5 things you should know about a potential rail strike

Date: Friday, November 25, 2022
Source: FreightWaves

A rail strike — or a lockout by the railroads — could occur in early December if unions and railroads can’t reach a labor agreement that satisfies everyone. Congress has the ability to stop a strike. So why is it so hard for everyone to come to a resolution? Here are five things to consider:

How we got where we are

A new labor agreement for each of the 12 unions has been in the works since January 2020, but negotiations between the unions and the railroads failed to progress. In July, President Joe Biden appointed three independent experts to serve on the Presidential Emergency Board (PEB), a panel that is formed per federal law if negotiations are at an impasse.

The PEB conducted hearings and received testimony from stakeholders this summer about how the unions and railroads could resolve the impasse. PEB then issued its recommendations, which were meant to serve as a jumping-off point for a new contract.

Since September, members of eight unions have voted in favor of ratifying their labor agreements. But four have not: the Brotherhood of Maintenance of Way-Employes Division (BMWED), the Brotherhood of Railroad Signalmen (BRS), the International Brotherhood of Boilermakers (IBB) and the Transportation Division of the International Association of Sheet Metal, Air, Rail, and Transportation Workers (SMART-TD). SMART-TD is divided into different segments, with the yardmasters voting to ratify the agreement while the remaining members did not.

Cooling-off periods will continue through December

By rejecting ratification of the agreements, the four unions go back to the bargaining table with the freight railroads. During this time, union members and the railroads are not allowed to engage in any strikes or work lockouts until a certain number of days after the rejection of a labor agreement has occurred, per the Railway Labor Act.

This time when neither party can take action is known as a “cooling-off period” or a time when parties maintain the status quo. The cooling-off period for the four unions ends on Dec. 8; right after midnight on Dec. 9, the unions or the railroads may take corrective action.

Getting to an agreement everyone likes is challenging

Sick leave appears to be one of the outstanding issues at contention. Union members have argued that the sick leave policy should allow employees to respond more immediately to individual or family needs; unionized machinists say their sick leave benefits don’t kick in until seven days have passed. Restrictive attendance policies also discourage workers from using vacation leave in lieu of sick leave, members have argued.

The freight railroads say union members do have leave benefits, and they note that the PEB didn’t include an extensive response to sick leave in its list of recommendations. Furthermore, the current system was set up by the unions and the railroads years ago. Changing it would require negotiations, but those negotiations should occur under a different forum than through contract talks.

“Any suggestion that rail workers cannot take time off when sick is easily disproven. Rail employees can and do take time off for sickness and have comprehensive paid sickness benefits starting, depending upon craft, after as few as four days of absence and lasting up to 52 weeks,” says the website of the National Carriers Conference Committee, the group representing the freight railroads at the bargaining table.

“The structure of these benefits is a function of decades of bargaining where unions have repeatedly agreed that short-term absences would be unpaid in favor of higher compensation for days worked and more generous sickness benefits for longer absences,” NCCC said.

“The PEB’s recommendations remain the framework for an agreement. Now is not the time to introduce new demands that rekindle the prospect of a railroad strike. The carriers have therefore advised the unions that the latest proposal will not be accepted and that they must accept agreements based on the PEB-recommended framework,” NCCC said.

The railroads have also argued that the tentative agreement as it stood had the potential to improve scheduling predictability because of a provision in the agreement that requires the parties to work on a railroad-by-railroad basis to address work schedules and job assignments, according to the Association of American Railroads. The tentative agreement also included an arbitration backstop, the freight rail trade group said.

Provisions within the labor agreements call for the largest wage increases in nearly five decades and maintain employees’ platinum-level health care coverage, according to NCCC.

Neither party really wants to get to the point where Congress must intervene

There are lingering doubts among observers about whether a deal can be reached because BMWED has been at the bargaining table for weeks, and that union and the railroads have yet to reach an agreement.

That perceived lack of progress is why shippers are worried. Over 300 trade groups sent a joint letter pressing congressional leaders to prevent a strike. Chemicals shippers say a monthlong strike could pull out $160 billion from the U.S. economy, while agricultural shippers say a potential strike would have disastrous timing since low water levels on the Mississippi River are hampering barge transport and shippers need the rail option.

While some rank-and-file members have expressed their desire to strike, observers and stakeholders have said leaders of both the unions and the railroads don’t wish for the situation to get to the point where Congress must intervene because of the uncertainties of which path Congress might take (see below). If that does happen, there is a perception the railroads might have the upper hand, particularly if the issue drags past the lame duck session.

“This can all be settled through negotiations and without a strike. A settlement would be in the best interests of the workers, the railroads, shippers and the American people,” SMART-TD President Jeremy Ferguson said in Monday’s release announcing his union’s voting results.

Congressional leadership and the White House have been playing close attention to the unfolding events, and there are behind-the-scenes actions to determine what legislative actions could be taken to limit, if not fully prevent, a preemptive shutdown by the railroads, a union leader said. The railroads had begun curtaining and stopping shipments of hazardous materials days before a strike could have occurred in mid-September because of uncertainty over whether SMART-TD and BLET and the railroads could reach a tentative agreement that could be sent to union members for a ratification vote.

The hope is that the Democrats can rally around legislation that would address sick leave policies so that not only would union members be able to vote their conscience but also the legislation could prevent a freight shutdown, the union leader said.

Congressional intervention could get complicated and messy

The reason why stakeholders don’t want Congress to intervene is because there is so much uncertainty about what could happen. There are several legislative options that Congress can pursue, but the challenge is finding the best option that has the greatest likelihood of passing the House and the Senate and being signed into law by President Joe Biden.

There’s no limitation on how Congress could intervene, but there are three options Congress could pursue, according to Seth Harris, senior fellow at Northeastern University’s Burns Center for Social Change. Harris has also served as Biden’s top labor adviser, and he was the acting secretary of labor and deputy secretary of labor for former President Barack Obama.

“The three likeliest options are, one, they pass a bill imposing a longer cooling-off period, two, they pass a bill ending the strike — if there is a strike — and, three, they pass a bill that ends the strike and imposes terms on the parties, basically legislating a collective bargaining agreement for the parties,” Harris told FreightWaves.

“It’s very hard to know which legislation is most likely. The easiest one is the cooling-off period, maybe combined with ending the strike,” he continued. “The harder one is imposing terms because I don’t think there’s any reason to believe that the parties are more likely to get an agreement in Congress than they have been able to agree at the bargaining table.”

What complicates matters further is that the legislation must have sizable bipartisan support. The Democrats in the Senate need 10 Republican senators, or 60 votes total, to get the bill to pass that chamber, according to Harris. The 60 votes would be needed to overcome a possible filibuster in the Senate.

“It’s going to be extremely hard to get to a resolution that’s widely acceptable. The complexity and the politics will make it hard for Congress to act,” Harris said.

“Now, if there is a strike, I think it will be equally difficult or perhaps more difficult for them to not act. But that’s the balance they’re going to have to strike — which path is harder: action or inaction?”


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