Bulletin 4

March 17, 2000


TO: Participating Employers

FROM: Office of the Administrative Manager

RE: Revisions to Trustee Policy on Acceptance of Employer Contributions

The Trustees of the Western Conference of Teamsters Pension Trust recently amended the long-standing Policy On Acceptance of Employer Contributions to provide bargaining parties with greater flexibility in structuring their participation in the Trust. These changes may first be negotiated for work performed in the month of April 2000. With one exception, these changes are not mandatory; they are permissive and are subject to collective bargaining. Click here to view the complete amended Policy On Acceptance of Employer Contributions.

The changes to the Policy are as follows:

1. Provision 3 of the Policy has been amended. It now states that a Pension Agreement will not be acceptable to the Trust if it contains "Provisions that limit the employees on whose account contributions are to be made to those who have satisfied a specific minimum period of employment or seniority, except that part-time regular and full-time regular employees serving a probationary period may, for a period not to exceed ninety (90) calendar days, be covered under a contribution rate not less than ten (10) cents per hour, including PEER. Casuals, extras, jobbers and hiring hall employees are not subject to the foregoing exception."

2. Provision 5 of the Policy has also been amended. It now states that a Pension Agreement will not be acceptable to the Trust if it contains: "Provisions that permit contributions on a basis that will produce a contribution less than on all straight time hours worked by the employee, provided that for purpose of this rule paid vacation and paid holiday hours shall be included in straight time hours worked."

3. Provision 7 of the Policy has also been amended. It now states that a Pension Agreement will not be acceptable to the Trust if it contains: "Provisions which reduce contributions for each compensable hour to less than that which applied prior to any date, except as provided in Number 3 above."

4. Provision 8 of the Policy has been amended. It now states that a Pension Agreement is unacceptable to the Trust if it contains: "Provisions that provide different contribution rates within the same job classification other than during the specified waiting period as defined in Number 3 above. (Different contribution rates for substantially different job descriptions or classifications are permissible as determined by the Trustees in their sole discretion. To illustrate this concept: driver, warehouse, office, mechanic, sales, production would be considered substantially different descriptions/classifications under this provision.)" Provisions 1, 2, 4, and 6 of the Trustee Policy on Acceptance of Employer Contributions remain unchanged. In addition, the Trustees have clarified that they shall interpret the Policy more broadly in one additional fact situation. Subject to specific limitations, which will be addressed by the Trustees on a case-by-case basis, certain public employee groups that were previously precluded from participation in the Plan may now negotiate coverage.

Bargaining parties are strongly encouraged to bring any questions regarding application of the amended Policy to the Trustees for clarification, including submission of proposed language to be contained in collective bargaining agreements. The Trust's Area Administrative Offices will work actively with the bargaining parties to answer questions and provide guidance on compliance with these rules.

To assist you in understanding these rules, set forth below are frequently asked questions and common examples of factual situations:

Q. If a break-in rate is negotiated, must PEER be paid on such contributions?
A. Yes. If the collective bargaining agreement (referred to herein as a Pension Agreement) contains participation at any PEER level (PEER/84, PEER/82 or PEER/80), the break-in rate must include PEER coverage as well, and provide the same PEER level.

Q. Is it permissible for a negotiated break-in rate to be greater than 10¢ per hour?
A. Yes. The bargaining parties may negotiate any break-in rate between 10¢ per compensable hour (including necessary funding for the appropriate PEER level, if any) and the existing total contribution rate in the Pension Agreement. For example, a Pension Agreement calling for a total break-in rate of 10¢ per hour which contained PEER/84, would need to indicate that 9¢ was the basic contribution and 1¢ was for the 6.5% additional contribution required to fund the PEER/84 program. A Pension Agreement which called for a break-in rate of $1.00/hr. and contained PEER/80 would need to clarify that 86¢ would go to fund the basic contribution and 14¢ would be utilized to fund the PEER/80 program.

Q. Is it permissible to have more than one break-in rate in a Pension Agreement?
A. Yes, under certain circumstances. If the bargaining parties have negotiated multiple contribution rates in one Pension Agreement (in compliance with newly revised Guideline 8) then each contribution rate may have its own accompanying break-in rate. For example, a bargaining unit composed of drivers, warehouse and office may have regular contribution rates of $1.00/hr., $1.50/hr and $2.00/hr., respectively, along with break-in rates of 10¢/hr., 20¢/hr. and 50¢/hr., respectively. However, as discussed in detail below, the period during which the break-in rate applies must be the same for all employees in the bargaining unit, and the PEER level (if any) must be the same for all employees in the bargaining unit.

Q. Can a break-in rate be applied to employees who have already begun their probationary period?
A. No. The break-in rate may first apply to employees who begin their probationary period in the month after the Pension Agreement providing for such rate is received and approved by the Trust's Administrative Office. Specifically, the earliest allowed effective date for a break-in rate would be the first of the month following the month in which the Pension Agreement is received and approved, but in no event earlier than April 1, 2000.

Q. May the break-in rate be applied to casual or hiring hall employees?
A. No. The break-in rate may only be negotiated for full or part-time regular employees serving a probationary period.

Q. If an employee begins service with a contributing employer, is subject to the break-in rate for the entire period required by the Pension Agreement, then terminates employment and is later rehired by the same employer, would he be subject to another break-in rate period?
A. No. He must be reported at the full rate under the Pension Agreement governing his new position from his first hour of employment. An employee is only subject to a maximum 90 calendar days of contributions at a break-in rate from any single contributing employer.

