Grocery workers will keep their health care, but pay more for it

Grocery workers will keep their health care, but pay more for it

Michele Ellson

Thousands of Northern and Central California grocery workers – including employees of Nob Hill Foods in Alameda – are set to consider a contract offer that maintains their existing health benefit plan but will see them paying more for it. Union leaders are urging workers to approve the deal, which came on the heels of a nine-day strike.

The proposed contract retains health care coverage for workers who have retired from Raley’s and Nob Hill grocery stores in Northern and Central California, though they will pay more for their care if it’s approved. For the first time ever, the contract also includes weekly co-pays for current employees’ spouses and children, while setting limits on the amount of money the grocery chain will pay toward workers’ health care.

In addition to a wage freeze, workers will consider a temporary agreement that trims some premium pay, which union leaders agreed to after getting a look at the Sacramento-based grocery chain’s books. The temporary pay cuts could be extended if Raley’s is unable to maintain its profits.

“The primary objective of the strike was to make sure the benefits remained in place, and that was achieved,” said Mike Henneberry, communications director for United Food and Commercial Workers Local 5.

A Raley’s spokesman did not respond to a reporter’s e-mail seeking additional information for this story.

The proposed contract comes at a time when managers at Northern California’s major, unionized grocery chains say they are experiencing growing competition from non-union shops like Whole Foods, Trader Joe’s, Mi Pueblo and Walmart. During the strike a Raley’s spokesman said the grocer has seen 240 new, nonunion outlets selling grocery items open in markets it serves since 2008, taking advantage of cheap land and cheaper labor to compete with union stores.

Walmart, which is the nation’s largest private employer with a reported workforce of 1.4 million, is facing scrutiny for decisions to eliminate health care for new part-time workers and to cut some existing part-timers from the chain’s health care plan. And experts have speculated that the discount chain’s policies will be replicated by other companies.

In a letter prefacing the contract deal, UFCW5 president Ron Lind said times have changed since 2007, when he said the union took advantage of a booming economy and negotiated the highest wage increases and best overall settlement in the union’s history.

“We all know what has happened since then,” Lind wrote.

The contract proposal also comes after years of what Henneberry characterized as double-digit health care cost increases that have sent employers’ health care expenses skyrocketing. If the contract is approved, Raley’s will pay $6.20 an hour for each employee in order to cover the cost of their health care, an amount that Henneberry guessed would be closer to $9 without employee co-pays and benefit reductions that could see workers paying more for drugs and visits with out-of-network specialists.

Pay for Nob Hill workers can range from $10 for baggers to $21 for journeyman checkers and stockers and a little more for the stores’ meat cutters, Henneberry said during an earlier interview.

Raley’s, Lucky and Safeway participate in a joint health care plan that’s administered by company managers and by the unions who work in those stores. Both Raley’s and Lucky are private companies whose financials are not publicly available. But in a recent filing, Safeway’s managers said they spent $748 million on medical benefits for active employees and retirees who work in in the grocer’s nearly 1,700 stores in 2011, up from $704.4 million the year before and $715.8 million in 2009. Most of Safeway’s 200,000 workers are unionized.

The filing doesn’t separate the amount Safeway pays toward retirees’ medical care, though the contract packet Raley’s workers received says that retiree health care comprises “a huge portion” of the total cost of health care for the three grocers who pay into the combined plan.

“This is why some employers tried to eliminate health care for retirees altogether,” a health care FAQ in the packet says, adding that Raley’s retirees’ health care costs, while rising, will still be lower than those of other retirees.

Safeway is also facing the same massive declines in the value of its pension investments that have driven an anguished debate over the cost of public sector pensions, its most recent annual report to the Securities and Exchange Commission showed. Details of the tentative Safeway contract aren’t yet available, but Raley’s management agreed to maintain workers’ pensions as-is.

Under the proposed contract, Raley’s per-employee health care cost growth is capped at $6.80 through 2014, when the contract is up again and when major provisions of the Affordable Care Act, known as Obamacare, go into effect. Henneberry said the union would need to look at other ways to manage costs, like higher deductibles or benefit cuts, if costs rise beyond the amount Raley’s will pay.

The contract offer contains a range of co-pays, with lower co-pays for employees who agree to take on a health coach and adopt other healthy lifestyle moves that are expected to lower care costs. The co-pays range from $10 to $20 a week per child and $20 to $35 for spouses.

It also requires workers to pay more for pricier drugs and for out-of-network specialists when a similar specialist is available in-plan.

Managers at Raley’s had imposed a contract that would have eliminated health care coverage for retirees and moved existing employees into a company-sponsored plan from the existing one, prompting the strike. Union leaders had already signed off on a contract and temporary stabilization agreement for Lucky/Save Mart workers similar to the one Raley’s employees will consider, and they reached an accord with Safeway’s management while the strike was in progress.

The full details of the Safeway deal haven’t yet been released, though both union leaders representing 22,000 workers and management said the existing health care plan will remain in place.

Raley’s and Nob Hill workers will vote on the tentative contract through December 17.