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July 27, 2010
Union Claims Compensation Agreement Shorts Overtime

A union of truck drivers decided that its compensation agreement, set by collective bargaining with Safeway, resulted in its drivers missing out on overtime pay.

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What happened. Teamsters Local No. 174 is a union that represents the drivers who work at Safeway’s Auburn distribution center. In 2003, the union and Safeway executed a collective bargaining agreement (CBA) that stipulated the method by which drivers would be compensated between 2003 and 2005. In 2005, they renewed this agreement, covering the period 2005 to 2011.

The basis of compensation was a combination of mileage and activity rates known as the ABC system. This system assigned time values called “standard time” to delivery routes and activities. For example, a driver’s pretrip and departure duties might be worth 25 minutes of standard time, regardless of how much actual time it took to complete them. For deliveries, the ABC system set a certain amount of standard time according to charts that vary by geographic area, time of day, and traffic. Safeway and Local 174 negotiated the time values and mileage charts together.

Under the CBA, these charts can be reviewed if they seem to not accurately reflect driver experience. If drivers are delayed by major congestion, breakdowns, or inspections, they are paid extra time called “delay time” in the agreement. The agreement also provides for overtime paid after 8 or 10 hours a day (depending on the driver) of standard time and 40 hours of standard time in a workweek. Safeway keeps track of the total time that drivers are dispatched during the day. The time between a shift’s beginning and end is called “actual time.” Safeway does not attempt to track meals or other breaks, so actual time does not reflect the actual amount of time worked.

In 2007, Local 174 sued Safeway, claiming that the company had denied its drivers proper overtime compensation under Washington’s Minimum Wage Act (WA Rev. Code Sec. 49.46). The trial court dismissed the case at Safeway’s request and Local 174 appealed.

What the court said. The Washington Minimum Wage Act mandates that employees who work more than 40 hours a week be paid for the excess work at least one-and-one-half times the regular rate. Safeway claimed that this law did not apply to Local 174 because it fell under an exception to the law that excludes drivers who are covered by the Federal Motor Carrier Act (49 USC Sec. 3101 et seq.). Under this law, if a compensation system includes overtime pay reasonably equivalent to that required by the Washington law, the state law’s overtime requirement does not apply.

Local 174 argued that the federal law did not apply to its drivers because Safeway’s ABC system did not include “reasonably equivalent” overtime pay. The union claimed that because Safeway’s drivers were paid at a piece rate instead of an hourly rate, Safeway was calculating its overtime payments at too low a rate. The Court of Appeals disagreed.

Under the exemption for drivers covered by the Federal Motor Carrier Act, overtime pay must be at least one-and-one-half times the base rate of pay, which is the amount of compensation paid per unit in a workweek of 40 hours or less. The ABC system complied with both Washington and federal law by providing a base rate of pay and setting overtime pay at one-and-one-half times that rate.

In compliance with the law, Safeway has kept data on payment and hours worked. In practice, drivers are paid more for standard time hours than they would be if they were paid for the hours they actually worked. The court found that for the group of drivers as a whole, the overtime pay was fair. The union complained that about 20 percent of drivers had fewer standard hours than actual hours,
but the court did not find that a reason to find Safeway at fault. The court concluded that Safeway had successfully proven that the ABC system complied with state law and dismissed the case again. General Teamsters Local No. 174 v. Safeway, Inc., Court of Appeals of Washington, No. 63006-7-I (5/17/10).

Point to remember: This compensation scheme is the result of collective bargaining between the company and the union; both parties have the right to review the agreement if they believe it has become unfair.

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