1999 General Memorandum of Understanding
Whereas, the Potomac Electric Power Company (the "Company" or
"Pepco") and Local 1900 of the International Brotherhood of
Electrical Workers (the "Union") by mutual agreement conducted
early negotiations to establish a successor Collective Bargaining
Agreement to the 1998 Collective Bargaining Agreement and,
Whereas, the Company and the Union have agreed to a successor
Collective Bargaining Agreement (hereinafter referred to as the
"Agreement" or "CBA"), whose terms are set forth below;
It is, therefore, further agreed and understood between the
Company and Union that:
I. Contract Duration
The 1999 Agreement shall be effective upon ratification
except as provided otherwise in this Agreement. The term of
this Agreement shall be to and including May 31, 2003 and it
shall thereafter continue in full force and effect for
succeeding periods of 12 calendar months each, unless either
party, prior to April 1, 2003, or April 1 of any year
thereafter, shall serve written notice upon the other party
of its desire to amend and/or terminate the Agreement as of
the following June 1. The Contract shall read as set forth
in the 1993 Collective Bargaining Agreement except to the
extent modified herein or modified through other written
agreements between the parties. The Annex shall be modified
consistent with written agreements between the parties since
the signing of the 1993 Collective Bargaining Agreement.
II. General Wage Increases
A. The Company shall provide a general wage increases
(GWI) of 3% in 1999, 3% in 2000, and 3% in 2001 to
eligible employees. In 2002, there will also be a 3%
increase unless either party, for any reason, provides
60-days notice prior to June 1, 2002 of its intention
to reopen the contact. Any such reopener will be
limited to wages and benefits. If no agreement is
reached regarding wages and benefits by June 1, 2002,
either party may terminate the agreement at any time
by giving 48 hours written notice thereof to the other
party.
B. The 1999 increase shall be effective as soon as
practicable after ratification. If the Agreement is
ratified in December 1998, the Company shall endeavor
to place the GWI in effect by the payroll period
beginning February 14, 1999. The Company further
agrees that if the Agreement is ratified in December
1998, each employee employed in the bargaining unit
from January 3, 1999, to the beginning of payroll
period in which the 1999 GWI takes effect will receive
a lump-sum payment of 3% of the employee's regular rate
for a normal workweek (40 hours for hourly employees;
38-3/4 for weekly employees) for the period between
January
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1999 General Memorandum of Understanding
3, 1999, and the beginning of the payroll period in
which the 1999 GWI goes into effect. The 2000 increase
shall be effective the payroll period beginning
June 4, 2000. The 2001 increase shall be effective the
payroll period beginning June 3, 2001. Unless either
party requests a reopener, the 2002 increase shall be
effective the payroll period beginning June 2, 2002.
If a reopener is requested, the time and amount of any
increase shall be subject to negotiations in 2002.
III. Divestiture Issues
The industry is in the midst of a major restructuring, with
the possibility that it may be either necessary or prudent,
in the Company's sole judgment, to sell generation or other
corporate assets or operations to a third party or to
transfer assets or operations to a subsidiary, pursuant to a
joint venture or other business combination(s). In such
cases, employees who are offered employment by the new
employer shall have their employment at Pepco terminated on
the closing or transfer date and shall have no future rights
under the collective bargaining agreement (hereinafter
"CBA") with respect to Pepco. Nothing in CBA shall require
a different result. The Company shall bargain with the
Union regarding the effects of any such transaction on
bargaining-unit employees and has already conducted effects
bargaining with respect to the possible divestiture of
generation assets (see IV, immediate below).
IV. The Company and Union have conducted "effects bargaining"
regarding the possible divestiture of generation assets and
agree as follows:
A. With respect to the divestiture of generation assets,
the Company agrees that as a condition of divestiture,
the Company will:
1. Require any Buyer to offer employment from and
after the closing to all affected bargaining-unit
employees, including employees absent from active
service due to illness or leave of absence,
whether paid or unpaid (excluding employees on LTD
as of the closing date who will remain as Pepco
employees). It is anticipated that the all
bargaining-unit employees in the Generation
Business Unit will be affected as well as some
employees in areas that directly support
Generation. In the event that some, but not all,
employees in an occupational group are affected,
the Company will initially solicit volunteers,
with the most senior employees getting the first
opportunity to elect whether to stay at Pepco or
go with a Buyer. If there are insufficient
volunteers, the least senior employees will be
offered employment with the Buyer.
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2. Require any Buyer to recognize the Union as the
exclusive bargaining representative of affected
bargaining-unit employees ("affected bargaining-
unit employees" are employees who are offered
employment by any Buyer).
3. Subject to paragraph B. below, require any Buyer
to assume the 1999 CBA for those affected
bargaining-unit employees who transfer to the
Buyer.
