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National Postal Mail Handlers Union A Division of LIUNA (AFL-CIO)

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Jul 5

Arbitration Award Issued to Resolve Bargaining Dispute Between Rural Letter Carriers and Postal Service

Arbitration Award Issued to Resolve Bargaining Dispute Between Rural Letter Carriers and Postal Service

(July 5, 2012)  The three-member arbitration panel established to determine the terms of the 2010 National Agreement between the National Rural Letter Carriers Association and the U.S. Postal Service issued its long-awaited decision on July 3, 2012.  The panel was headed by neutral Arbitrator Jack Clarke.

While many of the details of the July 3, 2012 decision are unique to the NRLCA’s evaluated route system, the panel’s award also mirrored many of the wage and benefit provisions that were established in the negotiated 2010 National Agreement between the APWU and the Postal Service.  In particular, the award called for a two-year freeze on general wage increases, a one-year freeze and a one-year deferral on cost-of-living adjustments or COLAs, and a continuation in the one percent per year increases in employee contributions toward health insurance premiums.  The award also included three general wage increases totaling 3.5% and the eventual reinstitution of COLA payments based on the historical index.

Arbitrator Clarke’s decision squarely rejected the Postal Service’s argument that “this interest arbitration is ‘akin to a restructuring in Bankruptcy.’”  To the contrary, the Arbitrator noted, “[o]nly Congress can address the USPS’s overall mission, associated business plan and regulatory framework.  This Board of Arbitration can only address one, albeit critically important area -- the wages and benefits of Rural Letter Carriers.” 

On the issue of wages and benefits, the Board of Arbitration had much to say, and therefore warrants more extensive quotation.  The Board started by noting that it “was impressed by the most recent collective bargaining agreement between the USPS and the American Postal Workers Union (“APWU”) that became effective November 21, 2010 and runs through May 20, 2015 (hereinafter “2010 APWU-USPS Agreement”).  That agreement . . . contains a two year wage freeze, no COLA in year one, a deferral of COLA until 2013, a revised COLA base to July of 2011 and modest general wage increases starting in FY 2013 through FY 2015.  In addition, the agreement included labor cost changes that should reduce unit labor costs over the course of the agreement.  These changes include a two tier wage rate for new hires substantially below the current scale and an increase in non-career employees with lower wage and benefit packages.  The Board of Arbitration is well aware of the labor cost savings that will likely flow to the USPS from this collective bargaining agreement and has referred to it in rendering the Award set out below.”

The arbitration award continued with the following language:  “The USPS has argued in this proceeding that the Board of Arbitration should not be bound by the pattern established in the 2010 APWU-USPS Agreement and should not be concerned with internal equity.  While the Board of Arbitration is not bound to adopt the wage and benefit pattern set out in that agreement, it is appropriate that it do so in this particular case.  The USPS, principally through the testimony of its CFO, argued that the USPS’s financial condition has deteriorated since the 2010 APWU-USPS Agreement was entered into and now must make even more drastic reductions in Rural Delivery labor costs in order to stave off insolvency.  The Chairperson of the Board of Arbitration was not persuaded by this testimony.  Wholly apart from whether the USPS’s finances have deteriorated since May of 2011 (and the evidence on that point was less than persuasive), the Board of Arbitration, as noted above, is not a bankruptcy court and lacks the power of such a court to virtually completely restructure the USPS’s business.  Rather, the jurisdiction of this Board of Arbitration is limited to resolution of the issues presented to it by the USPS and the NRLCA.  In addition, the evidence presented during this hearing convinced at least the Chairperson that the major problem faced by the USPS is not the inadequacy of concessions in the 2010 APWU-USPS Agreement but rather the failure of Congress to address the overall mission and financing of the Service in a time of deteriorating mail volumes and reduced public demand for hardcopy postal services.  The Chairperson is convinced that no restructuring of a single labor contract can address all of the USPS’s financial challenges created, in large part, by the recession and the Postal Accountability and Enhancement Act with its retiree health benefits prefunding obligations.”

More details about the NRLCA-USPS award, and its potential impact on NPMHU arbitration proceedings, will be shared in future communications.





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