PEB Recommendations Released on Nov 5

On Saturday, November 5, 2011, President Obama released the recommendations of the Presidential Emergency Board (PEB) he created last month to investigate and make recommendations for resolving the contract dispute between the major freight railroads and their labor organizations.

The PEB recommendations are applicable to all rail labor organizations except the United Transportation Union. UTU previously reached and ratified a national agreement in September 2011.

The release of the recommendations started the final 30-day cooling off period during which the parties will negotiate. While the PEB’s recommendations are not binding, final settlements typically track the recommendations, unless the parties mutually agree to changes.

The carriers, though disappointed in some aspects of the PEB recommendations, are willing to settle by accepting the recommendations.

PEB Recommendations

The principal recommendations contained in the PEB’s decision are as follows:

General wage increases totaling 18.6% over six years;
A phase-in of cost-saving health plan design changes that parallel the plan design changes in the UTU agreement; and
A one time 1% lump sum bonus.

The PEB further recommends that all other union proposals be withdrawn or referred to consensual bargaining. Failure to reach agreement in bargaining would not preclude a national settlement, nor would it authorize a work stoppage.

The PEB used the UTU national agreement as the reference point for its recommendations. While the UTU agreement included wage increases totaling 17% over six years of the agreement, it also provided three additional compensation items:

$5 conductor certification pay;
A $3,000 lump sum payment to conductors still working at lower entry-level wage rates; and
A shorter pay progression for new entrant conductors.

The PEB recommendations took into account the value of the additional compensation items in the UTU agreement that are not strictly applicable to other employee groups and recommended:

Adjusting the general wage increase,
Adding a one time lump sum payment, and
Delaying implementation of some health care changes.

Steve Crable, CSX’s VP-labor relations, offers the following comparison of the PEB recommendations against the UTU agreement:

General wage increase of 4.3% in 2012 (compared to 3% for UTU), to take into account conductor certification pay;
A 3.8% increase in 2014 (compared to 3.5% for UTU), to take into account the elimination of the 5th step of new entrant rates;
A 1% lump sum payment (compared to $3,000 for UTU), to take into account that the UTU bonus was paid to fewer than half of the UTU group; and;
A phased implementation of healthcare changes beginning in July 2012 (compared to a January 2012 full implementation for UTU), to take into account different demographics and a number of other factors.

Note: Prior to the new UTU agreement, the monthly employee contribution for employees represented by UTU was scheduled to increase to $227 per month in July 2011 and increase again in 2012. The UTU agreement achieved a roll back of this monthly contribution to $200 per month. Thus, the delayed implementation of health care changes may be seen as offsetting the gains made by the UTU in reducing the monthly contribution to $200.

Negotiations begin this week

The National Carriers Conference Committee (NCCC) is scheduled to meet with the various labor organizations during the weeks of November 7 and November 14 to negotiate a settlement based on the PEB recommendations or a mutually acceptable alternative.

“We are hopeful that a relatively prompt agreement may be possible,” Crable says.