4. Require any Buyer to provide employees with full
credit for service with Pepco, including retention
of seniority under the provisions of the 1999 CBA.
For example, if at time of closing employee X has
15 years of service with Pepco, then he/she will
be deemed to have 15 years of service with the
Buyer under the 1999 CBA.
5. Require any Buyer to agree that, should any other
business entity (regardless of relationship to the
Buyer) acquire the generation assets from the
Buyer prior to the expiration of the 1999 CBA, the
Buyer will require this third party to assume the
conditions set forth immediately above in
IV.A.1, 2, 3 and 4.
B. Employee Benefits
The Company will further require any Buyer to provide
benefits to affected bargaining-unit employees
substantially equivalent to those provided under the
CBA. In doing so, the Buyer shall have the right to
use different providers and to establish its own
benefit plans or use its existing plans. There shall
be no duplication of benefits. The Company shall
require any Buyer to recognize service with Pepco for
purposes of eligibility and vesting and benefit
calculations in any benefit plan, program, or fringe
benefit arrangement.
1. With respect to the General Retirement Plan (GRP),
Pepco will coordinate information and efforts with
the Buyer to enable the Buyer to provide affected
employees no less than the GRP benefit with
respect to their service with the Buyer during the
term of the CBA as they would have received had
they remained at Pepco. More specifically, the
Company shall require any Buyer to agree to credit
all past service with the Company (subject to
Pepco's General Retirement provisions) for
eligibility for participation, vesting, early
retirement subsidies and benefit accrual service.
The Company shall be responsible for affected
employees' benefits accrued through the date of
closing. After the
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1999 General Memorandum of Understanding
date of closing, the Buyer shall be responsible
for benefits accrued during the remainder of the
1999 CBA by such affected employees. The Buyer's
plan may offset the benefit it pays by the benefit
paid by the Company's plan.
2. For purposes of health care coverage, the Company
shall require any Buyer to waive all limitations
regarding pre-existing condition exclusions,
actively at work exclusions and waiting periods
for employees who become employees of the Buyer.
Further, during the calendar year in which closing
occurs, all health care expenses incurred by
affected bargaining-unit employees that were
qualified to be taken into account for purposes of
satisfying any deductible or out-of-pocket limit
under Pepco's health care plans shall be taken
into account for purposes of satisfying any
deductible or out-of-pocket limit under the
Buyer's health care plans for such calendar year.
3. Any Buyer shall be required to give affected
bargaining-unit employees full credit for all
vacation, sick leave or comp time benefits accrued
but not used as of the closing.
4. With respect to the Savings Plan, any Buyer shall
be required to establish a 401(k) plan or add
affected bargaining-unit employees to its existing
plan provided that the employees' deferral options
and employer match (except that matching
contributions will not be made in Pepco stock) are
no less favorable than those provided under
Pepco's plan. Any Buyer must accept rollovers
from other qualified plans. Any Buyer has the
right to offer investment funds different from
those offered under Pepco's plan. Employees going
to a Buyer will, to the extent possible under
applicable law, be considered terminations of
employment and under Pepco's plan will have the
option of leaving their account balance in the
Pepco 401(k) plan, rolling the amount into the
Buyer's plan, or an individual retirement account,
or cashing in the account balance subject to tax
withholding and penalties.
5. Employees offered employment by any Buyer shall
not be eligible for severance pay or any other
termination benefits from Pepco, except as may be
required by law.
C. Transfer of Ownership
Affected bargaining-unit employees will cease to be
employees of the Company upon the transfer of ownership
and will have no further bidding,
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1999 General Memorandum of Understanding
recall or other rights for positions in the Company.
The Union acknowledges that upon transfer of ownership,
the Company is relieved of obligations and liabilities
under the CBA and this Agreement or otherwise to all
affected bargaining-unit employees or future employees
of the Buyer(s) to the extent that those obligations or
liabilities arise on or after the transfer of
ownership.
X. Xxxxxxxx-Cost Proceedings
The Union agrees that it will not oppose Company
settlement proposals at regulatory agencies, in
the legislature and in the court regarding
restructuring and stranded costs. The Union further
agrees to support, or at least not oppose, agreements
(including settlements) between parties involved in the
Company's stranded-cost efforts as reasonable and
support the Company's position that the stranded costs
it has identified are reasonable in amount and fully
recoverable from customers. The Company agrees it will
provide the Union as much, and as timely, information
as is reasonably practicable about its regulatory and
legislative proposals. The agreement set forth in this
paragraph is not intended to limit legislative or
regulatory actions on matters not reasonably related to
the Company's restructuring and stranded-cost
proposals.
E. Any claim by the Union that any Buyer has failed to
comply with its obligations under the CBA after the
closing date shall be a matter strictly between the
Union and the Buyer.
