B   M   W   E
Tentative Agreement Out For Ratification
By the time you read this, if you are a member covered by the national agreement, you should have received a packet containing a ballot and information about the tentative national agreement reached on March 8, 2001.

An International Association meeting was held in Kansas City, Missouri on March 27 to go over in detail the provisions of the tentative agreement and to make the necessary preparations to send it out to BMWE members for ratification. Packets containing the ballots were then mailed on April 27.

Returned votes will be counted on May 30, 2001, in Washington, DC by an independent firm and the results will be published in the June/July issue of the BMWE JOURNAL.

"Our ultimate goal is to ensure that our membership is as fully informed as possible when they cast their votes in the ratification process," said BMWE President Mac A. Fleming. To achieve that end, an information packet was sent to each member, information was posted on the BMWE website, and system officers attended as many local meetings as possible to review the agreement and answer any questions.

The tentative agreement reflects the political realities the BMWE faced once George W. Bush was selected president. The BMWE was faced with very difficult options — none of them good for BMWE members — once the Supreme Court chose Bush as president.

The BMWE’s bargaining process is directly and significantly impacted by federal law and the executive branch of the federal government. An executive branch agency, the National Mediation Board, has jurisdiction over bargaining and mediation and so long as it does not release the parties from mediation, neither side can resort to self-help.

Even when the NMB releases the parties, the president has the right to halt self-help by appointing a presidential emergency board. A PEB then conducts "fact finding" hearings and issues recommendations to resolve the dispute. Although the findings are not legally binding, and either side can reject the recommendations, Congress generally intervenes directly after one or the other side resorts to self-help to impose either the recommendations of the PEB or a final and binding arbitration process.

BMWE reached a bargaining impasse with the railroads in June 2000 and asked the NMB to release the parties. At that time the railroads made harmful proposals — to contract out production work; cut-away-from-home expenses; weaken the Feb. 7, 1965 Job Protection Agreement; weaken seniority in bidding and assignment rules, just to name a few.

The BMWE extended bargaining committee felt that if the NMB had released us from mediation in June, President Clinton would have appointed a board which would have evaluated the situation fairly. The NMB, however, simply functioned as an agent of the railroads and refused the BMWE’s request.

Again, in December 2000, the BMWE pushed for a release with the help of the AFL-CIO. Again, the NMB refused.

In January, George W. Bush became President of the United States. The last national PEB appointed by a Republican President Bush was PEB No. 219 in 1991. That Board’s recommendations were legislated by Congress. The result devastated work rules, brought managed care, the first-ever health care cost-sharing, and gave below inflation wage increases.

PEB 219 was a watershed for BMWE. Although all of Rail Labor was injured by PEB 219, BMWE members, in addition to the paltry increases, suffered immensely more serious injuries because of the nature of their work and their work rules.

"We learned at that time that because we have so much more at stake than wages and health care," said President Fleming, "we must be extremely aware of the political environment in which we function. What is a cold to most of the other crafts is double pneumonia to BMWE."

Within two weeks of taking office, the new President Bush and the Congressional Republicans (joined by certain renegade Democrats) began attacking labor on all fronts.

Within two months, they repealed ergonomic regulations that target repetitive motion injuries and reversed a whole series of Clinton Executive Orders that were sympathetic to labor. Worse, Bush appointed an airline PEB to block the Northwest Airlines mechanics’ exercise of self-help.

The BMWE’s worst fears were confirmed. This Bush administration is acting in an aggressive and systematic way to aid Big Business at the expense of employees.

Given these facts of life, it was clear to the bargaining committee that any presidential emergency board appointed by Bush would not lend us a sympathetic ear. And even a fair PEB would have a hard time avoiding the fact the railroads are having problems with their revenues and stock prices (even if most of this can be blamed on their ill-advised mergers of the last several years). And once more, it is undeniable that health and welfare premium costs have exploded, making greater cost-sharing virtually inevitable.

Given the political and economic realities the BMWE faced, the bargaining committee negotiated the best agreement it could, rather than risk an all but certain worse result from a Bush PEB. But the bargaining committee is providing BMWE members with the final decision. We are telling our members what risks are likely if they reject the agreement but with the firm belief that if our members want to take the risks associated of going to a Bush PEB, they should be given the opportunity to choose that avenue by rejecting this agreement. On the other hand, as union representatives taking the political risks of making such an agreement, we feel our members should not simply be given no other option but calamity if something less than that can be agreed to.

