Teamsters Drop Yellow Strike Threat After Central States Pension Extends Benefits

The union threatened to strike over a missed $50 million payment by subsidiaries of Yellow, which accused the Teamsters of breaching their CBA.




The Teamsters Union representing workers for Yellow Corp. operating companies YRC Freight and Holland has dropped its threat to strike after the Central States Health and Welfare Fund agreed Sunday to extend health care benefits for the workers.

The strike threat came Friday after the pension fund’s trustees voted to suspend health care benefits and cease pension accruals for Yellow Corp. employees after Holland Freight and Yellow Freight failed to make an obligated pension contribution. According to the pension fund, Yellow missed a $50 million payment on July 15 and needed to pay it by July 23. Instead, talks between the Teamsters and the pension fund on Sunday resulted in a 30-day extension of benefits while the pension fund waits for Yellow to make its payment.

“Yellow has failed its workers once again and continues to neglect its responsibilities,” Teamsters General President Sean O’Brien said in a release last week. “This corporation’s gross mismanagement is another affront to the livelihoods and well-being of 22,000 Teamsters nationwide. Following years of worker givebacks, federal loans, and other bailouts, this deadbeat company has only itself to blame for being in this embarrassing position.”

Yellow accused the Teamsters of breaching the collective bargaining agreement that governs the relationship between the two and blamed that breach for Yellow’s inability to make the monthly contribution payments to the Central States funds. According to the company, it wrote to Central States in June requesting a short-term deferral of its obligation to pay contributions for July and August, with interest.

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“Regrettably, the board of trustees of Central States refused Yellow’s request, despite the funds’ healthy reserves,” the company said in a statement, adding that a strike “would be anything but lawful, as it would violate the parties’ collective bargaining agreement.”

Yellow alleges that the Teamsters’ leadership “steadfastly refused to negotiate” the company’s restructuring plans, which the company said is necessary to compete against non-union carriers. The company alleges in a lawsuit it filed against the union last month that the Teamsters’ opposition to the restructuring froze its business plan for nine months, costing it more than $137 million in adjusted EBITDA and prevented critical refinancing. 

“Ever since Teamsters’ leadership made its request that Yellow open its contract early, Yellow has tried to meet to negotiate a contract that would provide wage increases for its Teamster employees,” Yellow said in a statement, adding that the alleged obstruction “caused Yellow’s liquidity crisis and Yellow’s need to implement cash-conservation measures, including its benefit funding deferral request.”

Representatives from the International Brotherhood of Teamsters did not immediately respond to a request for comment about Yellow’s accusation that the Teamsters breached the CBA.


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PBGC Clarifies ‘Return Seeking’ and ‘Investment Grade’ for SFA Purposes

Reacting to some confusion about the terms’ precise meanings, the PBGC clarified and provided examples of both.



The Pension Benefit Guaranty Corporation last week clarified in an FAQ what investments qualify as “return seeking assets” and “investment grade fixed income” for pension funds investing money received from the Special Financial Assistance fund.

Multiemployer plans receiving Special Financial Assistance under the American Rescue Plan must invest all of the money they receive from the PBGC into IGFI investments if they applied under the interim rule issued in July 2021. If they applied under the final rule, issued in July 2022, they can invest up to 33% in RSAs, and the remaining 67% must be in IGFI.

Though the PBGC wrote in the FAQ that it believes “the meaning of these terms is well understood by sophisticated investors,” they acknowledged some confusion among pension managers.

“Investment grade” is defined in Section 4262.14 of the SFA regulations as “securities for which the issuer (or obligor) has at least adequate capacity to meet the financial commitments under the security for the projected life of the asset or exposure,” according to the FAQ. Credit ratings from credit agencies cannot be used in this determination under the Dodd-Frank Wall Street Reform and Consumer Protection Act.

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Some examples of IGFI investments include securities issued by the U.S. government, investment-grade municipal bonds, money market funds and cash or cash equivalents. Debt which pays a fixed amount or rate, is denominated in U.S. dollars, originates from an SEC-registered issuer and meets all investment grade criteria, also qualifies.

Mutual funds, exchange-traded funds and collective funds can be vehicles for IGFI, depending on their composition.

The PBGC wrote that if an ETF or mutual fund abides “by an investment policy that restricts investment predominantly to permissible IGFI securities,” it would qualify as IGFI and “generally, the types of investment grade securities included in a typical aggregate U.S. bond index fund are permissible IGFI securities, except fixed-to-float securities or those resold in reliance on the SEC’s Rule 144A,” which defines certain qualified investors for private placements.

As for permissible RSAs, the PBGC explained that these investments typically include common stock registered with the SEC and offered on a U.S. exchange. This can include foreign stock and real estate investment trusts.

The PBGC also offered several examples of investments that are not permissible as return-seeking assets, including stocks traded over the counter, stocks traded on foreign exchanges, funds invested in foreign markets, high-yield bonds and alternative investments—including private credit and “direct real estate or hedge funds and investments with or that create leverage.”

The PBGC also said it does not provide “upfront advice” or pre-approval of an investment strategy or asset class. Certain investments may be found non-compliant in an audit, though the PBGC did not elaborate.

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