_____ 

_____ 

REPORT 

to 

THE PRESIDENT 

by 

EMERGENCY BOARD 

NO. 240 

SUBMITTED PURSUANT TO EXECUTIVE ORDER DATED DECEMBER 6, 2006 

ESTABLISHING AN EMERGENCY BOARD TO INVESTIGATE A DISPUTE 

BETWEEN METRO-NORTH RAILROAD AND THE TRANSPORTATION 

COMMUNICATIONS INTERNATIONAL UNION; TRANSPORT WORKERS 

UNION OF AMERICA; SHEET METAL WORKERS’ INTERNATIONAL 

ASSOCIATION; INTERNATIONAL ASSOCIATION OF MACHINISTS & 

AEROSPACE WORKERS; INTERNATIONAL BROTHERHOOD OF ELECTRICAL 

WORKERS; SERVICE EMPLOYEES INTERNATIONAL UNION – NATIONAL 

CONFERENCE OF FIREMEN & OILERS; INTERNATIONAL BROTHERHOOD OF 

TEAMSTERS; AND TRANSPORTATION COMMUNICATIONS INTERNATIONAL 

UNION – AMERICAN RAILWAY & AIRWAYS SUPERVISORS ASSOCIATION 

AND SECTION 9a OF 

THE RAILWAY LABOR ACT, AS AMENDED 

 (National Mediation Board Case Nos. A-13332, A-13333, A-13334, A-13335, A-13336, A-13338, 

A-13342, A-13343, A-13344, A-13345, A-13347, A-13378) 

WASHINGTON, D.C. 

JANUARY 19, 2007
Washington, D.C. 

January 19, 2007 

The President 

The White House 

Washington, DC 20500 

Dear Mr. President: 

On December 6, 2006, pursuant to Section 9a of the Railway Labor Act, as amended, and by 

Executive Order, you established an Emergency Board to investigate a dispute between the 

Metro-North Railroad and certain of its employees represented by the Transportation 

Communications International Union; Transport Workers Union of America; Sheet Metal 

Workers’ International Association; International Association of Machinists & Aerospace 

Workers; International Brotherhood of Electrical Workers; Service Employees International 

Union – National Conference of Firemen & Oilers; International Brotherhood of Teamsters; and 

Transportation Communications International Union – American Railway & Airways Supervisors 

Association. 

Following its investigation of the issues in dispute, including both hearings and meetings with the 

parties, the Board now has the honor to submit its Report to you setting forth our 

recommendations for equitable resolution of the dispute between the parties. 

The Board acknowledges with thanks the assistance of Susanna C. Fisher and Norman L. Graber, 

staff attorneys of the National Mediation Board, who rendered invaluable counsel and aid to the 

Board throughout the proceedings. 

 Respectfully submitted, 

 ____________________________ 

Peter W. Tredick, Chairman 

 _____________________________ 

Patricia Hanahan Engman, Member 

 _____________________________ 

Robert E. Peterson, Member 

2
TABLE OF CONTENTS 

I. CREATION OF THE EMERGENCY BOARD.............................................5 

II. PARTIES TO THE DISPUTE........................................................................5 

A. Metro-North ........................................................................................5 

B. The Coalition ......................................................................................5 

III. HISTORY OF THE DISPUTE.......................................................................6 

IV. ACTIVITIES OF THE EMERGENCY BOARD...........................................7 

V. THE POSITIONS OF THE PARTIES ..........................................................8 

A. Metro-North ...........................................................................................8 

B. The Coalition .........................................................................................8 

VI. RECOMMENDATIONS................................................................................9 

A. The Term Sheet......................................................................................9 

B. Wages and Wage Adjustments ..............................................................9 

C. Retroactivity.........................................................................................12 

D. Pension.................................................................................................13 

E. Health Care Contribution.....................................................................15 

F. Benefits ................................................................................................16 

1. Coverage for Early Retirees Not Eligible for Medicare ........16 

2. “Pop Up” Retiree Medical Coverage.....................................17 

3. Vision Care ............................................................................17 

4. Life Insurance ........................................................................17 

5. Sick Leave Pay.......................................................................18 

3
G. Holidays ...............................................................................................18 

H. Rules ....................................................................................................18 

I. MTA Corporate Restructuring.............................................................19 

J. “Me Too” Agreement Protection.........................................................19 

K. Term of Agreement – Moratorium ......................................................20 

VII. CONCLUSION.............................................................................................20 

APPENDIX A – EXECUTIVE ORDER...............................................................23 

APPENDIX B – EXTENSION LETTER .............................................................26 

4
I. CREATION OF THE EMERGENCY BOARD 

Presidential Emergency Board No. 240 (“PEB” or “Board”) was established by 

the President pursuant to Section 9a of the Railway Labor Act (“RLA”), as amended, 45 

U.S.C. § 151 et seq. including § 159a, and by Executive Order dated December 6, 2006, 

effective December 7, 2006. The Board was created to investigate and report its findings 

and recommendations regarding a dispute between the Metro-North Railroad (“MetroNorth” or “Carrier”) and certain of its employees represented by certain unions. A copy 

of the Executive Order is attached as Appendix A. 

The President appointed Peter W. Tredick, of Santa Barbara, California, as 

Chairman of the Board, and Patricia Hanahan Engman, of Anna Maria, Florida, and, 

Robert E. Peterson, of Briarcliff Manor, New York, as Members. The National 

Mediation Board (“NMB”) appointed Susanna C. Fisher, Esq. and Norman L. Graber, 

Esq., as Special Counsel to the Board. 

