Chapter 1: Compliance with Statutory Policies
C. Employee Compensation and Career Advancement
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The Postal Service has nine collective bargaining agreements with seven unions covering approximately 726,000 employees. Negotiations with Postal Service unions cover a full range of topics involving wages, benefits, and conditions of employment. No agreements expired in 2002.

The next round of collective bargaining was expected to begin with the negotiations for a successor agreement to the 2000–2003 agreement with the American Postal Workers Union, AFL-CIO (APWU) which was to expire on November 20, 2003. However, a two-year contract extension was ratified late in calendar year 2002 by APWU members. The agreement provides for two additional general wage increases of 1.3 percent. The first is effective on November 15, 2003 and the second on November 27, 2004. The now five-year agreement also calls for four additional cost-of-living increases under the existing COLA formula, with two payments in 2004 and two in 2005, both based on January and July CPI-W trigger months. Grade 10 and grade 11 electronic technicians receive a one-grade upgrade effective November 29, 2003. Grade 4 computer forwarding system clerks will receive a one-grade upgrade effective November 13, 2004. The upgrades will be based on a step-to-step mechanism with credit for waiting-period time already served. Eligible employees will receive two 2.5 percent Uniform Program increases, the first in November 2003 and the second in November 2004. The parties also signed a Memorandum of Understanding that allows for two additional bids (applying for vacant positions) during the contract.

An interest arbitration award was issued on February 3, 2002, which set the terms of a new four-year collective bargaining agreement covering approximately 117,000 rural letter carrier employees represented by the National Rural Letter Carriers’ Association (NRLCA). The agreement is for the period November 21, 2000, through November 20, 2004, and provides general wage increases of 1.2 percent effective November 18, 2000; 1.8 percent effective November 17, 2001; 1.4 percent effective November 16, 2002; and 1.2 percent effective November 15, 2003. The NRLCA and the Postal Service also could extend the labor agreement for a fifth year if the parties reach a settlement on the economic provisions, based on the comparable year in either the APWU or National Association of Letter Carriers (NALC) national agreements. In addition to the general wage increases, the interest arbitration panel chaired by neutral arbitrator John Calhoun Wells provided for the continuation of the current cost-of-living adjustment (COLA) formula except that in lieu of COLA payments for the first year of the agreement, eligible career employees received a one-time lump sum cash payment of $499. Arbitrator Wells also awarded two pay adjustments, one of which is, in effect, the equivalent of a one-pay-level upgrade. The other is a $300 wage increase. Those two pay adjustments are in exchange for improved productivity in rural carrier standards. The standards involve flat and letter mail casing rates, the strapping out of mail, and the definition of letter-size mail. Also of note, the Postal Service secured a national mail count beginning February 28, 2002, and ending March 13, 2002. The implementation of the new productivity standards was effective on May 4, 2002.

Negotiations between the Postal Service and NALC began in August 2001 for a successor to the collective bargaining agreement that was to expire on November 20, 2001. Productive discussions took place throughout the fall, with the parties reaching agreement to extend the discussions past contract expiration and into 2002. The motivating factors to extend the discussions were the September 11 terrorist attacks and the anthrax threats, which consumed much of the attention of the negotiators. Negotiations successfully concluded in April, and a five-year collective bargaining agreement was signed June 26, 2002. The agreement, which covers the years 2001–2006, provides for general wage increases of 1.8 percent on November 17, 2001, 1.5 percent on November 16, 2002, 1.2 percent on November 15, 2003, 1.3 percent on November 27, 2004, and 1.3 percent on November 26, 2005. The agreement continues the current COLA formula and payment schedule, except that in lieu of COLA payments for the first year of the contract, eligible employees would receive a one-time cash payment.

In addition to negotiating many work rule changes, the parties rewrote Article 15, Grievance-Arbitration Procedure, replacing an old process that no longer met the parties’ needs. The new process is faster, more efficient, and focuses on addressing and resolving disputes at the lowest levels of the organization. This was the first major restructuring of the grievance-arbitration procedure in more than 20 years. The agreement covers approximately 234,000 employees represented by the NALC.

Negotiations with the National Postal Mail Handlers Union, AFL-CIO (NPMHU), which represents approximately 59,000 mail handlers for a successor to the collective bargaining agreement that expired on November 20, 2000, reached an impasse. The parties resumed discussions aimed at resolution of the dispute and reached a successful conclusion of negotiations. The four year agreement was signed on April 10, 2002. The new agreement covers the years from 2000–2004 and contains the following general increases: November 18, 2000, 1.3 percent: November 17, 2001, 1.9 percent: November 16, 2002, 1.5 percent: and November 15, 2003, 1.3 percent. The agreement continues the current COLA formula and payment schedule for career employees, except that in lieu of COLA payments for the first year of the contract, eligible career employees were to receive a one-time lump sum cash payment of $499.

Collective bargaining agreements between the Postal Service and certain smaller bargaining units were completed during 2002. The Postal Service reached an agreement with the National Postal Professional Nurses (NPPN) following post-fact finding discussions. The new 1999 USPS-NPPN Agreement was effective on April 11, 2002, and will continue through August 20, 2004. A four-year agreement was reached with the APWU on the 2000 Operating Services/Engineering, Facility Services Agreement, which was effective August 10, 2002, and will continue until November 20, 2004. A four-year agreement was also reached with the APWU on the 2001 Information Technology/Accounting Service Center Agreement, which was effective August 24, 2002, and continues through January 20, 2005.

The Postal Service and the NALC will publish the fourth edition of the USPS-NALC Joint Contract Administration Manual, which will be distributed to every city delivery unit in the system in the fall of 2002. First negotiated and published in 1998 and updated each year thereafter, this contract guide has been widely used in the field, and it has been crucial to the parties’ goals of reducing the incidence of workplace disputes.

The Postal Service and the NPMHU have completed the third full year of their test procedure which eliminates the third step of the grievance procedure at selected sites. In addition, the parties continue to make progress in completing the Contract Interpretation Manual, expected to be released in 2003. Once again they co-hosted the annual Quality of Work Life Conference for the fifth consecutive year.

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Chapter 1 Table of Contents

A.  Fundamental Service to the People

B.  Service to Small or Rural

C.  Employee Compensation and
     Career Advancement

D.  Postal Cost Apportionment and Postal
     Ratemaking Developments

E.  Transportation Policies

F.  Postal Service Facilities, Equipment,
     and Employee Working Conditions