Q. An employee begins service with a contributing employer at one location, works 30 days under a contractually required 90-calendar-day break-in rate, and is then laid off for 60 days. The employee is then recalled and is transferred to the employer's facility 500 miles away. This facility is governed by a different Pension Agreement, which also calls for a 90-calendar-day break-in rate. Is the employee still subject to a break-in rate for pension contributions?
A. No. The break-in rate is calculated from an employee's first day as a probationary employee and runs for consecutive calendar days, regardless of intervening layoff or discharge. The bargaining parties in the example had negotiated a 90-calendar-day break-in rate period. Therefore, the full contribution rate was due on the 91st calendar day after the employee's initial date of hire regardless of his physical location or coverage under a different Pension Agreement.

Q. May a break-in period of "three months" be negotiated?
A. No. The maximum period of 90 calendar days allowed under Trustee Policy is not synonymous with a three-month period because three calendar months generally constitute 91 or 92 days.

Q. May any of the contractual Pension terms besides the rate be altered for break-in period employees?
A. No. For example, the PEER level must be the same for all classifications utilizing a break-in rate under a single Pension Agreement. The basis on which contributions are made, such as "all hours compensated" must be the same for employees at the break-in rate as it is for those receiving the regular rate of contributions. Only the contribution rate may be different during a break-in period.

Q. May the bargaining parties determine a time period during which the break-in rate will apply that is different than the 90 calendar days stated in the Policy?
A. Yes. The bargaining parties may use a different calendar-day period, so long as it applies to regular employees who are serving a probationary period under the Pension Agreement and under no circumstances could any application of the formula chosen by the parties exceed any 90-calendar-day period. For example, the bargaining parties may wish to utilize a 30-calendar-day period for the break-in rate. This is acceptable. Also acceptable would be an 80-calendar-day period. However, under no circumstances may the period during which the break-in rate applies exceed the length of the probationary period provided in the Pension Agreement.

Q. Our Pension Agreement contains a 173 hour monthly maximum on pension contributions and a 40-hour regular work week. Is this contribution formula acceptable under Trustee Policy?
A. Not under the literal fact situation described above. Newly revised Guideline 5 requires a contribution formula that, at a minimum, provides for contributions equal to all straight-time hours worked, including paid vacation and holiday hours. The Trust recognizes that historically many Pension Agreements have contained provisions stating daily, weekly, monthly or annual maximums on contributions. These are all still allowable if their application does not fail the requirements of Guideline 5. One of the most common such provisions is a 173-hour monthly maximum. Beginning with the next renewed or amended contract, a 173-hour monthly maximum in a Pension Agreement providing for a 40-hour work week will be acceptable only if a 173-hour contribution is guaranteed for months which contain less than 173 straight-time hours. An equivalent requirement will apply to daily, weekly and annual maximums if their application does not produce a contribution formula equivalent to all straight time hours worked.

Q. We understand the above requirements, but wish to negotiate a monthly maximum on pension contributions without a guarantee of paying 173 hours in months that contain fewer hours. Our Pension Agreement contains a 40-hour work week. What is the lowest monthly maximum we could negotiate and satisfy Trustee Policy?
A. A maximum of 184 hours or higher would be required since the longest months of the year can contain 184 straight-time hours.

Q. How many different contribution rates may be negotiated under one Pension Agreement?
A. There is no specific limit. However, Trustee Policy requires that the job descriptions or job classifications be "substantially different" to justify a different contribution rate. For example, drivers, warehousemen and office workers could be contributed upon at different rates. However, all warehousemen would need to be paid upon at the same rate, all drivers at a second rate, and all office personnel at a third rate. The Trustees reserve the right to determine if the job classifications proposed by the parties involve substantially different categories.

In addition to the differing contribution rates for substantially different job classifications, a single or multiple break-in rates for the unit are also permissible, as described above.

Q. In order to achieve different contribution rates for classifications with substantially different duties, is it permissible to reallocate pension contributions from one job classification to another?
A. No. This would result in a reduction in the contribution rate of persons in one of the classifications. This has never been allowed under Trustee Policy. It is permissible, however, to freeze one job classification at the existing rate and apply all additional funds to the contribution rate of another classification under the same Pension Agreement, subject to the limitations stated above.

Q. Our Pension Agreement contains two different rates and meets the Trust's policy requirements for substantially different job classifications. We wish to negotiate a break-in rate. Must we apply the break-in rate to all job classifications?
A. No. The bargaining parties may choose to negotiate the break-in rate to apply only to one group of job classifications being contributed upon at the same rate. The other group of job classifications in the example may have a different break-in rate, or no break-in rate at all.

Q. Are there any different reporting requirements involved in utilizing the new Policy changes?
A. Yes. The Trust will require contributing employers to report to the Trust utilizing additional forms and procedures. Instructions on reporting will be given to the employer as soon as the Pension Agreement calling for either of the Policy changes is received in and approved by the Trust Administrative Office.

There are undoubtedly other factual scenarios that have not been described in this memorandum. The bargaining parties are encouraged to bring their specific questions to the Trustees for advance determination on the application of these rules. Please contact the Administrative Office for your geographic area.