II. PARTIES TO THE DISPUTE 

A. Metro-North 

Metro-North was created in 1982 by the Metropolitan Transportation Authority 

(“MTA”) as a public benefit corporation to operate rail commuter lines between New 

York City and its northern suburbs in New York and Connecticut that were being 

operated by the Consolidated Rail Corporation (“Conrail”). Metro-North took 

responsibility for this rail commuter service on January 1, 1983, and operates rail service 

in Connecticut through an agreement with the Connecticut Department of Transportation. 

Each weekday, Metro-North operates 620 trains transporting over 250,000 

passengers over its 775 miles of track. Approximately 58% of its operating revenue 

comes from passenger fares. Federal, state, and local subsidies provide the balance of its 

operating revenue, as well as funding for capital improvements. 

Metro-North has a total of 5,840 employees, with 4,880 of those employees 

represented by various labor organizations, which are, in turn, separated into 17 crafts or 

classes. 

Other transportation subsidiaries in addition to Metro-North that are a part of the 

MTA include the Long Island Rail Road (“LIRR”); the New York City Transit Authority 

(“NYCTA”); the Triborough Bridge and Tunnel Authority; the Staten Island Rapid 

Transit Operating Authority; and, several bus lines. 

B. The Coalition 

The Coalition represents about 3,500 Metro-North employees in 12 crafts and 

classes of work. The Coalition consists of the following unions: the Transportation 

5
Communications International Union; Transport Workers Union of America; Sheet Metal 

Workers’ International Association; International Association of Machinists & Aerospace 

Workers; International Brotherhood of Electrical Workers; Service Employees 

International Union – National Conference of Firemen & Oilers; International 

Brotherhood of Teamsters; and Transportation Communications International Union – 

American Railway & Airways Supervisors Association (“The Coalition”). 

Members of the Coalition entered into agreement on January 13, 2005 to form 

the “Metro-North Labor Bargaining Coalition, AFL-CIO.” As described in the 

agreement, the Coalition’s purpose was to “bargain with Metro-North during this round 

over rates of pay, pension and health and welfare.” The agreement further states: “The 

Coalition shall represent its affiliates in all proceedings before Presidential Emergency 

Boards, arbitration panels, or any other forum where disposition of the Section 6 notices 

is placed at issue.” 

III. HISTORY OF THE DISPUTE 

In December 2002, pursuant to Section 6 of the RLA, each of the unions that 

comprise the Coalition served on Metro-North formal notices for changes in current rates 

of pay, rules, and working conditions. 

Although each of the separate bargaining units commenced negotiations with 

Metro-North on an individual basis, they subsequently joined together as an informal 

Coalition and thereafter entered into mutual agreement as a formal Coalition. 

While the Coalition was in negotiation with Metro-North, another body of 

bargaining unit employees that represents six of the bargaining units on Metro North, the 

Association of Commuter Rail Employees (“ACRE”), entered into an agreement with 

Metro-North on January 15, 2004 in disposition of their Section 6 notices. 

Metro-North offered a like agreement to the other bargaining units. Although one 

current member of the Coalition, i.e., the Transportation Communications International 

Union – American Railway & Airways Supervisors Association (“TCIU-ARASA”) 

expressed a willingness in June 2005 to enter into terms of agreement as in the ACRE 

Agreement, it failed membership ratification. The TCIU-ARASA thereafter joined the 

Coalition. 

The parties were unable to resolve the issues in dispute in direct negotiations, and 

applications were filed with the National Mediation Board (“NMB”) by the separate 

bargaining units in October and November 2004 by all but the TCIU-ARASA. The latter 

filed its application for mediation in July 2005. 

Representatives of all parties thereafter worked with an NMB mediator and with 

Board Members of the NMB in an effort to reach agreement. Although various proposals 

for settlement were discussed, considered, and rejected, it was not until June 23, 2006 

that the Coalition and Metro-North initialed a one-page Term Sheet that briefly set forth 

6
an understanding as to the basis for mutual settlement. Although no vote was taken, this 

Term Sheet was opposed by some rank and file employees. 

On November 1, 2006, the NMB, in accordance with Section 5, First, of the RLA, 

urged Metro-North and the Coalition to enter into an agreement to submit its collective 

bargaining dispute to arbitration as provided in Section 8 of the RLA (“proffer of 

arbitration”). Under dates of November 2 and 3, 2006, the Coalition bargaining units, 

individually, declined the NMB proffer of arbitration. Metro-North advised under date of 

November 6, 2006 that it would accept the proffer of arbitration. As the RLA provides 

that both parties must agree to a proffer of arbitration to establish an arbitration board, no 

board was established. 

On November 6, 2006, the NMB served notice that its services were terminated 

under the provisions of Section 5, First, of the RLA. Accordingly, “self-help” became 

available to both parties as of 12:01 a.m., EST, on Thursday, December 7, 2006. The 

Coalition thereafter announced that at that time it would withdraw its represented 

membership employees from work on Metro-North. 