V. Successorship
The parties agree that Section 23.01 of the 1998 CBA shall be
modified in the 1999 CBA to read as follows: "The parties
to this Agreement agree that it shall be binding upon them
and their successors and assigns."
VI. Union-Management Relations
The Company and Union recognize that the industry is
changing dramatically and that it is critical that the
parties work together to ensure that employees are as
productive as possible and that the Company be able to
compete effectively in this new era. To that end, the
parties agree as follows:
A. The parties will establish an Executive Steering
Committee (hereafter ESC) whose purpose shall be to
oversee a joint committee process and to resolve
disputes or issues as may be necessary. The ESC shall
be made up of two senior executives, a representative
from Labor Relations, the Union president, and two
additional Union representatives. Each party shall
designate its representatives.
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1999 General Memorandum of Understanding
B. The parties will continue to establish joint committees
as mutually agreed.
C. A new committee must identify its purpose and draft a
mission statement for submission to the ESC for
approval.
D. To improve the quality of committee discussions, the
Company offers to provide facilitator training, as may
be requested by various committees.
E. In the event the parties mutually agree that we need
the assistance of a consultant to further advance the
committee process, the Company shall pay the costs of
the consultant.
F. The parties agree that no committee disputes are
subject to the grievance or arbitration process. This
does not preclude the filing of a grievance over the
application of the labor agreement to a matter being
discussed by a committee.
G. After agreeing to extend the 1995 labor agreement, the
parties set up a number of committees, both corporate
and area, to consider a variety of issues. The parties
made substantial progress in many of the committees;
however, much additional work needs to be done as we go
forward in a restructured industry. For example, the
Benefits Committee began reviewing how to develop a
more modern and portable pension plan. The parties
agree to continue to work on coming up with a mutually acceptable
way to implement such a plan. The Superior Performance
Committee began reviewing "peer review" for the
Company. The parties agree to conduct a pilot program
on peer review and if successful, to consider further
expansion of the concept. Many area committees are
working to create multi-skilled jobs to increase
productivity and enhance employee skills. The parties
agree to continue to negotiate such agreements, which
shall be voted upon by employees in affected areas
prior to implementation; nothing, however, precludes
the Company from exercising its rights under the
Agreement to implement new or revised jobs on a
unilateral basis. In other matters directly affecting
a specific work unit such as the creation of new jobs,
special agreements on overtime, work rules or
standards, the company and Union agree that only
affected employees shall vote on such matters.
VII. Holidays
In addition to the days set forth in Section 11.01 of the
1993 Collective Bargaining Agreement, Thursday, December 23,
1999, Tuesday, December 26, 2000, and Monday, December 24,
2001 shall be observed as uniform and fixed holidays during
the 1999 Agreement. Further, the parties agree to observe
New
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1999 General Memorandum of Understanding
Years Day 2000 on the date celebrated by the federal
government, which may be either Friday, December 31, 1999 or
Monday, January 3, 2000. In 2001, it is the parties'
understanding that Inauguration Day will occur on a
Saturday. When Inauguration Day occurs during a normal
workday (Monday through Friday), it precludes employees from
being able to work at the Xxxxxx Xxxxxx Building, which has
resulted in the Company's agreeing to provide the day off
(as a holiday) for the entire Company. The parties agree
that Saturday, January 20, 2001 will not be deemed a holiday
that requires any employee to be paid a holiday allowance;
however, the parties agree that any employee who actually
works on Inauguration Day will receive the holiday premium
of double time for each hour worked, though he/she will not
receive a holiday allowance.
IN WITNESS WHEREOF, on this 8th day of December 1998, the parties
have caused their appropriate and duly authorized representatives
to sign this General Memorandum of Understanding, signifying
thereby their agreement hereon. This Agreement is subject to
ratification by bargaining-unit members.
For the Union For the Company
/s/ Xxxxx X. Xxxxxx /s/ A. S. Xxxxxxxxx
______________________________ _____________________________
Xxxxx X. Xxxxxx Xxxxxxx X. Xxxxxxxxx,
President/Financial Secretary/ Group Vice-President
Business Manager Corporate Services
/s/ Xxxxxx X. Xxxxxxx /s/ Xxxxxxx X. Xxxxxxxxx
______________________________ _____________________________
Xxxxxx X. Xxxxxxx Xxxxxxx X. Xxxxxxxxx,
Recording Secretary/ Manager, Industrial Relations
Business Representative & Employee Benefits
/s/ Xxxx X. Xxxxxxx /s/ Xxxxxxx X. Xxxxxxxx, Xx
______________________________ _____________________________
Xxxx X. Xxxxxxx Xxxxxxx X. Xxxxxxxx, Xx,
Vice-President Supervisor, Labor Relations
Business Representative
/s/ Xxxx X. Xxxx
______________________________
Xxxx X. Xxxx
Business Representative
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