America’s freight railroads greatly value the skills, wide-ranging talents, diverse backgrounds and dedication the men and women who comprise the rail workforce bring to their work each and every day.
Their commitment to the safety and efficiency of the rail network and operations is something every American benefits from. Railroads and rail employees are united in their goals of attaining the highest level of safety and ensuring the future of the industry remains bright. Under federal law, freight rail companies and employees conduct negotiations through collective bargaining. Collective bargaining — the structured and regulated process through which rail labor contracts are negotiated — is a long-standing and important process used by railroads and their employees to ensure individual interests are thoughtfully considered as both parties work to chart the course of the industry.
The process has resulted in highly successful outcomes. Freight railroad employees are among the nation’s most highly compensated workers while America’s freight railroad industry is largely regarded the safest, most-efficient and cost-effective rail system in the world.
The Railway Labor Act (RLA)
Recognizing the vital role railroads — and their workforce — play in the American economy, Congress passed the Railway Labor Act (RLA) in 1926 to govern the industry’s collective bargaining process. The RLA was one of the earliest federal laws to guarantee workers the right to organize and choose representatives without interference or coercion from their employers.
The RLA establishes a deliberate negotiation process for railroads and workers, with numerous opportunities for mediation and resolution. The process requires the parties to “exert every reasonable effort” to reach agreements and is designed to avoid interruptions to interstate commerce. Typically, both parties come to agreement without outside intervention; however, if needed, an independent federal agency — the National Mediation Board (NMB) — may be called by either party to step in and mediate negotiations.
Once mediation begins, negotiations will continue until the NMB determines to release the parties. Only after either party has declined binding arbitration and no agreement has otherwise been reached may the president of the United States step in to help facilitate a resolution through the appointment of a Presidential Emergency Board (PEB). This process has been remarkably successful in reaching voluntary contract settlements without labor strikes. In fact, over the past 30 years, there have only been two days of service disruptions arising from national rail bargaining, the last one of which was in 1992.
Railroads are represented by the in national, multi-employer negotiations by the National Carriers’ Conference Committee formed within the National Railway Labor Conference (NRLC) while the 12 major rail labor organizations, organized by crafts or classes of employees, negotiate independently or as part of a larger cohort.
The Collective Bargaining Process
A unique element of collective bargaining under the RLA is that contracts do not expire and remain in effect until modified by the parties. The first step in modifying an existing contract is the issuance of Section 6 Notices (a reference to a specific section of the RLA), which detail the contractual changes the parties are seeking. The multi-step, often years-long process of multi-employer rail bargaining allows the parties to consider and work through agreements pertaining to wages, benefits and workplace rules. If necessary, governmental bodies — including the NMB or an aforementioned PEB — may be brought in to mediate and provide recommendations in order to promulgate agreements rather than having the parties engage in “self-help” tactics, such as strikes and lockouts.
The NRLC provides detailed information about the various steps within the bargaining process, including:
A Track Record of Employee Benefits
Collective bargaining agreements establish wages, benefits and workplace rules for approximately 84% of the employees of Class I railroads and around 60% of employees of non-Class I railroads.
The freight rail industry offers its employees one of the highest compensation packages in the country, ranking in the top 6% of American industries. In 2018, the average U.S. Class I freight railroad employee earned average annual compensation — wages plus benefits — of some $122,000. Since 2006, rail wage rates rose by 43% versus 29% on average for other U.S. workers. Additionally, railroad employees are covered by the Railroad Retirement System, a benefit significantly more generous than Social Security that provides retirement, disability, sickness, and survivor benefits to railroad workers and their families. In 2018, more than 540,000 beneficiaries received more than $12.7 billion in benefits annually from Railroad Retirement System.
Health care coverage for railroad employees is also among the best in the nation, on average covering 90% of expenses. The industry’s benefits plan ranks in the highest category — the Platinum-level status — as defined by the Affordable Care Act and the railroads’ costs for providing employee healthcare insurance — plan costs minus employee contributions — is 52% greater than average employee plans. Railroad employees’ healthcare, retirement, and compensation packages rank in the top 5% of American industries.
Workplace Safety and Operating Rules
Like other businesses, freight railroads must thoughtfully and effectively manage their resources to ensure the health and safety of their employees and the industry for years to come. Factors such as customer demands, advancements in technology and the health of the economy have the potential to affect how railroads manage and deploy their workforce. As such, workplace rules — such as crew size requirements — are negotiated as part of the collective bargaining process.