On November 30, 2006, in accordance with Section 9a of the RLA, Metro-North 

requested that the President establish an Emergency Board to investigate and issue a 

report and recommendations regarding the dispute. Section 9a(c)(1) of the RLA, in 

setting forth special procedures for commuter service, provides that any party to a dispute 

that is not adjusted under the other procedures of the RLA, or Governor of the State 

through which the service that is subject to dispute is operated, may request the President 

to establish an Emergency Board. Thereafter, on December 6, 2006, the President 

created this Emergency Board, effective December 7, 2006. 

IV. ACTIVITIES OF THE EMERGENCY BOARD 

Both parties were requested to and did provide the Board with pre-hearing 

submissions on December 15, 2006. A hearing on the issues in dispute was held 

December 18 and 19, 2006, in New York, New York. Both parties were represented by 

counsel, and had a full and fair opportunity to present oral and documentary evidence and 

argument. 

The Board thereafter took under advisement the arguments and positions of the 

parties, and continued in contact with the parties concerning a need for additional 

information involving various issues in dispute. The Board also reviewed the positions of 

the parties in joint telephone conferences and exchanges of electronic mail among 

themselves and with the parties. 

When it became apparent additional time was necessary for the parties to prepare 

responses to certain requested information, and to enable the Board the opportunity to 

engage the parties in mediation, a request was made for an extension of time to January 

19, 2007 for the Board to file its Report. The President approved this time extension on 

January 4, 2007. A copy of the extension approval is attached as Appendix B. 

7
The Board met in executive session separately and jointly with the parties on 

January 16, 2007 in Washington D.C. The Board members thereafter met in executive 

session to finalize this Report. 

V. THE POSITIONS OF THE PARTIES 

A. Metro-North 

It is the position of Metro-North that the Board should recommend an agreement 

comprised entirely of the understanding as outlined in the June 23, 2006 Term Sheet that 

was initialed by it and all representatives of the bargaining units that are members of the 

Coalition. 

Metro-North submits the Term Sheet, supplemented by work rule/productivity 

changes and other pension and benefit provisions as contained in Memoranda of 

Understandings as were distributed to each of the separate bargaining units of the 

Coalition in October 2006, provides terms that are equal to and consistent with those 

contained in Metro-North’s agreement with ACRE-represented employees in six other 

bargaining units. 

Metro-North further argues the Term Sheet and work rule/productivity changes 

are similar to and equal in value to the agreement it entered into with ACRE and the 

agreement the LIRR entered into with the United Transportation Union (“UTU”). 

Although the agreements cover some different subject matter or issues, MetroNorth contends the ACRE agreement, as with the Term Sheet, contains significant 

differences with respect to a pension conversion to the MTA Defined Benefit Plan (“DB 

Plan”) as compared with the LIRR. With respect to the pension conversion, Metro-North 

submits that ACRE members will receive service credit back to 1983 under the DB Plan, 

unlike the LIRR employees whose service credit extended only to 1988. However, 

Metro-North says, the parties agreed to provisions to offset the cost of the unfunded 

pension liability resulting from that additional service credit, as set forth in the Term 

Sheet. 

B. The Coalition 

The Coalition argues that contrary to Metro-North’s assertions that the Term Sheet 

comprised full agreement on all issues, there remained material provisions that were not 

agreed upon or reduced to writing. Therefore, the Coalition maintains, there was no 

meeting of the minds on a comprehensive agreement. 

Moreover, the Coalition says, when it brought the Term Sheet to the attention of its 

membership, it was opposed as a basis for settlement. 

8
The Coalition thus contends that a recommendation for settlement should be based 

on its pre-hearing proposal which it maintains affords a fresh approach that will allow the 

parties to reach an overall agreement that is fair, lessens the disparity between MetroNorth and LIRR employees, can be ratified, and does not put significant strain on MetroNorth’s finances. 

VI. RECOMMENDATIONS 

A. The Term Sheet 

On June 23, 2006 representatives of Metro-North and each of the Coalition’s 

separate bargaining units initialed a one-page Term Sheet that summarized the terms of 

an understanding that represented a good faith effort to resolve the dispute. It was 

understood that Metro-North and each of the bargaining units in the Coalition would 

propose the Term Sheet to their respective constituencies for adoption. 

The Term Sheet was not, however, presented for a formal vote to any of the 

Coalition’s bargaining unit membership. The Coalition representative testified there was 

strong rank and file opposition to the Term Sheet because: 1) there was too little value in 

the Term Sheet to enable ratification; 2) there was disagreement over no fewer than six 

important issues; and, 3) it became apparent as a result of NYCTA/MTA arbitration 

proceeding on which the value of the Term Sheet provisions were based that Metro-North 

had undervalued the Term Sheet. 

Notwithstanding the position of the Coalition that the Term Sheet is no longer a 

viable basis for settlement, Metro-North urges the Term Sheet be recommended for 

adoption as meeting agreed-upon components of settlement. Metro-North advocates this 

despite having stated to the Coalition at various times that it was withdrawing it from the 

bargaining table as a means of settlement. 

B. Wages and Wage Adjustments 

Collective bargaining agreements between Metro-North and the 17 bargaining 

units of nine unions that represent its employees in various crafts and classes of service 

have been based over the years on the principle of pattern bargaining and settlements. In 

accordance with this principle, changes in established rates of pay are made so that the 

timing and amount of wage adjustment are alike over the term of agreement for each 

separate bargaining unit craft or class. 

