Form 1 NATIONAL RAILROAD ADJUSTMENT BOARD
THIRD DIVISION
Award No. 42306 Docket No. MW-42087 16-3-NRAB-00003-130036
The Third Division consisted of the regular members and in addition Referee George E. Larney when award was rendered.
(Brotherhood of Maintenance of Way Employes Division ( IBT Rail Conference
PARTIES TO DISPUTE: (
(Bessemer and Lake Erie Railroad Company
STATEMENT OF CLAIM:
"Claim of the System Committee of the Brotherhood that:
1. The Agreement was violated when the Carrier failed to comply with the terms and conditions of Article IV and Side Letter 2 of the January 9, 2009 Agreement when it refused to permit properly qualified employees to directly deposit their $5,000 lump sum payment into the Carrier's 401 (k) plan (Carrier's File BLE-BMWED-2011-00001).
2. The Agreement was further violated when the Carrier unilaterally disbursed the $5,000 referenced above in Part (1) in the form of a check, thus subjecting the payment to applicable state and federal taxes.
3. As a consequence of the violation referenced in Parts (1) and (2) above, the Carrier shall make Claimants M. Shine, J. Unik, R. Clem, B. Beil, G. Drake, B. Hilliard, R. McKnight, D. Engstrom and J. Wisniewski whole by either:
(a) Pay each of the employees the taxable difference that they received in their lump sum checks. In other words, if an employee netted (received a total of) $3,200 out of the $5,000 lump sum payment, the Carrier would owe that employee $1,800 tax free or,
(b)Change the language of the 401 (k) plan to allow lump sum payments to be deposited into this '401 (k)' plan. After the language is changed, provide the Claimants with a check for the amount of $5,000 and roll the entire amount into the 401 (k) plan for each Claimant."
FINDINGS:
The Third Division of the Adjustment Board, upon the whole record and all the evidence, finds that:
The carrier or carriers and the employee or employees involved in this dispute are respectively carrier and employee within the meaning of the Railway Labor Act, as approved June 21, 1934.
This Division of the Adjustment Board has jurisdiction over the dispute involved herein.
Parties to said dispute were given due notice of hearing thereon.
On January 9, 2009, the Carrier and the Organization, hereinafter together known as the Parties, entered into a new Agreement pursuant to an exchange of Section 6 Notices in 2008, wherein relevant to this claim, the Parties agreed to amend the existing Defined Benefit Pension Plan referenced as the Bessemer and Lake Erie (B&LE) Non-Contributory Pension Plan. The intent of the amended Plan was to freeze the B&LE Plan for eligible current employees and close out the B&LE Plan to newly-hired employees. Additionally, the B&LE Plan was a completely Carrier funded retirement plan, whereas the Carrier's own replacement 401 (k) plan required employee contributions.
In order to effect the change in retirement plans, the Parties agreed to the following contractual language in Article IV - the Pension Plan clause of the new 2009 Agreement:
"A. The Bessemer Non-Contributory Pension Plan will be closed to new participants.
B. Effective July 1, 2011, employees presently participating in the Bessemer Non-Contributory Pension Plan will have their
service frozen for purposes of calculating their accrued benefits. Future service will continue to be accumulated for eligibility purposes only. Future salary growth will be considered in the calculation of the pension benefit payable upon retirement or other termination of employment."
Additionally, to effect the changeover in Pension Plans from the B&LE Plan to the Carrier's 401 (k) Plan, the Parties agreed to the following specific terms in a Side Letter they designated as Side Letter 2, which, in pertinent part, provided:
"This will confirm our understanding reached during negotiations leading to the B&LE/BMWE agreement of this date. We agreed that all participants in the Bessemer Non-Contributory Pension Plan in active service as of July 1, 2011 who have not attained 30 years of continuous service will receive a lump sum payment of five thousand dollars ($5,000). Participants in the Bessemer Non-Contributory Pension Plan that are not in active service on July 1, 2011 that have not attained 30 years of continuous service will be eligible for this lump sum payment upon their return to active service. The employees eligible to receive such lump sum will be given sufficient advance notice from the Company to allow them to change payroll deductions for the Canadian National Railway Company Union Savings Plan For U.S. Operations 401 (k) plan, or any successor plan so that such lump sum payment may be deposited in whole or in part in the employee's 401 (k) account."
