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Confusion At Big Brown: Contract Rejected, But Union Says It's Ratified; UPS Appears Mystified

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The Teamsters have voted against the UPS contract agreement for the Small Package division, but the union says the contract is ratified anyway.

That appeared to be news to United Parcel Service, Inc. (NYSE: UPS).

While that fate of that larger contract may be somewhat in question, one thing that is clear is that the tentative contract agreement covering the UPS Freight division, much smaller than the Small Package sector, was defeated by the Teamsters.

According to a statement issued by the Teamsters, the contract — agreed to in July to replace the five-year agreement that expired July 31 — was rejected 50,248-42,356. That seems like a clear defeat.

But the Teamsters in its statement announcing the vote headlined it with a declaration that the contract was ratified. According to the Teamsters, the International Constitution requires that a two-thirds vote is needed to reject a final offer. Since that didn't occur--the percentage split is 54.2 percent against--it means that "the National Master Agreement has been ratified," according to the Teamsters.

This statement appears to have caught UPS off guard. Early Friday evening, UPS said of the day's developments: "We are disappointed the Small Package and Freight tentative agreements were not ratified."

But after the Teamsters came out with its declaration that the Small Package deal was in fact ratified through a provision in the union's constitution, UPS put out a second statement. But what UPS said was far from a victory lap that it had a deal. "UPS has reviewed the Teamsters website statement and will meet with the Teamsters leadership in the near future to discuss next steps regarding the national and local agreements," the UPS statement said.

The reference to future meetings is an acknowledgement that while the Teamsters statement may have declared the Small Package contract ratified, there were still things to discuss.

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The union has been working under a 60-day extension that kicked in August 1, the day after the expiration of the prior contract. UPS said in both its statements, from before the Teamsters ratification announcement and after it, that business was continuing as usual.

Looming in the background, particularly for the Teamsters management, is a group called the Teamsters for a Democratic Union. It has been critical of the tentative agreement reached between UPS and the union, and it is no fan of Denis Taylor, the chief negotiator on the UPS agreement.

On its website, the dissidents said Taylor had informed local Teamsters officials earlier in the week that he would "ignore" a no vote if the 2/3 threshold was not reached. It said that Taylor, under pressure, had "reversed course," though the Teamsters union did declare the contract ratified. But the dissident group said Taylor's statement was "weak," and had created a loophole by the notification that the Teamsters would seek more meetings with UPS to further discuss some issues, including ones that are local in nature.

"As a negotiator, Taylor needs to step up or step out of the way," the dissident group said on its website. "UPSers have spoken and they expect the next contract offer to address the issues that caused members to vote No, including two-tier 22.4 drivers (a job classification at UPS) and low part-time pay."

The contract covering workers at UPS Freight went down to a defeat by a vote of 4,255-2,601. UPS Freight is a mostly LTL carrier, with second quarter revenues of $853 million. By contrast, the total U.S. domestic package division had revenues of $10.3 billion.

"The Teamsters National UPS Freight Negotiating Committee will notify the company that the union is terminating the contract extension, and the committee will contact the company to request another round of negotiations in order to address members' concerns," the Teamsters said in its "ratification" statement. "That agreement, which covers about 11,600 union-represented workers, will then need to be voted on again by the members."

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