Metro-North submits that a pattern of wage adjustments generally exists in each 

round of negotiations between the separate MTA entities, i.e., the NYCTA, LIRR, and 

Metro-North. It points to the latest contract terms for represented employees of the 

NYCTA providing for a lump sum payment of $1,000 in the first year, and 3% wage 

increases in the second and third years. 

9
As further evidence of this pattern, Metro-North points to the LIRR agreement 

with its largest union, the UTU, which represents 2,450 employees in train service, track 

maintenance, car repair, special services, and maintenance of way supervisors. This 

agreement is for four years, - January 1, 2003 through December 31, 2006, and provides 

the same wage increases for the first three years as the NYCTA agreement, i.e., $1,000 

lump sum, 3%, and 3%, with an additional 3% for the fourth year. 

With respect to its own workforce, Metro-North refers to an agreement with six 

bargaining units represented by ACRE. ACRE represents approximately 1,400 

employees in engine and train service, traffic control, yard supervision, power, and 

signals. It entered into a four-year agreement with Metro-North similar to and equal in 

cost to the LIRR/UTU agreement. The agreement provides a $1,000 lump sum payment 

for 2003 and 3% general wage increases on January 1 of 2004, 2005, and 2006. 

In keeping with this pattern of wage settlements, Metro-North proposes that the 

Coalition before this Board be in agreement to a six-year settlement that provides a 

$1,000 lump sum payment for 2003; 3% general wage increases January 1, 2004, 2005, 

and 2006; 4% January 1, 2007; and, 3.5% January 1, 2008. 

In argument to the Board, the Coalition urges that the pattern of wage increases 

for Metro-North employees should mirror the wage levels of comparable crafts and 

classes on the LIRR because it is a rail commuter carrier like Metro-North that is also 

part of the MTA. 

The Coalition, contrary to Metro-North’s argument, says the two railroads provide 

identical modes of passenger transportation; share the same fundamental economic 

characteristics; have similar sources of financial support and, thus, fiscal capacity to meet 

operating costs; and that the work functions and organization of work on the two 

properties are virtually the same. 

In further support of its position, the Coalition argues that although members on 

Metro-North are performing the same job for essentially the same employer, the current 

wages of Metro-North employees are only 85% of employees in like crafts and classes on 

the LIRR. Even with the increases received by the LIRR over the course of the last round 

of LIRR bargaining, the Coalition says, the Metro-North rates of pay will remain nearly 

$2.00 per hour behind, or 7.7% below LIRR as of January 1, 2006. 

This single central fact, the Coalition asserts, justifies its position that substantial 

movement toward pay equality with the LIRR must be achieved during this round of 

negotiations to produce what it says would be a fair and reasonable result. 

To move Metro-North employees towards equality in compensation with their 

counterparts of the LIRR the Coalition proposes general wage increases of 4% on 

January 1, 2003; 3% on January 1, 2004, 2005, and 2006; an equity adjustment effective 

December 31, 2006, that is estimated to be the equivalent of a 1.75% increase; and, 4% 

on January 1, 2007, 2008, and 2009. 

10
The Coalition request for wage parity with employees of the LIRR, or “equal pay 

for equal work,” is a matter that has been considered and reviewed numerous times since 

1982 when Metro-North was created by the MTA to operate commuter rail lines 

previously operated by Conrail. 

More recently, PEB 226 in its Report of April 21, 1995 to President Clinton said 

the following with respect to the issue of wage level parity: 

The Board’s recommendations on 1995-97 wage adjustments are found 

elsewhere in the Report. As for the so-called “parity” or “equity” issue, 

however, the Board cannot accept the recommendation that those 

Organizations whose wages are less than comparable LIRR wages should 

be brought to LIRR levels by 1997. First of all, the amount of new money 

involved in such an undertaking is far beyond what the Board is prepared 

to recommend as appropriate at this time. 

There are, however, other factors to be considered. The Board does not 

believe that LIRR wages, however comparable the work, is an appropriate 

standard for Metro-North pay levels. Comparisons elsewhere also make 

sense, whether for similar work at other commuter railroads, for other 

MTA agencies such as the NYC Transit Authority, or for comparable 

railroad work in general. The Carrier presented significant data 

concerning other Northeast commuter railroads (New Jersey Transit 

Corporation and Southeastern Pennsylvania Transportation Authority) as 

well as Conrail and the National Railroad Passenger Corporation 

(Amtrak). In all four instances, wage levels are considerably lower than at 

Metro-North, and wage increases granted in the 12 years’ of Carrier’s 

existence have been considerably less for these four carriers than at MetroNorth. In sum, the Board recognizes the perceptions of inequity and 

unfairness set forth by the Organizations but does not necessarily accept 

the view that LIRR wage rates are the “right” ones. In addition, there is 

no reason not to include other railroads, such as those mentioned above, in 

making comparisons. 

When the recommendations of PEB 226 did not result in a resolution of the 

dispute, President Clinton created PEB 227 to select final offers of the parties. The 

Report of PEB 227 does not show the Organizations pursued their wage level parity 

argument with the LIRR to that Board. The Report of PEB 227 on the subject of Wages 

reads in part here pertinent: 

We agree with the findings of PEB 226 that the agreement should include 

“moderate increases” consistent with “the trend.” Specifically, we have 

accepted the offers which provide for an aggregate ten percent (10%) 

wage increase commencing July 1, 1995 through December 31, 1997. 