Following, in brief, is what was achieved in the tentative agreement:

Article I Wages:

a) COLA-based General Wage Increases On January 1, 2001, there is a 3.5% general wage increase (GWI) (minus 27 cents an hour already received) rolled into the existing rates of pay. Then, there will be general wage increases on July 1 of this year, and annually on July 1, 2002, July 1, 2003, and July 1, 2004. Those general wage increases will be in the form of a cost of living adjustment that rolls into the basic rates of pay. So, if the consumer price index goes up by 3%, the result will be a proportional cents-per hour-increase.

The last National Agreement had a series of lump sums and specific percentage increases. Obviously, lump sums do not roll into the basic rates of pay, so general wage increases are usually preferable.

With a cost of living adjustment arrangement, it is possible that if inflation remains very low, the yield could be less than if there were general wage increases and lump sums. However, if the rate of inflation should average above percentage increases and the value of the lump sums, then BMWE members do better. The cost of living index may rise more sharply in the next period because of energy price spikes.

"We cannot predict the future. But we know this for certain, analysis by one of our economists has shown us that, if we had cost of living adjustments instead of lump sums and GWI’s since 1978 our members woul be averaging $2.23 per hour more than they are earning. So, we opted for COLA-based increases," said President Fleming.

b) Health and Welfare Offsets: Ever since PEB No. 219, there has been health care cost-sharing that took the form of deferrals from the so-called Harris COLA formula. While the Harris COLA formula starts with a full COLA, it was subject to limitations and caps.

The maximum CPI increase that could be taken into account in any given adjustment period was 3%, and only half of the increase in the CPI in any measurement period could be taken into consideration. With those limitations, the Harris COLA could yield no more than one-half of the increase of the cost-of-living. In addition, the Harris COLA formula provided that the cents per hour be produced by dividing one-half of the increase in the payment rate for health and welfare benefits, by the average straight-time equivalent hours up to a maximum of one-half of the cost of living allowance.

Put simply, up to one-half of the increase could be diverted to offset increases in health care premiums. The Harris-type COLA will be in place starting July 1, 2005.

Cost of living GWIs will also be subject to health care offsets. The cost sharing begins with the second general wage increase; it will reduce the COLA adjustment by 35% of the increase in the health insurance premiums. The offsets rise to 40% of the increase in health insurance premiums at the third general increase (7/1/2002); 45% in 2003, and 50% in 2004.

In no case can more than one-half of the increase resulting from COLA increases be diverted into cost-sharing. But unlike the Harris COLA, the GWI COLA is not subject to the 3% per year cap, nor does it take only half of the change in the consumer price index into account. Instead it is a full COLA; but subject to the health care cost offsets.

Why did the BMWE agree to this? We know that our employee contributions to health and welfare premiums are among the lowest in industry. Considering the big recent spike in health care premiums, the carriers would have a strong case before a PEB or an interest arbitration. No one will pretend that these offsets are a good outcome. However, given the overall risk to BMWE membership of a Bush PEB, common sense dictated that we swallow the health and welfare cost sharing package as part of an overall deal.

The BMWE did, however, continue to raise the issue of our members being treated differently from other craft employees in the event the carriers negotiated something different on health and welfare with the other crafts. On April 6, Robert F. Allen, the carriers’ bargaining representative, advised the BMWE in writing:

Therefore, we assure you that in the event we negotiate with the other rail labor organizations during this round a health and welfare package and/or health and welfare offsets that differ from those contained in our Tentative agreement, BMWE will have the option to elect such alternative arrangement.

Article II Eliminates Current Harris-COLA; Reinstates Harris COLA in 2005.

Article III Optional Alternative Compensation: This program does not compel the BMWE to accept any alternative compensation scheme, such as stock options. Any arrangement in lieu of general wage increases requires voluntary agreement of labor and management, and is not something that can be sent to final and binding arbitration.

Article IV Supplemental Sickness: Section 1 increases benefits to "restore the same ratio of benefits to rates of pay as existed on December 31, 1999." There is a second adjustment on December 31, 2004, (Section 2). So, we have obtained supplemental sickness increases that track those that we’ve obtained in the past.

In addition, Section 3 fixes the problem of when an employee is released by his doctor to return to work and he has not been released by the carrier’s medical officer under this settlement. Now, he will continue to draw sickness benefits until he is found to be medically qualified.

Article V Health and Welfare Plan: Some significant improvements in the health and welfare plan were obtained. These include an improved routine physical examination benefit; childhood immunization; improvements to child speech therapy; "PKU" tests; improved pregnancy benefits; improved allergy shot benefits; hearing aid benefits of $600 annually; plan life insurance increased from $10,000 to $20,000 with accidental death and disability increased from $8,000 to $16,000; and, vision care goes from "select" to the better "standard" plan.

