Giant, Safeway Sign New Pacts With UFCW Locals 27, 400

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Members of United Food & Commercial Workers (UFCW) Locals 400 (Washington, DC area) and 27 (Baltimore/Eastern Shore) voted overwhelmingly on December 17 to ratify new, three-year collective bargaining agreements with Giant/Landover and Safeway. The new contracts impact nearly 25,000 clerks at 304 Giant and Safeway stores in the Baltimore-Washington area. In a separate vote held on January 7, approximately 300 meatcutters at Giant also approved a new three year deal (the Giant meatcutters’ deal was negotiated separately because parent company Ahold USA recently opened a meat-processing plant in Central Pennsylvania, which will result in a reduction of meatcutters at its stores). The new agreements will run from November 1, 2013 to October 29, 2016.

The ratification vote culminates challenging, grueling and sometimes contentious bargaining between labor and management as the parties worked through two contract extensions after the previous 18 month pact expired on October 31.

While the most tenured clerks and meatcutters will have to pay more out of their pockets for health care coverage, Locals 400 and 27 were able to keep their part-time members in the existing multi-employer health plans for the next three years. That was a major bargaining issue as the chains sought to have their clerks and meatcutters join the new state and federal exchanges that were created as part of the Affordable Care Act (ACA).

In addition to preserving many healthcare benefits, most clerks and meatcutters will receive a wage increase of 35 cents, 35 cents and 30 cents per hour for each of the next three years (service clerks, Starbucks clerks, personal shoppers and fuel attendants will receive wage gains of 25 cents, 25 cents and 20 cents per hour over the three year period).

All told, over the course of the three-year contract, the two local labor unions estimated its members will receive an average of $3.35/hour in additional compensation, including wage increases as well as health, pension and other benefits.

However, several sources told us that the cost of the new deal for the chains over the life of the contract will be the same whether or not the exchanges were opened up to the associates, who now will be paying higher out-of-pocket costs.

From the outset of the bargaining, healthcare issues were the key negotiating focus. During the past 18 months, food retailers nationally have been reducing the number of hours for many of their employees to fewer than 30 hours per week, making those associates part-timers according to the ACA. And as part-time associates, employers would not face the higher costs that would be linked to full-time status (30 or more hours).

Labor unions were in a dilemma because the ACA essentially did not protect any Taft-Hartley multi-employer health care plans, thus exposing those plans to higher premium and benefits costs when compared to what the new exchanges might offer. If union members elected to join the exchanges, that would further dilute current multi-employer health plans, and over time, potentially make them obsolete. So, at least for this three year deal, all Giant and Safeway clerks and meatcutters will remain part of the existing plan.

As noted earlier, maintaining that status has come at a cost, especially for the most experienced clerks and meatcutters who will no longer have their medical insurance covered at 100 percent (it will shift to an 80-20 percent plan). Many other associates will see their major medical co-pays shift to a 70-30 percent ratio (vs. 80-20 percent); a $75 emergency co-pay will be added (it will be waived if the person is admitted); current deductibles will be increased from $300 to $500; and the out-of-pocket maximum will be increased from $4,000 to $5,000. Additionally, weekly co-pays will now be added (ranging from $5-15 per week depending on family profile) and a spousal surcharge (if coverage is requested) will be added for the first time.

New hires (those who join Giant or Safeway after January 1, 2014) will now have to wait 13 months to become eligible for health care benefits (reduced from the previous 18 month eligibility period because of the ACA), and if they maintain continuous active service for those two years, they will also receive a $200 bonus.