11
In overall study of the record before us, the Board finds no reason to conclude 

other than PEB 226 did that a need exists for an in-depth study of not only LIRR rates of 

pay, rules and working conditions, but also such factors as they exist with respect to other 

comparable commuter rail lines. 

Moreover, as concerns a comparison of rates of pay, rules and working conditions 

of Metro-North employees with those of the LIRR, it would seem to the Board that is a 

subject to be considered when and if there is a consolidation of workforces, such as when 

the LIRR is brought to New York City’s Manhattan’s East Side under a $2.6 billion grant 

by the federal government that New York State Governor Pataki signed off on this past 

December. 

It is, therefore the recommendation of the Board that the parties be in agreement 

to the pattern of wage increases as proposed by Metro-North, and contained in the Term 

Sheet initialed by the parties, i.e., a one-time lump sum payment of $1,000 for 2003; 3% 

general wage increases January 1, 2004, 2005, and 2006; 4% January 1, 2007; and, 3.5% 

January 1, 2008. 

C. Retroactivity 

Metro-North’s 2004 Agreement with ACRE provides that to be eligible to receive 

the lump sum payment of $1,000 for 2003, the employee must have been on the payroll 

between January 1, 2003 and December 31. 2003. The Agreement further provides that 

employees who were on the payroll during 2003 for less than 12 months, which includes 

retirees, new hires, or otherwise off pay status for one month or more, shall have their 

lump sum payment prorated based on the number of months on the payroll over a 

denominator of 12. Fifteen days or more on the payroll in a month is deemed to 

constitute a month of service. Employees who were terminated or voluntarily resigned 

during 2003 or before the final ratification of the ACRE Agreement were not entitled to 

the lump sum payment or any pro rata share thereof. 

A similar retroactivity clause was made a part of the most recent LIRR-UTU 

Agreement of November 14, 2003. 

In the October 23, 2006 draft agreements that Metro-North proposed to the 

individual bargaining units of the Coalition, as supplements to the Term Sheet, a similar 

retroactivity clause was included as concerns the $1,000 lump sum payment. 

The Metro-North proposals to the Coalition members included an additional 

provision as follows: 

The retroactive payments commencing on January 1, 2004 shall only be 

granted to current employees for service performed in 2004, 2005 and 

2006 and on a pro-rated basis for employees who since January 1, 2004 

have: 1) retired; 2) died; or, 3) were dismissed and subsequently reinstated 

with full seniority restored. 

12
Under these circumstances, it is the recommendation of the Board that the parties be in 

agreement to the retroactivity provisions in the Metro-North proposals of October 23, 

2006. 

D. Pension 

The parties have engaged in extensive dialogue about the manner by which 

employees shall be covered by the MTA DB Plan. In letters of November 30, 2004 and 

December 6, 2004 to Metro-North, outlining its proposals for settlement of the various 

issues in dispute, the Coalition described its request concerning Pensions as follows: 

a) For vesting purposes the Defined Benefit Plan will vest in the year 

1983. 

b) Employees will pay a 3% contribution of their gross wages for a 

maximum of ten years (120 months). 

c) All money in an employee’s current defined contribution plan fund 

(Vanguard) that has been contributed by Metro-North will be 

contributed to the Metro-North defined benefit fund. Likewise, all 

monies in an employee’s current defined contribution plan fund 

(Vanguard) that has been contributed by the employee will be retained 

in the employee’s account. 

Thereafter, by letter of February 9, 2005, the Coalition, in a counter-proposal to 

Metro-North, requested that the following terms be in addition to those mentioned above: 

On the date of agreement, each employee will be afforded a one-time 

option to elect to be covered by the Metro-North Defined Benefit Plan 

under the terms described in (c) above, or to remain in the Vanguard 

Defined Contribution Plan, in which case Metro-North will continue to 

make contributions according to the current negotiated schedule and the 

employee will retain all monies previously contributed to their account by 

Metro-North as well as their own contributions. Employees who elect to 

remain in the Defined Contribution Plan in lieu of being covered by the 

Defined Benefit Plan will not be required to pay 3% of their gross wages. 

Although some subsequent changes in the provisions set forth above were 

discussed, when the parties initialed the Term Sheet on June 23, 2006, their 

understanding relating to the Pension issue was jointly outlined as follows: 

Eliminate DC Plan (Vanguard); 

Convert Vanguard Plan to MTA DB coverage; 

13
Past service credited to 1983; 

All employees contribute 3% on gross wages, effective 10/1/2005; 

Employee contribution account, including associated earnings, remains 

with employee; 

Employer contributions, including associated earnings, transferred to 

MTA DB Plan; 

The Company paid life insurance policy will be eliminated upon 

ratification. 

One time irrevocable option for current employees hired prior to 1/1/88 to 

opt out of participation in the MTA DB Plan. This election must be made 

within 90 days of final ratification, pursuant to a process establish[ed] by 

the employer. For all employees who elect to remain in a DC Plan, the 

employer shall continue to contribute at the current rates. These 

employees will not contribute 3% towards the DB Plan. For those 

employees who elect to remain in a DC Plan, the employer will do a nontax transfer into the MTA DC Plan at the time of the transfer of DC Plan 

assets to the MTA DB Plan. 

The plan of benefits cannot be unilaterally changed by the employer. All 

changes in benefit levels must be collectively bargained. 

