Oct 24, 2022 - Economy

Railroad worker negotiations head off the rails over paid sick leave

Illustration of train car silhouettes connected by red crosses.

Illustration: Gabriella Turrisi/Axios

A standoff over paid sick leave between railroad companies and their third largest union is raising the prospect of a worker strike — and Christmastime economic disaster — even after the White House brokered a deal to avoid that fate.

Why it matters: It's a sign of the changed landscape for labor in the post-pandemic era that the state of the nation's economy now hangs on worker demands for a fairly basic benefit — paid time off for illness.

  • Even though railroad unions were able to negotiate a substantial pay raise in their agreement, they say it doesn't address certain intolerable workplace conditions.
  • There's anger among the rank and file over the companies' punitive scheduling systems, insiders tell Axios. During the pandemic, workloads became intolerable as the industry struggled with worker shortages, they said.
  • Workers and industry observers emphasize that the railroad companies — including Union Pacific, CSX and Norfolk Southern — are seeing record profit margins of around 40%, mostly due to large cuts to headcount over the past several years. But workers say they haven't benefited.

Driving the news: Last week, negotiators for the railroad companies rejected the Brotherhood of Maintenance of Way Employes (BMWE) Division of the International Brotherhood of Teamsters' demand for seven paid sick days. The parties will likely continue negotiating this week.

Catch up quick: The railroads and their 12 unions have been negotiating a new contract for more than two years. Last month, the Biden administration brokered a deal, which the unions are now voting on. Six voted yes.

  • A surprise “no“ vote came in earlier this month from BMWE; they wanted a better deal.

What they're saying: The railroads say it's too late to negotiate over sick leave. "It's not something to be slapped on in the waning days of a bargaining round that's lasted for over two years," Ian Jefferies, the CEO of the Association of American Railroads, an industry trade group, tells Axios.

  • Jefferies, himself getting over a bout of COVID, argued that workers do have sick leave — because they are able to tap benefits for illnesses that last longer than four days, and they can "mark off" — or call in for unpaid time off. (Though most companies put restrictions and penalties around that process.)
  • The agreement brokered by the White House features one paid day off that can be used, without penalty, for a worker's birthday or to make doctor's appointments — but only on Tuesday, Wednesday or Thursday.
  • "I remain confident that we're going to get our temporary agreements ratified and be able to avoid a strike — that’s still a possibility but I don't think it's a probability," Union Pacific CEO Lance Fritz said in an earnings call last week.
  • Fritz and others tell Axios that the BMWE union members who rejected the deal weren't all aware that they'd gained a key benefit late in the game in the negotiations, having to do with travel reimbursements. That could've changed the vote results, they said.

The other side: Sick leave has long been a point of contention and is why some members voted down the deal, Peter Kennedy, director of strategic coordination at BMWE, tells Axios.

  • He recognized the stakes: "We don't want to harm the economy. But we also don't want our members to be without basic human protection."
  • Kennedy says they modeled their request on the sick pay given to federal contractors, who must work 30 hours to earn one hour paid sick time.
  • The proposition would cost the railroads about a penny out of every dollar they earn in profit, he says. "The railroads would still be making record profits if they ponied up and did the right thing here."

Meanwhile: Even the rail companies' customers say they should give workers what they need.

  • "To say the paid sick leave policy for rail workers is woefully inadequate would be an understatement," wrote the CEO of the National Association of Chemical Distributors in SupplyChainDive last week.

What we’re watching: On November 17, the two largest unions announce their votes, and a few days later the deadline for BMWE's cooling off period expires. The possibility of a holiday strike looms.

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