The National Association of Letter Carriers reached tentative agreement with the U.S. Postal Service on a new five-year National Agreement covering all 222,000 active city delivery carriers throughout the nation.

The tentative contract, approved unanimously by the NALC Executive Council July 12, will be submitted to the active membership for ratification as soon as possible.

The settlement calls for general wage increases of 8.85 percent over the term of the agreement, along with nine cost-of-living adjustments (COLAs).

NALC President William H. Young and Postmaster General Jack Potter reached the tentative agreement after an extended period of negotiations in June and July.

“This agreement represents collective bargaining at its best,” President Young said. “It’s a win-win deal for the Postal Service and the nation’s city letter carriers,” he continued. “It offers improved job security and fair wages for letter carriers and provides an intelligent and responsible way forward on the issues of flats automation and outsourcing.” Young concluded that the agreement will “assure the Postal Service of a motivated and dedicated delivery workforce committed to providing high-quality and efficient postal services to the nation’s mailers.”

Highlights of Agreement

Article 9: Wage and Salary Provisions

Under the terms of the proposed contract, all city letter carriers would receive five general wage increases (GWIs) over the span of the 2006-2011 contract period, each calculated as a percentage of the basic salaries in effect at the end of the 2001-2006 National Agreement.

The increases are as follows:

	1.4 percent retroactive to November 25, 2006
	1.8 percent in November 24, 2007
	1.9 percent in November 22, 2008
	1.9 percent in November 21, 2009
	1.85 percent in November 20, 2010

Since the agreed upon date for the first wage general wage hike has already passed, the increase would be paid retroactively to November 25, 2006. A date for issuing payments for full back pay (including for overtime hours and other premium pay hours) will be announced in the future, pending ratification.

Under proposed terms, the average letter carrier salary would increase $4,200 over the life of the contract solely from general wage increases. This chart outlines the basic wage increases provided under the proposed contract for both regular city carriers (Grade CC-1) and city carrier-technicians (Grade CC-2).

Cost-of-living adjustments

The tentative accord makes no changes to the formula for calculating semi-annual cost-of-living adjustments (COLAs), but sets the May 2007 Consumer Price Index (CPI-W) as the “base month index” for future COLA payments. In lieu of COLA that would have accrued under the formula from July 2006 and May 2007, the agreement calls for a one-time cash payment of $686 (see below). If ratified by the members, the contract will provide for a total of nine COLA increases over the term of the 2006-2011 National Agreement.

The chart also outlines the average pay increases, including both GWIs and projected COLAs, letter carriers could receive over the life under the contract. Although the GWIs are fixed by the contract, the COLAs payable will depend on actual changes in the CPI-W over the next four years. The estimated COLAs ($2,992 annually) assume an annual inflation rate of 2.2 percent. During the past contract, letter carriers received $3,556 in COLA increases over the 5-year agreement.

COLA cash payment

A one-time cash payment of $686 will be paid to all eligible city carriers as soon as possible following ratification of the agreement. This payment, which will not be rolled into carriers' basic annual pay, is derived from the COLA formula and is based on the increase in the CPI-W from July 2006 through May 2007. The COLA cash payment and the back-pay calculation for the first general increase may be paid in one or two checks. The date for issuing the payments either together or separately will be announced in the future.

Only carriers in a pay status during the pay period immediately prior to the effective date of the cash payment will be eligible for it. Those in full-time regular positions would receive the full amount, while hourly rate employees (PTFs and PTRs) would get a payment based on the number of paid hours in the 26 pay periods prior to the payment’s effective date and will be paid according to the following schedule:

Article 21: Health Insurance Premiums

In recognition of health benefit trends in the private sector and cost shift changes adopted by other postal unions, the tentative contract will gradually raise the percentage of health insurance premiums payable by city letter carriers under the Federal Employee Health Benefit Program. The agreement maintains the Postal Service’s current share of costs (85%) in 2007 and 2008, but reduces that share by two percentage points in 2009 (to 83%) and by an additional one point in each of the following three years (82% in 2010, 81% in 2009 and 80% in 2012). At the end of the agreement the Postal Service will pay 80 percent of health insurance premiums, a level that is comparable to that paid by large national employers in the private sector, yet significantly greater than that paid by other federal agencies (72%).

By 2012, when the full effect of the 5.0 percentage point cost shift takes effect, the average letter carrier will pay $21.84 per pay period more for family coverage and $9.23 per pay period more for self-only coverage – using this year’s average postal FEHBP premiums as a base. The one-time cash payment will cover a significant portion of the increased cost and, thanks to the wage increases and projected COLAs provided by the contract (see this table), the average pay of letter carriers will rise by $276.62 per pay period by the end of the contract. Of course, these health insurance figures do not account for future medical inflation, but such inflation will occur regardless of any change in the share of premiums paid by letter carriers.

New Article 32 Protections on Subcontracting

The proposed contract includes new protections against contracting out city carrier work. These new protections, the first of their kind since the 1973 National Agreement, are contained in two new Memoranda of Understanding (MOUs). One prohibits outsourcing of any existing city delivery services during the term of the contract and the other establishes a national Joint Committee on subcontracting that will seek to “develop a meaningful evolutionary approach to the issue of subcontracting” to address the outsourcing of new delivery points. As the Committee does its work, there will be a six-month moratorium on “any new subcontracting in offices in which city letter carriers are currently employed.”

More details about these MOUs will be presented in the August Postal Record and copies of these and all other MOUs adopted by the parties will be included in the Tentative National Agreement that will be sent out with the soon-to-be released ratification materials.

Article 7: Transitional Employees and the Abolishment of Casuals

The contract will abolish the use of casuals in the City Carrier craft and replace such workers with Transitional Employees or TEs. The 3.5% limit currently applied to casuals will now apply to these new TEs. Other restrictions will also apply.

The TE category was established by the 1991 Mittenthal Award (which set the terms of the 1990-1994 National Agreement) to ease the introduction of DPS. The pay and conditions established for TEs by that award will apply to them. In short, TEs are limited-term (359 days) bargaining unit employees who are paid at Grade CC 1-Step A. This will raise the pay of converted casuals by $5-$6 per hour.

In addition, the new contract gives the Postal Service the authority to employ up to 8,000 additional TEs to facilitate the implementation flat sorting automation over the course of the contract. This authority, which is further restricted by an MOU on flat sorting automation, will expire once the Postal Service’s Flat Sequencing System (FSS) is fully implemented. Details will be provided in The Postal Record.

Uniform Allowance

The current annual uniform allowance of $328 will rise 2.5% annually over five years to $371 and will continue to be payable on each carrier’s anniversary date. (The one-time new carrier additional allowance will rise from the current $76 to $86 over five years.)

Other Provisions

The tentative agreement includes a wide variety of additional provisions. These include but are not limited to the following:

• Route Evaluations: The agreement provides for a joint committee to be established to study and develop a new process for route evaluations.
  
• Flat Sequencing System Implementation: The agreement provides a mechanism for establishing FSS work methods and adjusting routes.
  
• Resolution of National Level Disputes: The proposed accord includes agreements developed over the past 18 months to satisfactorily resolve a number of national level disputes consistent with NALC's long-held positions. Included are those concerning DOIS, the Third Bundle, COR, S-999 Mail and FSS implementation.

See the August Postal Record for additional details on the proposed contract. A complete copy of the Tentative National Agreement, including all MOUs and related documents, will be sent to every active member once it is finalized. A ratification vote will be announced as soon as possible.

If the contract is ratified, a National Training Conference on implementing its terms will be held. Details on its time and place will be announced.