Winston & Strawn LLP: Labor News October 2008

In This Issue

Roughly 900 pilots at Atlas Air Inc. and Polar Air Cargo Worldwide, two subsidiaries of Atlas Air Worldwide Holdings, will begin voting November 19 on whether to replace the Air Line Pilots Association, their current bargaining representative, with the International Brotherhood of Teamsters. The National Mediation Board authorized the election after determining that the two subsidiaries constitute a single transportation system for representational purposes under the Railway Labor Act. Currently the two pilot groups have separate collective bargaining agreements.

Smithfield Foods Inc. and the United Food and Commercial Workers International Union settled a lawsuit related to a long-running effort to unionize a Smithfield pork processing plant in Tar Heel, North Carolina. The settlement, which remains under seal, paves the way for the beginning of possible union representation and the end of the union’s campaign against the company. Smithfield and the UFCW reached agreement on an election process in which the workers at the Tar Heel plant can choose whether they want to be represented by the UFCW. Approximately 4,500 employees will be eligible to vote in the representation election, though it is not known when the election may occur.

Members of United Healthcare Workers-West engaged in a one-day strike at nearly a dozen hospitals in Northern California on October 29. According to the union, the strike was in response to months of unfair labor practices and bad-faith negotiation by hospital management. The strikes occurred at five Sutter Health facilities, five hospitals owned by Daughters of Charity Health System, and Alliance Clinic. The hospitals contended that the strike was not about bad faith negotiations, but instead was about the union’s effort to obtain a master contract with Sutter. For the past decade, UHW-W has been working to line up the expiration dates of its contracts and this past summer some 200 hospital and nursing home contracts covering 75,000 workers expired in May, June, or July.

Boeing and the International Association of Machinists and Aerospace Workers ended its strike at plants in Washington, Oregon, and Kansas after 52 days upon reaching a tentative four-year contract providing general wage increases of 15 percent over the term of the agreement and job security measures for the union. The proposed contract, if approved, would last through September 8, 2012.

Members of the International Brotherhood of Teamsters Local 200 in Milwaukee ratified a new five-year contract with Waste Management Inc. The new agreement covers 240 truck drivers, equipment operators and mechanics employed at Waste Management’s Milwaukee-area facility. Under the new labor agreement, Waste Management will withdraw from the Central States multi-employer defined benefit pension program, and replace it with a 401(k) defined contribution plan.

Members of the International Brotherhood of Teamsters ratified a three-year national master agreement with a group of major auto transport companies. Local leaders of the IBT previously endorsed a proposal in June that was rejected by the membership in August. One of the provisions withdrawn from the ratified agreement would have called for lower wage rates for employees hired on or after June 19, 2008. The ratified agreement increases employer contributions to health/ welfare and pension plans by $2.72 per hour over term. The new terms also provide for a wage freeze in the first two years. In the third year, yard, service and office workers will receive an increase of 40 cents an hour. Drivers will receive an additional 1 cent per running mile and 2 cents per loaded mile. The term of the agreement is June 1, when the prior contract expired, through May 31, 2011.

Members of the Communications Workers of America at Qwest Communications International Inc. reached a four-year tentative agreement. The terms provide a 3 percent wage increase in each year, as well as increased health care premiums in the first three years of the agreement. The proposed contract covers 20,000 telecommunications workers in 13 Midwestern and Western states.

Anheuser-Busch Cos. and the Teamsters reached a tentative agreement on a new five year labor contract covering 8,000 brewery and delivery workers throughout the country. The terms protect health and welfare benefits and provide wage increases in each year of the proposed contract, for a total wage increase of 15 percent over term. The current contract expires February 29, 2009.

Members of the United Steelworkers ratified a four-year contract covering 2,800 workers employed at four iron ore mines operated by Cleveland-Cliffs Inc. in Michigan and Minnesota. The contracts are retroactive to September 1 and provide for an immediate hourly wage increase of $1.18 across the board, followed by increases of 4 percent in the second, third, and fourth years, plus a $6,000 signing bonus, increased pension multipliers, and a new profit-sharing plan.

Catholic Healthcare West and Service Employees International Union’s United Healthcare Workers-West reached a tentative agreement providing 14,000 workers at 33 health care facilities in Northern California pay increases of at least 13.75 percent over the contract’s four year term. The contract also calls for a new supplemental unemployment fund that would provide laid-off workers between 60 percent and 80 percent of their base pay for up to six months.

Members of the United Steelworkers approved a four-year contract with ArcelorMittal in a mail-ballot ratification vote. The contract provides covered employees with a $6,000 lump-sum signing bonus as well as wage increases of $1 per hour in the first year followed by 4 percent in each of the remaining years. ArcelorMittal will make contributions of $25 million per quarter for the life of the contract to the voluntary employees’ beneficial association trust fund. The contract, which covers 14,000 workers at 14 plants in the United States, is retroactive to September 1.

