NYC Local Teamster Dissidents Allege $18 Million Health Fund Loss

HOFFA SMITIt could be a case of miscalculation, a bad contract, or a king-sized rip-off.  Either way, a faction of dissenters within a major New York City local of the International Brotherhood of Teamsters wants some answers.  A report put together by Local 804 Members United, a network of union employees of United Parcel Service (UPS), revealed in June that during 2003-07 the local health fund lost nearly $18 million, a figure representing more than half of all plan assets.  Union officials, they charge, colluded with UPS management to divert this money to the union pension plan, while hiking member health care co-payments. “It’s totally irresponsible how they let these reserves disappear,” said Pete Mastrandrea, a Teamster driver.  “It’s inexcusable how they’ve managed these funds, and they need to answer to the membership for it.”


Teamsters Local 804 has around 7,500 rank-and-file members, and is based in the Long Island City area of Queens, N.Y.  The union is perhaps best known as the home base of former General President Ron Carey, who during the late Nineties was forced out of his position (and eventually the union itself) for complicity in a nearly $900,000 money-laundering scheme surrounding his 1996 re-election campaign.  But a far larger loss, say dissenters, has been happening right under the noses of local leaders.  Back in 2002 the union agreed to a contract with UPS.  Unfortunately, company contributions were insufficient to cover member health care costs.  As a result, the managers tapped into fund reserves to cover the shortfall.  When losses exceeded $6 million, local officials made matters worse by secretly agreeing with UPS to shift company contributions to the local’s pension fund.

Local 804 and UPS recently agreed to a new contract after members overwhelmingly rejected a previous offer containing extensive givebacks.  As part of the agreement, the union and UPS signed a memorandum affirming that 70 cents out of every dollar negotiated for benefits in the first year of the new contract will go to the pension fund.  That leaves over only 30 cents per dollar for health care.  The dissenting faction is hoping that more transparency will stem the health fund losses.  This April, UPS employees within Local 804 voted by more than 90 percent to require the local executive board to provide members with information about their pension and health care funds.  Local President Howard Redmond, after initially opposing the dissenters, endorsed the new bylaws from the podium, pledging to help members obtain pension documents that the Local 804 health fund trustees failed to turn over to members in violation of the Pension Protection Act.  When you’re talking about $18 million, a lot of people are going to be watching.  (Teamsters for a Democratic Union, 4/21/08, 6/20/08, 8/1/08; other sources).