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Labor Relations Advisor, February 2015

March 6, 2015

Auto Workers to Receive Significant Profit-Sharing Payout for 2014

Workers represented by the United Auto Workers (UAW) will receive profit-sharing payouts of about $6,900 at Ford Motor Co, $9,000 at General Motors Co. and up to $2,750 at Fiat Chrysler Automobiles US LLC for 2014. The payouts are a result of previously negotiated collective bargaining agreements between the parties.

Compared to 2013, GM’s bonus this year represents a $1,500 increase, Fiat’s bonus represents a $250 increase and Ford’s bonus represents a $1,900 decrease. Regarding the significant GM payout, UAW President Dennis Williams said in a statement, “GM has demonstrated that the company can profit, shareholders can have value and our members can be rewarded for their hard work.”

GM’s plan is unique from the others as some of the bonus is tied to performance and not profit. This year for example, $2,000 of the $9,000 total bonus is tied to performance.

According a Bloomberg report, about 50,000 workers at Ford, 48,400 at GM and 35,700 at Fiat will receive pay-out checks for 2014.

In the auto-industry, recalls can significantly affect the maker’s annual earnings and therefore eat in to the profit-sharing payout for employees. As the automakers are set to begin the next round of bargaining this summer, Kristina Adamski, Ford’s Cooperate Communications Manager, told Bloomberg that a new profit-sharing formula that does not penalize workers for recalls is “something that potentially we might discuss” at the table.

Ford Hiring 1,550 New Workers; 300 to 500 Workers Will Transition From Entry-Level Wages to $28.50 Per Hour

On February 4, Ford announced it plans to add 1,550 jobs to its facilities in Missouri and Michigan in order to meet growing demand for the 2015 F-150 truck.

An “entry-level” agreement with the United Automotive Workers (UAW), has allowed Ford to hire entry-level employees at lower pay rates then their veteran counterparts who make $28.50 per hour. The company committed to hiring 12,000 such workers by 2015 and exceeded that promise by about 3,000 jobs.

The planned additional 1,550 employees will put Ford over its allowable “cap” of entry-level workers. Therefore 300 to 500 entry-level workers will transition and become the first group of “new traditional” employees. These employees will see their hourly wages increase 48 percent from $19.28 per hour to $28.50 per hour. Based on a 40-hour work week, it will cost Ford about $9.6 million per year to transition 500 employees.

The current two-tier wage system initially agreed to in 2007 allows workers doing the same jobs to receive different pay. While the system was certainly met with some objection from labor, it has allowed the auto industry to hire thousands of workers in recent years. UAW Vice President Jimmy Settles, said this new hiring surge “represents a major milestone for employees hired under the entry-level agreement, as many will now begin to convert to ‘new traditional’ wage status, as negotiated in the 2011 collective bargaining agreement.”

Joe Hinrichs, Ford president, The Americas, said the creation of the 1,550 jobs is “further proof that customers recognize the all-new F-150 as the toughest, smartest, most capable F-150 ever. We sell every truck we can build, and we plan to build more.”

Bargaining between Ford and UAW is scheduled to begin later this year as the current contract expires on September 15, 2015. Wages and the two-tier system will undoubtedly be a primary focus.

6,000 UPS Workers in Illinois, Iowa and Indiana Contract by 4-to-1 Margin.

Employees represented by the International Brotherhood of Teamsters Local 710 agreed to a new five year contract with UPS on February 19, 2015. According to the IBT announcement, the agreement is retroactive to 2013 and will expire on July 31, 2018.

The agreement includes wage increases, health care benefits, improved vacation pay and improved job opportunities.

 John T. Coli, Trustee of Local 710 and President of Teamsters Joint Council 25 called the agreement a “strong” contract “protecting dedicated UPS workers in Chicago and across Illinois, Iowa and Indiana.”

The first tentative agreement reached in April 2014 was rejected by the membership. This ratified agreement is the result of what the union called a “marathon negotiation session between the Local 710 negotiating committee and UPS management on December 5, 2014.”