American Federation of State, County, and Municipal Employees Local 3299 and the University of California reached a tentative five-year agreement covering 11,500 patient care employees. The tentative agreement would provide a 20 percent pay increase over the five-year term.

Members of United Auto Workers Local 2488 ratified a four-year, two-tier contract with Mitsubishi Motors of North America Inc. The agreement cuts wages across the board while guaranteeing that Mitsubishi’s Normal, Illinois plant will remain open with no involuntary layoffs for the life of the agreement. Effective October 6, the contract reduces the base wage rate for production workers by $1.67 to $24 per hour and for maintenance workers by $1.71 to $28.50 per hour. Any workers recalled from layoff will earn $16.80 per hour upon return, while new production workers and new maintenance workers will earn $14 per hour. The contract also suspends the current $3.08 cost of living allowance.

Northern Grumman and United Steelworkers Local 8888 reached a tentative agreement on a 52 month contract covering 8,500 employees at the Newport News, Virginia shipyard. The terms would increase wages by an average of 16.4 percent over the life of the contract. Additionally, the terms provide for an increase in shift differentials, improved pensions for long-term workers and fixing the percentage paid by the employer and bargaining unit members for health care premiums.

Members of United Steelworkers locals that engage in oil bargaining ratified a set of policy proposals on October 27 outlining the USW’s goals for contract talks and provided strike authorization to union negotiators. The current national oil industry contract will expire February 1, 2009. The national agreements cover six major companies, including Amoco, British Petroleum, Chevron, ConocoPhillips, Exxon Mobil, and Shell Oil, as well as 38 independent refiners, covering more than 30,000 workers in the production, refining, marketing, transportation and pipeline sectors of the oil industry throughout the United States.

Collective bargaining data compiled by BNA through October 20 for all settlements showed that the average first-year wage increase was 3.6 percent, compared with 3.7 percent in the comparable period of 2007. The median first-year increase for settlements reported to date was 3.3 percent, the same as reported in 2007.

Human Resources and Social Development Canada reported that major collective bargaining agreements reached in Canada during August produced average base-rate wage increases of 4.6 percent, up from the 3.3 percent average in July and the 3.0 percent average in June.

Sun Country Airlines implemented a 40 percent across the board wage cut for all of its employees. The 250 member local previously accepted a 10 percent pay reduction in June.

ExpressJet Airlines, which provides regional services operating as Continental Express, reached tentative agreements with the four unions representing about 5,400 of ExpressJet’s 8,000 employees. The agreements include labor cost reductions in pay and benefits that would reduce the carrier’s labor costs by a total of $20 million annually. If ratified, the agreements would commence on November 1.

Frontier Airlines and the Transportation Workers Union reached a tentative new contract that calls for long-term wage and benefit concessions, the union and company announced October 2. The tentative agreement now goes to a ratification vote by local members and for approval by the U.S. Bankruptcy Court for the Southern District of New York, which is overseeing Frontier’s Chapter 11 bankruptcy.

A group of 13 Continental Airlines pilots sued the Air Line Pilots Association International for allegedly discriminating against them because of their age. Until December 2007, federal law required pilots to stop flying at age 60. In December 2007, Congress passed the Fair Treatment for Experienced Pilots Act, which raised the mandatory retirement age to 65. The FTEPA is not retroactive — pilots who lost the right to fly before December 2007 can only be reinstated if they are treated as new hires. The plaintiffs in the suit lost the right to serve as pilots before they turned 60, but they continued flying duties in other capacities, such as serving as flight instructors or first officers. The plaintiffs argue that because they were never made to retire completely, they should be reinstated as pilots with all the seniority they had earned. The pilots allege that ALPA is encouraging Continental not to reinstate pilots over age 60, contrary to Continental’s collective bargaining agreement with the union. Brooks v. Air Line Pilots Association International, No. 1:08-cv-01817 (D.D.C., filed Oct. 23, 2008).

The National Labor Relations Board General Counsel issued a guideline memorandum on the implications of the NLRB’s 2007 decision in St. George Warehouse and how Regional office attorneys should proceed when litigating whether illegally discharged workers conducted a reasonable search for work. Among other directives, the memorandum provides that Regional personnel should be prepared to conduct their own investigations into the availability of jobs and instruct alleged discriminatees to carefully document their job searches.

