The rank-and-file Teamsters' union members at UPS Freight, UPS Inc.'s less-than-truckload (LTL) unit, overwhelmingly voted to reject a five-year contract proposal already approved by the company and union leadership. The vote, which was 4,244 to 1,897, sends both sides back to the bargaining table and raises doubts about whether a deal can be finalized before the contract's July 31 expiration date.

At UPS' larger small-package unit, the situation is not as clear-cut, yet it still spells potential trouble for the Atlanta-based giant and for Teamster leaders. As of late Monday, the contract seemed headed for approval but only by a slightly more than 4,000-vote margin. According to dissident group Teamsters for a Democratic Union (TDU), the contract passed with the narrowest margin of victory in the history of UPS labor agreements. The first national contract was reached in 1979. Before then, the two sides worked under regional and local compacts.

In addition, TDU said members rejected 17 regional supplements and riders to the contract. If accurate, that would be the largest number of supplemental and rider rejections in the Teamsters' 110-year history.

Unlike with UPS Freight, the Teamsters did not confirm the results of the small-package contract on its website as of last night. UPS and Teamster leaders tentatively agreed on both pacts in April. The small-package contract, which also expires July 31, covers about 240,000 UPS employees. The LTL pact covers between 10,000 and 12,000 workers at UPS Freight. Combined it is the largest collective-bargaining agreement in North America.

All of the rejected supplements and riders must be renegotiated and re-voted on before a national contract can be signed, according to TDU. That's because the contract is one integrated document, not separate or regional agreements. If a supplement or a rider is rejected for a third time, that becomes a strike vote, TDU said.

Ken Paff, TDU's national organizer and a frequent critic of Teamster General President James P. Hoffa, called the votes on the two contracts "a big repudiation" of Hoffa's efforts. Paff said the outcomes are a "pretty big deal" for UPS as well.

In a statement issued last night, UPS said it "has not been officially notified of voting results, and it is our understanding that the ballot count will continue tomorrow." UPS said it would not comment further until it was notified by the Teamsters of the results.

The small-package master contract passed on the backs of members in the Southeast, the mid-Atlantic, and New England. In those regions, the margin of victory was close to 12,000 votes. In the rest of the country, the margin of rejection was about 7,000 votes.

The most striking blow came from the Central region, home of the largest supplemental agreement. There, Local 89 in Louisville, Ky.—which represents about 9,300 small-package workers and is the largest Teamster local in the UPS system— rejected the master agreement by a vote of 3,388 to 483. The rank-and-file rejected its supplement by an equally convincing vote of 3,520 to 441. Louisville is home to UPS' primary global air facility known as Worldport. In mid-May, leaders of the local had advised members to reject the small-package and UPS Freight contract proposals.

POINTS OF CONTENTION
Based on public statements over the past 24 hours, the biggest bone of contention is the proposed shift from a UPS-administered health plan to a Teamster health plan with UPS and the union as trustees. Opponents of the shift say it will result in benefit cuts for the affected workers. Additionally some opponents, such as the leaders of Local 89 in Louisville, say there is no clear explanation of how the transition would occur.

"Health care sunk [both contracts]," said a high-level union source.

Union officials have also voiced concerns that the raises for package workers in the proposed master contract fall below the level of increases called for in the current pact. They are also worried that the agreement contained no pension increases for the first four years.

The Union's executive board also took a dim view of the tentative UPS Freight contract, saying it fails to eliminate or reduce the practice of driver subcontracting, which was one of the union's main grievances. UPS Freight subcontracts about half its driving work, according to union officials.

Judging by the resounding defeat of the UPS Freight agreement, the rank-and-file were unhappy with the proposed creation of a separate "line-haul driver" division designed to reduce the incidence of driver subcontracting. According to Local 89 in Louisville, the contract still fails to eliminate or reduce the practice. Newly hired employees of the division would earn 20 cents less per mile than other members, local officials said.