Unable to compete on delivery runs, the company began reducing trip rates for drivers. Eventually, it brought the effective hourly rate below the collective agreement minimum. The arbitrator found the “clear and express” language needed to allow the company to set new rates on existing runs did not exist in the agreement
Under competitive pressure to reduce its rates, a trucking company recalculated the trip rate it charged customers based on a wage rate that was lower than what was specified in the collective agreement.
The union and the employer had a long-standing collective bargaining relationship. Hourly rates under the agreement between the parties ranged from $21.85 at the beginning of the agreement to $22.85 at the agreement’s end in 2012.
In addition to establishing the basic hourly wage rates, the collective agreement also provided for trip rates. Trip rates included standardized calculations for yard time, loading time, breaks and hook-up time. Trip rates were established to provide an all-inclusive, consistent rate to be applied to regular trips made to three main destinations. These regularly scheduled runs were referred to as bid runs. Drivers could bid on these runs based on their seniority and operate the run for a period of one year before the run was put up for bid again.
A new corporation acquired the trucking company’s main client. The trucking company was informed that the general freight increase negotiated by the predecessor company would not be honoured. The trucking company was also told that its bid to renew its contract for regular deliveries to Detroit was not competitive.
Competitive pressure
The trucking company informally approached some elements in the union seeking concessions on the wage rate for the Detroit work. The employer then unilaterally established a trip rate for the Detroit work. However, the trucking company was informed its new rate was still not competitive enough. The employer went to the union again to seek more concessions. The union refused and, as a result, the employer was compelled to again lower its quoted rate, although this time without reducing driver’s wages.
Next, the trucking company was informed that its rates for 24 destinations were under competitive pressure from other companies. In response, the company developed trip rates for all 24 destinations — which included one of the bid runs outlined in the collective agreement — based on a $20 per hour wage rate and then posted them for drivers to bid on.
Initially, the union filed a couple of grievances with respect to the employer’s process for posting the work. However, during discussions about these grievances, it became apparent that the employer had calculated the trip rates based on a wage lower than what was specified in the collective agreement.
The union grieved.
The union said that the employer had violated the clear and express wage provisions of the collective agreement. The union said that the only time the employer could pay trip rates was either for those runs that had been expressly identified in the collective agreement or were administered as bid runs, which were reopened annually. Neither of those circumstances applied in this case.
The employer argued that the collective agreement gave it the discretion to establish trip rates in response to business conditions. Once the employer determined that a trip rate was necessary, it was then entitled to set the rate at the appropriate level with a view to business considerations. In this case, the employer was justified in responding to pressure from its client by establishing a trip rate at a level necessary to secure the work.
The Arbitrator disagreed.
Clear and express language needed
“For me to find that the Employer has reserved the right to alter … agreed upon wages to a level that it unilaterally determines it can afford would be a remarkable conclusion and one which I would not be inclined to reach without clear and express language in the collective agreement establishing that right.”
Neither could the language in the collective agreement governing the employer’s rights to establish bid runs be stretched to apply to this case, the Arbitrator said.
The runs in question did not match the characteristics of the bid runs described by the language of the collective agreement. They were not administered in the same way or renewed on a yearly basis.
“Even if I were to accept that the Employer could establish a trip rate for new bid runs, there is no hint of authority in the collective agreement to establish a trip rate for runs such as those in issue in this case.”
The Arbitrator ruled that the employer violated the collective agreement. The employer was ordered to pay the hourly rates set out in the collective agreement.
Reference: Teamsters Local Union 879 and John Grant Haulage. Norm Jesin — Sole Arbitrator. Joanne McMahon for the Union. Harvey Capp for the Employer. Sept. 20, 2011. 10 pp.
