Teamsters call off strike threat at Yellow over freeze on pension payments

A potentially company-ending strike at Yellow Corp. was averted when the union says its Central States Health and Welfare Fund agreed Sunday to extend health care benefits for workers at Yellow subsidiaries YRC Freight and Holland.

The move came after what the union called “intense pressure” from Teamsters General President Sean M. O’Brien and General Secretary-Treasurer Fred Zuckerman.

The extension of health care benefits for Teamsters and their families averts a strike at the freight companies, which could have begun on Monday after Yellow failed to make contractually obligated benefit payments of $50 million to Central States on July 15.

The agreement by Central States at the urging of the Teamsters gives Yellow 30 days to pay its bills. The Teamsters say it has an “understanding” the company will do so within the next two weeks.

The intense discussions between Teamsters leadership and Central States successfully convinced fund trustees to reverse their previous decision that health care benefits would end on July 23 if Yellow remained delinquent.

O’Brien subsequently ordered the Teamsters National Freight Industry Negotiating Committee to meet in-person with Yellow representatives this week in Washington “to review the state of the company and the current contract.”

As the Teamsters and Yellow sit down, the reversal by Central States will keep health care benefits paid and the Teamsters on the job for the time being.

“Our members at YRC Freight and Holland cannot work without health care, and the Teamsters worked tirelessly to ensure an immediate strike at Yellow could be averted. These discussions were not easy, but Central States has made meaningful movement under pressure from the union. We are seeking a real resolution, but let this solution today serve as a profound reminder that our members can only endure so many sacrifices. Teamsters at Yellow simply work too hard and have already given so much.” - Sean M. O’Brien

Yellow Corp. said it withheld approximately $50 million in pension contributions to the Teamsters Central States pension fund because it says Teamsters’ leadership is causing “obstruction” to the company’s major change of operations.

That caused what Yellow labeled a “liquidity crisis” and the need to implement cash-conservation measures, including its benefit funding deferral request.

Yellow, which controls about 8% of the $58 billion less-than-truckload (LTL) market as the third-largest player in that sector, says the Teamsters’ threat of a strike would be illegal and a violation of the collective bargaining agreement, which doesn’t expire until March 31.

Yellow lost a plea for a temporary restraining order in its District of Kansas lawsuit against the Teamsters. It said the union’s actions are the “direct cause” of Yellow’s inability to make contributions to the funds.

Yellow had asked U.S. District Judge Julie Robinson to issue a temporary restraining order and preliminary injunction against the union to prevent a threatened strike at midnight Sunday.

Robinson ruled she does not have authority to issue such orders. She expressed sympathy for the workers. But she wondered aloud whether such aggressive actions as a strike would not mean the Teamsters had won a battle but lost the war.

At issue is Yellow’s plan to convert its regional operations to a “One Yellow” format of multiple regional carriers operating in a long-haul system. The union is protesting potential change of domiciles for what the company calls a “small number” of drivers.

O’Brien said that the company’s failure to pay into the states’ funds was due to “gross mismanagement.”

“Following years of worker givebacks, federal loans, and other bailouts, this deadbeat company has only itself to blame for being in this embarrassing position,” O’Brien said.

To keep up with the times and customers’ needs, Yellow says it must implement its well-publicized business modernization plan known as “One Yellow.” But it says Teamsters’ leadership has rejected all proposed changes of operations. For nine months, the union has balked, freezing the company’s business plan for nine months.

This has cost Yellow in excess of $137 million in adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) and has prevented critical refinancing for Yellow. The company is suing the Teamsters for that amount.