However, prescription drug co-pays have been revised upward. Generic drugs will now have a $5 co-pay, and brand name drugs will have a $10 co-pay. Under the mail-order prescription drug program, generic drugs will have a $10 co-pay, and brand name drugs will have a $15 co-pay.

These are relatively modest increases in prescription drug co-payments. Significantly, the BMWE avoided the sort of "formulary" restrictions that steeply increase the prices of non-generic drugs. We did not want the cost-containment scheme to decide what drugs were appropriate. That ought to be up to one’s physician and we believe that we have preserved that principle with this outcome.

Article VI - Expenses Away from Home: The maximum reimbursement for actual reasonable lodging expense under the Award of Arbitration Board No. 298 increases from $26.75 to $29 per day. Meal allowances increase to $7.50, $15.50 and $23 per day. Actual lodging and meal maximums increase from $48 to $52 per day. These increases are effective July 1, 2002.

There is a second adjustment on January 1, 2005, taking the actual reasonable lodging expense benefits to $32 per day, meal allowances to $8, $17 and $25 respectively, and actual lodging and meal maximums top out at $57 per day. On non-298 roads, allowances will not be less than those provided for 298 roads.

In bargaining, the carriers complained that our away-from-home expenses were simply too high, so the bargaining committee could only conclude that they would be under attack at a PEB. In addition, we know that, while we played catch-up in the 1996 National Agreement, there had been a long erosion of the value of our expense allowance. This settlement keeps up our progress in travel allowance improvements, instead of a freeze or a reduction in the benefits.

Article VII Travel Allowance: This article simply provides that where an employee does not reside on the employing carrier’s system, he’ll be deemed to travel from the home station located nearest to his actual residence.

Article VIII General Provisions: This is standard moratorium language which withdraws the parties Section 6 Notices and permits service of new notices on November 1, 2004 with changes not to become effective before January 1, 2005.

There are also several side letters:

Side Letter 1 simply commits the carriers to work with us to improve information sharing concerning employment information pertaining to BMWE members.

Side Letter 2 sets forth what would happen if there was a decrease in health care premiums. We wanted this because if there were to be decreases in the premiums (for example, if some new cost-savings program actually reduced plan expenses), then we wanted to make sure that we would get the money diverted to cost-sharing back in wages, pro rata.

Side Letter 3 says there could be health care plan premium increases resulting solely from our craft leaving hospital associations on account of the increased employee cost-sharing of this agreement. If that is the case, then the initial cost of absorbing those employees into the plan would not be taken into account as premium increases that we would have to share.

Side Letter 4 has each of the parties acknowledging that, while we are agreeable to do a "bare bones" agreement to put this behind us, that says nothing about the importance of other issues we had on the table.

For example, the BMWE sought national pay rates. There are properties where BMWE rates of pay need to be normalized upward, especially where rate disparities resulted from railroad mergers. We didn’t want to let the carriers tell a future arbitration or PEB that we abandoned this issue, because that wasn’t the case.

While certain rates may be protected by New York Dock labor protective provisions at present, we have not abandoned the rate equalization issue. Instead, we had to defer it to the next round of negotiations. In addition, we have agreed to create and support a BMWE committee to deal with the problem of rate disparities that exist on the nation’s railroads. This will be a BMWE-wide effort to deal with a serious problem.

Unlike the PEB 219 imposed agreement which has 19 Articles, or the 1996 National Agreement with 18 Articles, there are no Articles beyond the eight. Instead, this is a "bare bones" agreement. While the BMWE did not make the same sort of progress it did in the (PEB No. 229) 1996 National Agreement, this agreement should be evaluated by what is not in it.

The carriers do not have the right to "exit" maintenance of way production work. We have not given up our updates of the February 7, 1965 Job Protection Agreement nor the 1996 Conrail sub improvements that have been so important in providing an income flow to hundreds (perhaps thousands) of our members during the recent furloughs. The carriers did not obtain the right to act unilaterally concerning starting times, the work week, nor were they able to cut travel allowances or away-from-home expenses. This agreement keeps all these important rules out of harm’s way.

The BMWE extended bargaining committee met before each bargaining session with the carriers as well as at other times during the bargaining round. They had the benefit of the best ideas of Grand Lodge officers, system officers, and appointees. A variety of tactical and strategic alternatives were considered. Finally, when we were unable to obtain a release and a Clinton Board, we came to a collective (if reluctant) conclusion. We would negotiate to get the best possible deal we could under the circumstances, and put it out to our members for ratification.

"We believe that we have done the right thing," said President Fleming. "While the wage/health and welfare cost-sharing component is tough to take, we walk away with the gains of PEB No. 229 virtually untouched. Given the political and economic realities we face, the bargaining committee is recommending that this agreement be ratified."

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