to push the Employee Free Choice Act, which stalled in the Senate in 2008, and whether or not to focus on health care reform and minimum wage increases during the current financial crisis.

The SEIU permanently banned the president of United Long Term Care Workers Local 6434, Tyrone Freeman, from holding union office or membership and ordered him to make a restitution of more than $1.1 million after the SEIU learned Freeman misused union funds. After conducting an investigation, the SEIU accused Freeman of seven charges of financial improprieties, including making improper payments to a company owned by his wife, misusing nonprofit funds to benefit himself and his family, and violating the Union's procedural and democratic safeguards. According to the SEIU, a lifetime membership ban is the most severe penalty the union can impose.

The Department of Labor filed suit against United Long Term Care Workers Local 6434 seeking to void the results of the Locals' March 12 election of officers. According to the DOL, Local 6434 violated Title IV of the Labor-Management Reporting and Disclosure Act by failing to provide a reasonable opportunity for the nomination of candidates. The suit seeks a declaratory judgment nullifying the election of all officers.

Amongst the litany of criminal charges currently facing Illinois Governor Rod Blagojevich is an allegation that he concocted a scheme in which he would appoint an unnamed person to the U.S. Senate seat vacated by President-elect Obama in exchange for a job as national director of Change to Win labor federation. According to the information disclosed by U.S. Attorney Patrick Fitzgerald, Blagojevich discussed the scheme with a senior SEIU representative. The SEIU has denied any wrongdoing on the part of any SEIU official in connection with the scandal.

Ron Carey, the first general president of the IBT, died December 11 in New York City at age 72. As Teamsters president, Carey sold the union's private jets and limousines, cut his own salary by 22 percent, eliminated most of the multiple salaries paid to Teamsters officials, and removed dozens of leaders of local unions where corruption had taken root.

Save Our Secret Ballot, a new business-backed group, announced a national campaign to urge states to adopt constitutional amendments requiring secret ballots for union representation elections. Save our Secret Ballot is part of a larger initiative by several business groups, including the U.S. Chamber of Commerce, which have been gearing up for the approaching congressional battle over several pieces of legislation. A primary focus of these organizations is the Employee Free Choice Act that would allow unions to be recognized based on authorization cards signed by employees instead of obtaining recognition through secret ballot elections.

If you have questions about items that appeared in this bulletin, or would like to learn more about any of these topics, please contact William Miossi at (202) 282-5708 or (312) 558-6109, or one of the other Labor & Employment Relations partners listed here:

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