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.
Retirees may have fared best under the new agreement. Those former clerks and meatcutters over 65 years of age will also have to contribute out of pocket as there is no longer a 100 percent deductible provision. And for those under 65, there will be no changes from the previous plan for the first two years of the pact.
However, in November 2015, many retirees under age 65 will receive a $350 monthly stipend from the healthcare fund. In the event a retiree receiving the payment dies prior to becoming Medicare eligible, the surviving spouse will receive monthly cash payment of $200 until he or she becomes Medicare eligible. If the ACA is repealed, the $350 per month amount will increase to $600 and the $200 will increase to $350. Upon reaching age 65 or otherwise being eligible for Medicare, a retiree or spouse receiving such payments shall be given a one-time option to elect medical coverage supplemental to Medicare under the current plan. If, at any time, a Medicare eligible retiree opts not to take fund retiree coverage, the retiree is ineligible for fund retiree coverage from that point forward.
The employers will also contribute $180,000 a year to the fund by each January 1 (the first year’s payment due by January 31) of this agreement for the purpose of hiring staff and/or a consultant or similar entity to provide guidance to employees in deciding how to obtain the appropriate health coverage.
As part of complying with the ACA, all associates will see annual limits (caps) on essential health benefits be eliminated; all pre-existing condition exclusions on non-excepted benefits will also be eliminated; coverage for dependent children will be extended to 26 years of age; coverage for all clinical trials will be included; all required ACA fees will be paid by the fund; waiting periods will be established for plans allowing employers to avoid employer mandate penalties, but will not exceed those in effect in 2013; coverage will meet affordability and minimum value requirements to satisfy the employer mandate.
“This is one of the best retail food contracts in the country,” said Local 400 president Mark P. Federici. “Unlike many other agreements, our members will keep their current health care benefits and won’t be forced onto the inferior plans offered through the ACA’s health care exchanges. Giant and Safeway will pay all benefits in full through the life of the contract and our members’ pensions will be properly funded. In addition, the collective bargaining agreement increases our members’ standard of living, and it’s one of the few contracts in the country providing all of its economic benefits in the form of hourly wage increases rather than a one-time bonus.”
Prior to the new contact being ratified, Federici stated: “Like virtually all negotiations taking place around the country today, the number one obstacle to reaching agreement is the impact of the Affordable Care Act on multi-employer Taft-Hartley funds, like the one that provides health coverage to our members at Giant and Safeway. Between this and the pervasiveness of corporate greed, virtually all bargaining in our industry across the country has resulted in lengthy delays and extensions. I am deeply grateful for our members’ patience and solidarity.
They should rest assured that we will work tenaciously to secure a new collective bargaining agreement that provides them with the security, respect and dignity they have more than earned.”
“We are very pleased our associates voted to approve new labor contracts that will bring stability and security to them and their families for the next three years,” said Giant spokesman Jamie Miller. “Throughout negotiations, our goal was to reach fair and reasonable contracts that respect our legacy and honor our associates’ contributions, while also recognizing our competitive realities.”
New Safeway eastern division president Brian Baer said, “The contract continues to provide our employees with excellent wages and benefits while also allowing Safeway to remain competitive in the local retail food market.”