In hearings before the Board, the Coalition opposed what it calls the inequity of 

LIRR employees having to contribute 3% of earnings for only 10 years towards the MTA 

DB Plan, while Metro-North employees being asked to contribute 3% of earnings for 

their entire careers to accrue pension credits back to 1983, even though pre-1988 LIRR 

employees receive far superior retiree benefits. 

The Coalition also now requests that Metro-North employees who were hired 

after 1988 have the same ability to opt out of the MTA DB Plan as employees hired 

before 1988. 

According to Metro-North, the parties met in June 2006 to resolve their 

disagreement regarding the valuation of the five years of service credit under the MTA 

DB Plan, and this meeting resulted in acceptance of Metro-North’s valuation of the five 

years service credit and the funding mechanisms that were necessary to offset the cost of 

that additional credit. 

As indicated above, a number of matters related to the Pension issue have been 

raised and discussed between the parties in their negotiations. Some seem more 

intractable than others notwithstanding that both parties seem to be in agreement to a 

major change in the current Pension benefit. 

14
Clearly, conversion of a DC Plan to a DB Plan is of significant benefit to the 

covered employees and, to a large extent, contrary to current trends involving such 

matters. As the Pension Benefit Guaranty Corporation has stated: “A defined benefit 

plan provides a stable source of retirement income to supplement social security,” or, in 

case of rail carrier employees, a stable source of retirement income to supplement 

pension annuities under the Railroad Retirement Act. 

Under the circumstances, the Board recommends that the parties be in agreement 

to the specific terms of the Pension issue as outlined in the Term Sheet. It seems to the 

Board that the representatives of both parties made a determined effort in their best 

professional judgment to arrive at an understanding that serves the interests of both 

parties. 

E. Health Care Contribution 

The cost of health care insurance continues to escalate at a rapid rate. A survey 

sponsored by the Kaiser Family Foundation and conducted by the Health Research and 

Education Trust of Chicago, an organization affiliated with the American Hospital 

Association, reported the cost of family coverage to have risen by as much as 87% since 

2000. Researchers also report that employers will face further increases in health care 

premium costs for their workers in the future. 

The impact of these rapidly rising costs has led some employers to terminate 

health care insurance for their employees and other employers to shift some of the 

premium costs to employees. 

It is in the face of escalating health care costs that Metro-North has requested that 

its employees contribute toward health insurance premium costs. Specifically, MetroNorth asks that “active” employees represented by the Coalition contribute 1.5% of their 

gross wages with an “escalator” that would increase the amount of the contribution as the 

cost of the insurance premium rises. 

The most recent Agreement between Metro-North and its employees in the craft 

or class of Conductors, Assistant Conductors and Hostlers, for example, provides that 

“new hires” will contribute to the premium cost of their health insurance plan at the same 

rate paid by Metro-North management employees, including any future adjustments. 

The recent Award of a Public Arbitration Panel involving represented employees 

of the NYCTA and Manhattan and Bronx Surface Transit Operating Authorities, 

subsidiary units of the MTA, directs that for the first time “active” members of the 

NYCTA will contribute 1.5% of their bi-weekly gross wages to pay a portion of their 

health care insurance premiums. This employee contribution was considered appropriate 

as an offset for the cost of retiree health care benefits. 

15
The Coalition argues that Metro-North’s proposal that employees contribute to 

health care insurance will exacerbate the benefit disparity between LIRR and MetroNorth employees, since LIRR employees do not now contribute toward their health care 

insurance. The Coalition further maintains that tying contributions for uniform health 

care benefits to compensation and hours worked would result in employees who worked 

significant amounts of overtime paying substantially more for the identical health care 

benefit than an employee who does not work overtime hours. 

The Coalition argues that a more equitable plan is contained in a recent 

Agreement between Southeastern Pennsylvania Transportation Authority and the 

Brotherhood of Locomotive Engineers and Trainmen, which caps employee contributions 

at 1% of gross wages for 40 straight time hours of work. 

In view of the Board’s other recommendations, and considering the equities of the 

situation, the Board recommends that the parties be in agreement to the following terms 

of settlement: 

Employees hired after the effective date of this Agreement will contribute 

1.5% of 40 hours of their weekly gross wages by payroll deduction to 

offset premium costs for the current health insurance plan, with an 

“escalator” for the term of agreement, this escalator not to exceed 2% of 

gross wages in any one year. 

Employees hired after the effective date of this Agreement who 

subsequently go on leave of absence without pay shall be required to 

personally make their normal contribution of 1.5% of 40 hours of their 

regular hourly rate of pay, in addition to any applicable escalator cap on a 

schedule of payment basis as determined appropriate by Metro-North. If 

such contribution is not made as directed, Metro-North shall cancel that 

employee’s health insurance coverage upon written notice to the 

employee. 

F. Benefits 

In addition to health care contributions, other benefit issues argued to the Board 

involve: 1) Coverage for Retirees Not Eligible for Medicare; 2) “Pop Up” Retiree 

Medicare Coverage; 3) Vision Care; 4) Life Insurance; and 5) Sick Leave Pay. 

1. Coverage for Early Retirees Not Eligible for Medicare 

The Coalition asks that employees who are at least 55 years of age with no less 

than 10 years service be entitled to receive health care benefits from Metro-North until 

they are eligible for Medicare. 

In support of its position, the Coalition submits that the LIRR employees already 

receive this benefit. At the same time, the Coalition is aware that the Metro-North 

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Agreement with ACRE grants a somewhat similar benefit, albeit under that Agreement 

employees become eligible for this benefit after 20 years service rather than the 10 years 

service here sought by the Coalition. 