The agreement includes significant hourly wage increases for each of the covered classifications. Specifically, hourly rates will increase as follows:


Prior Rate

New Rate

Percent Increase

Tractor Trailer Driver–Single

$      28.635

$     33.105


Tractor Trailer Driver–Doubles

$      29.085

$     33.555


Tractor Trailer Driver Double Forty/Triples

$      29.435

$     33.905


Parcel Delivery Pick up Drivers

$      28.430

$     32.900



$      27.760

$     32.230


All other inside employees

$      26.710

$     31.180



The agreement also switches employees from UPS’s self-insured health plan to TeamCare, a Teamster health plan under the national master contract between IBT and UPS. The Taft-Hartley plan is controlled by an elected board of trustees composed of an equal number of union and employer representatives. The agreement requires UPS to make weekly contributions to the plan. There is no pay roll deduction from employees for the duration of the contract.

In addition to the health care plan change, the new agreement provides 550 job opportunities for part-time workers to move into full-time positions and also increases weekly vacation pay from 45 times the employee’s hourly rate to 50 times the employee’s hourly rate.

For additional details, see the full agreement on the union’s website.

Teamsters Request Court to End Federal Oversight of Union

On February 17, 2015, Chief Judge Loretta A. Preska of the U.S. District Court for the Southern District of New York approved an agreement to phase out government oversight of the International Brotherhood of Teamsters (IBT). The agreement is between federal prosecutors and the union.

Last June, the IBT sent a letter to Preska requesting to eliminate governmental oversight of the union claiming, “The enforcement of the Consent Decree can no longer be justified.”

The Decree was established in 1989 in response to complaints of “mob-controlled union leadership, violence against union dissidents and defrauding of union members.”  The IBT claimed the union has undergone a “striking transformation” since that time and the three charges in the original complaint have been eradicated. The IBT added, “Any present-day misconduct is limited to sporadic transgressions like those found in many large organizations.”

Despite requests from attorney Barbara Harvey who represents the Teamsters for a Democratic Union (TDU) to make various revisions to the agreement, Judge Preska approved the deal. Preska wrote, “A thorough review of the Final Agreement and Order reveals that the settlement must be approved. There is no doubt here that the decree is procedurally proper, that its terms are clear, that it reflects a resolution of the claims at issue, and that it is untainted by collusion or corruption.”  

The TDU is a group known for criticizing Teamster leadership, particularly the union’s president, James P. Hoffa.

“This is an historic agreement that returns our great union to our 1.4 million Teamster members,” said Hoffa.

AFL-CIO Membership Decreased in 2014 to 9.3 Million; BLS Shows Little Change from 2013 to 2014

According to an AFL-CIO report for the AFL-CIO executive council meeting in February 2015, total membership of its 56 member unions has decreased by about 43,000. During the year, the association averaged 9,323,990 members.

The AFL-CIO member unions showing the largest losses in 2014 were the American Federation of State, County and municipal Employees (18,766), the United Steelworkers (11,090), and UNITE HERE (11,016).

Fourteen unions showed net gains last year. The largest gains were seen at the United Auto Workers (17,861), the American Federation of Teachers (8,414) and National Nurses United (5,232).

Earlier this year, the Bureau of Labor Statistics (BLS) released its own annual union membership numbers. Highlights from that report include the following:

  • Union membership rate was 11.1 percent in 2014, down 0.2 percentage point from 2013.
  • Public-sector workers had a union membership rate (35.7 percent), more than five times higher than that of private-sector workers (6.6 percent).
  • Workers in education, training, and library occupations and in protective service occupations had the highest unionization rate, at 35.3 percent for each occupation group. (See table 3.)
  • Men had a higher union membership rate (11.7 percent) than women (10.5 percent) in 2014.
  • Black workers were more likely to be union members than were white, Asian, or Hispanic workers.
  • New York continued to have the highest union membership rate (24.6 percent), and North Carolina again had the lowest rate (1.9 percent).

In written response to the BLS report, AFL-CIO President Richard Trumka said, “In 2014, workers made great strides and confronted great challenges, including major organizing wins at American Airlines, multiple state legislative victories on the minimum wage and innovative campaigns conducted by carwash workers, among others.”