DC: Metro Responds to Arbitration Award

Washington Metropolitan Area Transit Authority’s Arbitration Board Member dissented from a recent award because it failed to address pensions for future employees represented by AFL-CIO ATU Local 689 (L689) — worsening the Authority’s operating structural deficit — but acknowledged that changes to employee healthcare benefits will help the Authority with cost containment.

Metro General Manager and CEO Paul J. Wiedefeld said he is disappointed that the core issue of pension changes for future employees was not addressed, but is not inclined to appeal because the award provides relief on near term healthcare costs, and he wants closure so Metro workers can focus on safety and customer service.

“This award puts employees represented by Local 689 a step closer to a more equal footing with employees represented by other unions, supervisors and staff with respect to healthcare cost sharing,” said Wiedefeld. “The award also provides modest, well-earned wage increases for our workforce.”

The award raises wages for employees of Metro’s largest union by an annual average of 1.6 percent over four years, which increases operating expenses by $82 million. WMATA expects to save $21 million from the award’s increase to employee healthcare coverage contributions from 17 percent to 20 percent, and increases in deductibles and prescription copays. For example, employee copays for retail generic drugs will double from $5 to $10.

Metro sought, but did not receive, an arbitration award that would allow it to continue pensions for current employees but enroll future L689 employees in 401k accounts, to begin to address an unfunded pension liability of $2.8 billion (including unfunded healthcare costs for retirees). The award also remained silent on an overtime cap, leaving WMATA as the only large transit agency in the country with no overtime limit toward pension calculations.

“After two years of bargaining and a year of making our best case through binding arbitration, Metro’s structural operating deficit remains completely untouched,” said Wiedefeld.

Employees who joined Metro after 2009 and are members of Metro’s second largest union, AFL-CIO OPEIU Local 2, are already in 401k plans, per their collective bargaining agreement. The recently negotiated agreement between WMATA and Local 2 resulted in average annual raises of 2.2 percent, with healthcare contributions rising to 25 percent.

The award is effective retroactively to July 1, 2016 (FY2017), but the first year wage increase is 0 percent. WMATA will pay L689 employees the 1 percent increase awarded for last fiscal year and the 2.5 percent increase for the current fiscal year as soon as payroll changes are made this fall. The decision also provides an average 2.3 percent wage increase in FY2020. Healthcare benefit changes for active employees are effective January 1, 2019.