The Organization submits, without contradiction by the Carrier, that the $5,000 lump sum payment was to compensate the applicable employees covered by the terms and conditions set forth in both Article IV and Side Letter 2, specifically the nine named Claimants identified above, for losing access to the employer funded B&LE Pension Plan and having to move to the Carrier's administered 401 (k) retirement plan requiring them to make contributions.
On July 6, 2011, the Carrier informed the Organization that it would disperse $5,000 to each Claimant via a check on July 29, 2011, and that each Claimant could then place that money into their 401 (k) account. However, the Carrier further informed the Organization that the terms and conditions of its own 401 (k) plan that it administered and controlled did not permit "lump sum" payments to be directly deposited into the Claimant's 401 (k) accounts. The Carrier's position was predicated on the rationale that lump sum payments are not deemed to constitute compensation as defined by its 401 (k) Plan. The Organization objected to the prohibition of allowing the Claimants to make a lump sum deposit into its own administered 401 (k) plan, claiming this was a failure on the part of the Carrier to comply with the mutually agreed upon terms and conditions of Side Letter 2. The Organization asserted that the Carrier had had more than two years to amend its own 401 (k) plan so as to accept a lump sum payment in order to comply with the terms of Side Letter 2. The Carrier responded to the Organization's objection by proffering an alternate arrangement for the Claimants to make contributions to the 401 (k) plan that would, over a period of time, equal the lump sum payment either in full for a $5,000 deposit, or a partial sum of less than $5,000. Because the Organization rejected this alternate arrangement, the Carrier dispersed the $5,000 payment to the Claimants as indicated by the prior notice of July 6, on July 29, 2011, by check subject to State and Federal taxes and other designated deductions so that the lump sum payment amounted to considerably less than $5,000.
The Organization argues that in disallowing the Claimants to make a direct deposit of the lump sum payment either in the full amount of $5,000 or a partial monetary amount, the Carrier committed a clear violation of the terms and conditions mutually agreed to as set forth in both Article IV and Side Letter 2.
Upon a comprehensive review of all arguments asserted by both the Organization and the Carrier, the Board is in complete concurrence, given the unambiguous language contained in both Article IV and Side Letter 2, that the Carrier reneged on its agreement to permit each and every Claimant to deposit any amount of its lump sum payment of $5,000 into its own administered 401 (k) Plan. As such, the Carrier violated the terms and conditions of both Article IV and Side Letter 2. All the Carrier had to do to avoid this dispute was sometime during the two-year transition from its non-contributory pension plan to its 401 (k) plan was to amend the 401 (k) plan so as to make a one-time exception to accept a lump sum payment by any or all of the Claimants herein who opted to make such payment into their designated 401 (k) accounts.
AWARD
Claim sustained.
ORDER
This Board, after consideration of the dispute identified above, hereby orders that an award favorable to the Claimant(s) be made. The Carrier is ordered to make the Award effective on or before 30 days following the postmark date the Award is transmitted to the parties.
NATIONAL RAILROAD ADJUSTMENT BOARD By Order of Third Division
Dated at Chicago, Illinois, this 15th day of June 2016.
CARRIER MEMBERS' DISSENT to Third Division Award 4 2306; Docket MW-42087 (Referee George E. Larney)
The Carrier Members must dissent from this Award. In essence, the Majority held that the employees were denied the opportunity todeposit thelump sum payment into their 01(k) account and sh ield the payment from federal taxes. owever, the undisputed facts of record show that the Carrier provided the employees with just such an opportunity. The employees were afforded the opportunity to temporarily increase their 01(k) deductions. Using that opportunity, the employees could easily have increased their deductions to shelter an amount up to $5,0 00 in income and then resumed their normal 0(k contribution level. The Carrier ex plained the straightforward process of how this could be done. The Carrier also assigned a contact person for the employees to work with, and not one Claimant called to receive any additional information. TheMajority states that the Carrier could haveamended the 401(kplan so as to allow for lump sum payments. owever, an exclusion of lump sum payments from 401(k contributions is a common plan feature . It goes beyond the jurisdiction of the Board to rule that the Carrier should change the plan. And changing the plan was completely unnecessary. As previously stated, the employees had the ability to increase their 401(k) deductions in order to shelter the entire amount of the lump sum. They simply chose not to do so.
The Majority also errs to the extent that it suggests that the Carrier provide
the employees a tax-free payment or grant the employees a windfall duplicative
payment. The proposed remedy sustained by the Majority does not comply with
the requirements of law and exceeds the Board's jurisdiction.
CathyKeaneCortez
June 15, 2016
Michael C. Lesnik
MichaelC.Lesnik