Ladies and Gentlemen We have a contract award

Interest Arbitration Panel Issues Award: Four and a Half-Year Agreement Calls for Wage Increases and Industrial Engineered Study of Time Standards

In an interest arbitration award dated July 3, 2012, the NRLCA and USPS finally have a new National Agreement, which is effective from November 21, 2010 through May 20, 2015.  The Award and the NRLCA’s partial dissent are available for download here.

The path to a new Agreement began in September 2010 with our first of many negotiations sessions, the exchange of numerous collective bargaining proposals, and high hopes of reaching a voluntary agreement, especially after the USPS and APWU reached an agreement in May 2011. Unfortunately, after several members of Congress publically criticized the USPS and APWU contract, we reached an impasse in negotiations.  Instead of reaching a voluntary settlement, we proceeded to interest arbitration before an arbitration board led by neutral Chairman Jack Clarke, USPS party arbitrator Robert A. Dufek, and NRLCA party arbitrator Joey C. Johnson. The interest arbitration hearing took place during 26 hearing days spread over five months and resulted in hundreds of exhibits and more than 4,000 pages of transcript testimony.  

Not surprisingly, the Postal Service’s financial straits and Congress’ failure to resolve those issues made it a particularly difficult environment for interest arbitration.  The Postal Service cited its financial predicament to support its case for extreme concessions from the rural carrier craft – concessions that went well beyond what it agreed to with APWU.  It viewed the case as a bankruptcy proceeding – something squarely rejected in the Award – and demanded extraordinary cuts – from wages and benefits to standards and EMA.

In response and in support of its own proposals, the NRLCA presented compelling evidence and testimony from dozens of witnesses, including economists, health benefits and transportation experts, industrial engineers, as well as Rural Carrier officers, members and former USPS managers.  Through this effort, the Association successfully beat back the extraordinarily aggressive proposals put forward by the Postal Service at the beginning of the case.  Indeed, had the Postal Service’s original proposals been adopted it would have – among other things – frozen wages, eliminated COLA and no-layoff protection, drastically cut annual and sick leave benefits, imposed a new self-funded health care plan, and reduced EMA below the IRS per-mile rate. The sought-after changes to standards, alone, would have cost the craft billions of dollars.

Ultimately, financial realities dictated the final economic package, which is similar to that obtained by the APWU in its voluntary agreement. There are many other significant provisions of the new Agreement, but several aspects of the Award deserve special comment. From very early on, it was clear that, beyond the individual proposals, the evaluated system itself was on trial.  We believe that the evaluated system compared quite favorably to the other pay systems in the Postal Service and the Award reflects that.  Significantly, Chairman Clarke also made it quite clear that the evaluated system is an incentive system.  Still, it has been the case for too long that the USPS has been determined to “cherry pick” standards that it believes are too loose, despite knowing that other standards are surely too tight. The extent to which it tried to do so again during this proceeding was unprecedented, and the changes made by the Arbitration Board majority to prepaid parcels and DPS letters on LLV routes are regrettable – although much less than what the Postal Service proposed.  Those changes are the primary reason for NRLCA party arbitrator Joey Johnson’s separate opinion and dissent, which you are encouraged to read.  Arbitration Board member Johnson strenuously objects to the two standards changes – compared to the one walking speed standard awarded to the NRLCA – in light of the relative quality of the evidence submitted in support of these and other standards proposals and the admonition of our experts to review the whole system given the lack of industrial engineering – not focus on individual pieces.  Indeed, as Arbitration Board member Johnson points out, tinkering with certain individual standards will further distort the evaluated system at least until the standards are finally engineered. Arbitration Board member Johnson also strongly dissents from the imposition of a new pay chart for RCA’s hired between November 21, 2010 and today.

Fortunately, the standards changes are made subject to perhaps the most important and historic part of this award: the MOU providing for an engineering of the time standards in the evaluated system. By this MOU, for the first time in the history of the evaluated system, the parties will engage industrial engineers to study and to establish accurate, objective, and scientifically appropriate time standards that capture the full duties of rural carriers. We expect that this process will end the counterproductive pattern of cherry-picking in future collective bargaining and interest arbitration cases, and set the evaluated system on a solid long-term footing.

As is to be expected when the parties are unable to reach a voluntary settlement, especially in a challenging economic environment, this National Agreement certainly is not everything we would have hoped for.  Obviously, we would have preferred to achieve greater increases in wages and EMA, for instance, and no changes – or at least equitable changes – to standards (pending a review of the system).  But given the extraordinary concessions it sought on every issue we litigated, it is important to remember that the Postal Service did not get everything it asked for either.

The end result is one that preserves the evaluated system and recognizes its inherent value to both the Postal Service and rural carriers.  It acknowledges that the Postal Service’s financial problems must be solved by Congress, not by taking money out of the pockets of the men and women who work hard every day to make it the federal government’s most trusted agency.

A summary of the highlights of the interest arbitration award will be posted here shortly.



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