The Second Circuit affirmed an NLRB decision which held that North American Pipe did not violate the NLRA when it unilaterally issued 100 shares of stock valued at $1,450 to each of its employees, including 56 production and maintenance workers represented by UNITE HERE. The NLRB ruled 2-1 that the IPO stock award was a gift and was not a mandatory subject of bargaining. The Second Circuit found that the NLRB’s decision was supported by substantial evidence and should not be disturbed. UNITE HERE v. NLRB, No. 06-4440-ag.

The Seventh Circuit rejected the claims of laid-off auto workers who claimed that DaimlerChrsyler Corp. violated their re-employment rights under agreements with the United Auto Workers because the workers failed to exhaust their internal appeal rights under the UAW constitution. In affirming the lower court’s opinion, Judge Rovner noted that the auto workers failed to file a timely appeal of a UAW official’s decision not to pursue a grievance over the company’s failure to recall the laid-off employees. Bell v. DaimlerChrysler Corp., No. 07-2239.

The three vacancies on the National Labor Relations Board have not led to an increase in pending cases. The NLRB has issued 328 decisions during fiscal year 2008 which ended September 30 and managed to further reduce its inventory of pending cases. Altogether the NLRB decided 241 unfair labor practice cases and 87 representation cases during the fiscal year.

Under a final rule from the Labor Department’s Office of Labor-Management Standards released September 30, Labor unions with total annual receipts of at least $250,000 will be required to file a Form T-1 to disclose financial information about trusts in which they wield managerial control or financial dominance. Under the rule, which takes effect January 1, 2009, a union’s contributions include those made by employers on behalf of the union or its members pursuant to a collective bargaining agreement.

Labor organizations in Colorado, including the United Food and Commercial Workers Local 7 and Protect Colorado’s Future, a coalition of pro-labor groups and unions, agreed on October 2 to drop four measures from the November ballot in exchange for business leaders pledging to raise $3 million to defeat three initiatives targeting unions, including a proposed right-to-work law.

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The Labor Department filed suit against Chicago-based Local 150 of the International Union of Operating Engineers, seeking a declaratory judgment nullifying a 2007 election of officers in which union and employer funds allegedly were used to promote the incumbent slate of candidates. The suit seeks an order directing Local 150 to hold a new election, supervised by the Labor Department.

Thomas Leonard Sr., former recording secretary for Toledo, Ohio’s Laborers International Union Local 500, pled guilty to embezzling union funds after using his union credit card in 2004 to pay for strip club expenses totaling $4,386.

Kenneth P. Campbell, the former business manager of International Union of Operating Engineers Local 825 in New Jersey pled guilty to embezzling from his union and taking bribes from construction contractors to ensure labor peace and to allow the use of nonunion labor on their job sites. The embezzled funds and cash bribes totaled at least $200,000.

Rickman Jackson, an officer of the Service Employees International Union in Michigan, who has been linked to allegations of financial improprieties at a California local, has reached a settlement agreement with the union. The agreement calls for Jackson to be removed from office and barred from holding union office for three years, make complete financial restitution, and cooperate fully with an internal investigation.

Chad Mowery, the former secretary-treasurer of Brotherhood of Locomotive Engineers Division 282 in Hamilton, Ohio, pled guilty to embezzling $2,537 from the union between October 2003 and December 2003. Mowery was sentenced to serve one year of probation and to pay $357 in restitution by the U.S. District Court for the Southern District of Ohio.

Michael St. John, a former union official for Glass, Molders, Pottery, Plastics and Allied Workers Local 30 in Pevely, Missouri was indicted on embezzlement charges in the Eastern District of Missouri. St. John is charged with embezzling approximately $24,000 in union funds and if convicted, he faces a maximum sentence of five years in prison and a fine of up to $10,000.

The Labor Department’s Office of Labor Management Standards announced that it garnered 130 indictments and 102 convictions during fiscal year 2008, which ended September 30. The bulk of the cases involved embezzlement of union funds and the agency’s enforcement actions resulted in more than $3.2 million being paid in restitution to the unions. According to DOL data, in fiscal year 2007 the agency racked up 100 indictments, 118 convictions, and court-ordered restitution to the unions of $14.8 million.

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The Minnesota Nurses Association announced its withdrawal from the American Nurses Association, citing a difference in vision on how to best represent the interests of nurses. The MNA, consisting of 20,000 members, was the second largest constituent member of the ANA.

Members of a Service Employees International Union local that represented 7,000 health care workers in New Jersey, SEIU 1199 NJ, voted to merge with the 1199 SEIU United Healthcare Workers East.

Wal-Mart Canada Corp. closed its Tire & Lube Express department at its Gatineau, Quebec retail outlet because higher wages mandated in the first collective bargaining agreement for the department’s five employees made it unprofitable to operate. The increased wages resulted from a mediated bargaining agreement with the United Food and Commercial Workers Canada that imposed a 33 percent increase in the employees’ hourly wages.

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