Metro-North has proposed adoption of the health care benefits as contained in the 

ACRE Agreement. 

The Board concurs with the position of Metro-North and therefore recommends 

that settlement of this issue be in keeping with the terms of the ACRE Agreement. 

2. “Pop Up” Retiree Medicare Coverage 

The Coalition requests payment to retirees who are eligible for Medicare, as is 

provided employees of the LIRR. The purpose is to allow retirees to supplement 

Medicare coverage. 

The Coalition proposal recommends that employees who retire after the effective 

date of this Agreement receive a retiree “Pop Up” benefit upon becoming eligible for 

benefits provided under Medicare. Such retiree, the Coalition urges, should receive from 

Metro-North a monthly allowance of one hundred dollar ($100) for single person 

coverage; two hundred dollar ($200) for family coverage. 

A provision covering this Coalition demand was set forth in the Term Sheet, and 

the Board recommends its adoption. 

3. Vision Care 

The Board recommends that effective the date of this Agreement, as with the 

ACRE Agreement, the Vision Care Plan for represented or agreement employees be 

eliminated and that all represented employees thereafter be covered by a Vision Care 

Plan providing benefits equal to those currently in effect for non-represented 

management personnel of Metro-North. 

4. Life Insurance 

The Coalition requests that Metro-North employees be allowed to retain an 

existing paid Life Insurance benefit of $100,000, and not be required to have that benefit 

eliminated with entrance into the DB Plan, as with ACRE. 

The Board recommends that effective the date of this Agreement, the existing 

Metro-North paid Life Insurance benefit of $100,000 be eliminated and that employees in 

the DB Plan thereafter be covered by that Plan’s $100,000 death benefit. 

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5. Sick Leave Pay 

The Coalition proposal on Sick Leave Pay requests that Metro-North employees 

have the same benefit as on the LIRR. It asserts that on the LIRR employees receive 

100% of their pay when using sick leave, whereas Metro-North employees only receive 

90% of their wages. The Coalition says that it seeks this benefit to lessen the disparity 

between LIRR and Metro-North employees. 

As the Board stated above, there is a need to keep health care costs in line with 

other Metro-North employees. The Board has not been directed to any Metro-North 

Agreement that provides employees receive 100% of their pay when using sick leave. 

The Board therefore recommends that the Coalition withdraw this proposal. 

G. Holidays 

The Coalition requests that the number of paid holidays employees receive be 

increased from 11 to 12, which it submits will equal the holiday benefit received by LIRR 

employees. The Coalition specifically asks that the additional holiday be the date 

nationally designated to honor Dr. Martin Luther King, Jr. 

Metro-North says the Coalition request for an additional holiday did not arise in 

bargaining talks until after it had entered into Agreement with ACRE. Further, MetroNorth submits that the ACRE Agreement does not provide for an additional holiday, but 

rather replaces the Veterans’ Day holiday with the day after Thanksgiving. 

The Board recommends that effective the date of Agreement, the existing holiday 

provision be amended to allow Veterans Day to be replaced by the day after 

Thanksgiving. Moreover, the Board recommends the current Good Friday holiday be 

replaced by a Choice Holiday. This Choice Holiday may be used to celebrate any day 

including, but not limited to, the Dr. Martin Luther King holiday, subject to MetroNorth’s needs of service and in accordance with the notice procedures for requesting 

personal days. 

H. Rules 

In on-property negotiations and in their respective presentations to the Board, 

both parties have proposed the addition, change, modification, or elimination of certain 

agreement rules. 

Testimony and subsequent Board discussion with the parties indicates that in 

keeping with the Term Sheet mutual agreement was reached as to which productivity 

savings effective January 1, 2004, will achieve a percentage of savings sufficient to help 

offset some of the cost of settlement. 

The parties have, however, in hearings before the Board, identified a number of 

issues that one party or the other maintains are open rules issues. 

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The Board finds no useful purpose to be served by listing each referenced open 

issue, which, depending upon the representations of one or the other of the parties, ranges 

from 6 to 12 matters in dispute. The Board will, however, recommend that where the 

parties have shown that they are presently in agreement, those matters be incorporated 

into final settlement of the dispute. As concerns the remaining issues, except as the 

Board herein addresses them, it is recommended that such issues be withdrawn by the 

parties. 

I. MTA Corporate Restructuring 

Metro-North has requested as a part of the settlement a written commitment by 

the Coalition to work in harmony with the MTA in discussions involving the corporate 

restructuring of the MTA. 

Metro-North notes that its most recent collective bargaining agreement with 

ACRE, as with the LIRR, contains a joint letter of understanding that reads as follows: 

This letter will confirm our discussions during the recently completed 

negotiations for a new collective bargaining agreement regarding the 

MTA’s proposed corporate restructuring. We agree that the proposed 

restructuring provides potential opportunities for the MTA to operate more 

efficiently. We also agree that the best way to maximize those efficiencies 

is through cooperative efforts and good faith discussions which 

acknowledge the legitimate concerns of the workforce regarding seniority, 

earnings, job security and the like. We commit to using our best efforts to 

ensure that these discussions take place in a harmonious atmosphere and 

reach a timely and mutually acceptable conclusion. 

The Board recommends that the parties agree to adoption of a like letter of 

understanding. 

