UFCW Locals 400, 27 Ink New 18-Month Labor Agreements With Giant, Safeway

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There is labor peace in the Baltimore-Washington market for the region’s two largest chains – Giant/Landover and Safeway – but the contractual timeline for peace could be historically short.

On April 3, members of United Food and Commercial Workers Local 400 (Washington) and 27 (Baltimore, Eastern Shore) approved new contracts with Giant and Safeway affecting approximately 30,000 retail clerks and meatcutters from those two supermarket chains.

However, unlike the typical four year deals that have been struck between the parties, the pacts are for only18 months.

By itself the shortened agreement is big news. And the reason for such a narrow window: uncertainties about the costs and direction of the Affordable Health Care Act (“Obamacare”), signed into law by President Barack Obama in 2010 and currently being challenged before the United States Supreme Court.

Several sources told us that since many of the changes of “Obamacare” won’t go into effect until 2014, neither side felt comfortable making long-term health cost projections at this juncture. So, by October 2013 both retailers and both UFCW Locals will have to try to hammer out new agreements.

Bargaining officially began on January 11 and was preceded by aggressive UFCW informational programs focusing on improved compensation for their members. Local 400, in particular, utilized a multi-media campaign to show the discrepancies in earnings between Safeway (and its CEO Steve Burd) as well as AholdUSA’s success versus the annual income of a typical UFCW member.

So the stage had been set for bargaining to be contentious, and by all accounts the negotiations were indeed challenging. However, on March 29, two days before expiration, a tentative agreement was reached. And by Tuesday, April 3, an overwhelming majority of members ratified the deal.

From a wage perspective, effective April 1, courtesy clerks will receive a $0.20 per hour raise; service clerks will see a $0.30 per hour increase; and all others will gain $0.45 an hour. These across-the-board increases apply to all associates at or above the top rate in those classifications. Since the contract has been significantly shortened, there will be no bonuses and those raises will remain in place for the duration of the pact.

In health care, clerks and meatcutters received expanded bereavement benefits that now cover domestic partners, stepchildren and stepparents, while also gaining broader dental care for Tier 2 associates.

The big changes occurred in the FELRA (Food Employers Labor Relations Association) pension plan, which was begun by the UFCW Locals and Giant, Safeway and other grocery retailers in the 1970s. Like many other pension funds, the FELRA plan is significantly underfunded (about $1.2 billion underwater).

In a December 2011 interview, UFCW Local 400 president Tom McNutt made strengthening the pension plans a priority during negotiations.

And fresh ground was broken this time around with the creation of a new plan (Mid-Atlantic UFCW & Participating Employers Fund). While FELRA will remain in place to handle legacy costs, it is hoped that the new fund will over time alleviate the growing liability created by the market withdrawal of former FELRA members Food Fair, Acme, Grand Union, Food-
A- Rama and most recently A&P last June. Those withdrawals placed greater financial burden on Giant, Safeway and both UFCW Locals.

We asked one of our union sources if Giant and Safeway were willing to consider a plan comparable to Kroger’s recent creative initiative in which theCincinnatibased chain placed $650 million into a new fund to more quickly decrease underfunded liabilities. Our union source said that both chains recognized the severity of the state of its pension funds, but were unwilling to go that far.

In another fund dealing with severance pay and benefits (believed to be underfunded by approximately $65 million), Giant and Safeway agreed to a maintenance of benefits on health premiums and severance while also adding $6 million contribution to the fund this July followed by another $2 million contribution in July 2013

So, there indeed is peace in the valley for now. A short peace for sure, as October 31, 2013 doesn’t seem that far away at all.