J. “Me Too” Agreement Protection 

The Coalition states that although it is agreeable to extending the term of 

agreement with Metro-North beyond the four-year term of the Metro North-ACRE 

agreement, it wants a so-called “me too” provision. Such a provision would provide that 

in the event any subsequent agreement with ACRE or other unions in the next round of 

bargaining contains provisions superior to those negotiated in its six-year Agreement, it 

be given the same or equivalent treatment on such matters. 

Metro-North opposes this Coalition request. It submits it is not an on-property 

practice to enter into an understanding of this nature, and that such a clause is not 

contained in any of its past agreements. 

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This Coalition demand was not contained in the Term Sheet. Further, the Board 

has not been directed to any past situation where one labor organization on the property 

has gained an unfair settlement advantage over another. 

In the circumstances, the Board recommends that the Coalition withdraw its 

demand for a “me too” clause. 

K. Term of Agreement – Moratorium 

The Board recommends that the Agreement between the parties here at issue be in 

resolution of any and all pending notices served pursuant to the provisions of the Railway 

Labor Act, as amended, and the Agreement be effective January 1, 2003 and remain in 

effect thereafter until changed or modified in accordance with the provisions of the 

Railway Labor Act, as amended. 

Further, the Board recommends that a moratorium clause provide that the parties be in 

Agreement that they shall not serve or progress prior to November 1, 2008 any notice or 

proposal for the purpose of changing agreements to become effective on or before April 

1, 2009. 

VII. CONCLUSION 

In arriving at its recommendations the Board carefully considered the June 23, 

2006 Term Sheet that experienced negotiators for Metro-North and the Coalition arrived 

at after extensive bargaining and mediation over four years. This Term Sheet, initialed 

by all parties, was deemed at the time to be the best compromise of their divergent 

demands that either side was able to attain in this round of collective bargaining. 

The last-minute proposal of the Coalition, that surfaced for the first time in 

hearings before the Board, is simply too far removed from the principles of pattern 

bargaining and the agreed upon objectives contained in the Term Sheet to be 

recommended as a basis for overall settlement of the dispute. 

Accordingly, with the Term Sheet in mind, but also recognizing the need for 

certain changes to its terms, as well as disposition of open issues that both parties knew 

required resolution, the Board has set forth its recommendations for settlement of the 

current dispute. 

The Board understands from the record that the Term Sheet was opposed by at 

least some members of the Coalition. It well may be, however, that this opposition was 

because the Term Sheet was presented as a one-page document that only highlighted the 

terms of settlement and did not indicate that there were several open issues. In other 

words, the membership was not provided a document that fully spelled out the overall 

benefits of settlement, as is generally given to a membership before an agreement is 

placed for a ratification vote. 

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The Board would therefore recommend that before the terms of settlement as here 

recommended are released, negotiators for the parties reduce all terms of agreement to 

writing in plain language that will be understandable to employees. 

There is also reason to believe that opposition to the Term Sheet was driven by an 

attitude on the part of some employees that a fundamental right exists for Metro-North 

employees to have wage parity with LIRR employees. 

There is, however, no simple or quick answer to this wage parity issue, as past 

Emergency Boards involving Metro-North and its employees have also found. It is a 

subject that requires full consideration of numerous factors that affect pay comparisons, 

and not here in evidence. 

To evaluate a wage parity demand there must be a detailed quantitative analysis 

of not only wage levels, but also differing agreement rules, fringe benefits, working 

conditions, job content, restrictions, practices, and other relevant matters that may impact 

work relationships, thereby allowing for resolution of wage level differences based on a 

complete knowledge of all the factors included in total compensation. 

Further, equity considerations must also take into account what other Emergency 

Boards have held regarding comparisons and distinctions of comparable classes and 

similar sounding job titles of both Metro-North and the LIRR with other MTA agencies 

and other Northeast commuter railroads. 

Attention must also be given to the financial health of the MTA; the historical 

perspective of political decisions that affected certain settlements; and, the impact of 

collective bargaining agreements that provide levels of compensation and benefits that go 

well above those of the average commuter or taxpayer. As with all businesses, there is a 

limit to the amount of increased costs of labor that can be passed onto customers or, in 

the case here at issue, passengers and taxpayers in general. 

Finally, in the interests of promoting the stability of labor relations that attach to 

pattern bargaining, and to avoid the destabilizing effect of whipsaw or leapfrog 

bargaining the Board urges the parties to continue to adhere to the traditional principles 

of pattern bargaining relative to increases in rates of pay and other cost of agreement 

issues. 

In summary, it is the opinion of the Board that the best interests of the parties and 

the public would be served by resolution of the respective collective bargaining demands 

of Metro-North and the Coalition for changes in current rates of pay, rules and working 

conditions without resort to self-help. The Board, therefore, urges the parties to resolve 

the issues that separate them on the basis of the above findings and recommendations of 

this duly appointed Presidential Emergency Board. 

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In closing, the Board gratefully acknowledges the counsel and professional 

assistance rendered by Susanna C. Fisher, Esq., and Norman L. Graber, Esq. of the 

National Mediation Board Office of Legal Affairs throughout this process. 

 Respectfully submitted, 

________________________ 

 Peter W. Tredick, Chairman 

_________________________ 

 Patricia Hanahan Engman, Member 

________________________ 

Robert E. Peterson, Member 

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