YRCW employees are starting the third week of healthcare being paid for by the Teamsters’ benefits provider as if they were out of work, even though not all of them are.
The healthcare situation for YRCW employees is just one manifestation of the fiscal problems at the less-than-truckload (LTL) carrier, a slide that has taken the company’s stock price down to $1.40 from a 52-week high of just under $5.
On May 8, TeamCare, an operating unit of the Teamsters-affiliated Central States Health Fund, told Teamsters locals in a memo that YRCW was “delinquent in paying health contributions owed on members who worked during March.” The memo said YRCW had told Central States that the same development was going to happen for work performed by union members in April and May.
That memo was released at the same time as a “suspension of benefits” notice sent to “active YRCW members in the Health Fund.”
Except benefits weren’t suspended. TeamCare at that time said it had authored “Layoff Coverage” for a maximum of eight weeks. The union members and their family that were facing a cut-off of benefits on May 9 instead had their coverage extended for eight weeks. “Eligible claims incurred after May 10 may be paid even though YRCW is on suspension of benefits status,” the memo said.
The TeamCare memo said it had been in “extensive discussions” with YRCW management and its lenders “in an attempt to reach a fair resolution. However, YRCW has not made an acceptable repayment proposal to the Fund.”
In a statement to FreightWaves, YRCW confirmed that payments to the fund are in arrears. “In keeping with our efforts to preserve liquidity, we have delayed some fund contributions, and are working closely with the Funds and the Teamsters Union to ensure that YRCW employees have uninterrupted access to healthcare benefits,” the statement said. “In light of the current pandemic-led economic crisis, YRCW has taken a range of actions to streamline operations, reduce costs and amend debt covenants to ensure that we and our employees continue to play a vital role in transporting goods for the U.S. government and many essential businesses.”
A day after the TeamCare memo was sent about the suspension/extension of benefits, Ernie Soehl, director of the National Freight Division at the Teamsters, sent a memo to the Teamsters locals representing YRCW drivers. In the note, Soehl confirmed the key points of the TeamCare memo but also said the “layoff coverage” fund at TeamCare would be weakened by the move. “The continued coverage will, however, deplete the eight weeks of layoff coverage going forward, even for those employees who are not laid off,” Soehl’s memo said.
The solution to the problem short-term, Soehl said, would be an improvement in the business climate. “It is hoped that over the next eight weeks, YRCW’s business and financial situation will improve and that the company can cure the delinquency and return to normal status,” Soehl said, noting an improved freight market and the fact that “some laid-off employees have been recalled to active status.”
A spokeswoman for the Teamsters had no additional comment beyond the May 9 memo.
In its recent first quarter earnings conference call, YRCW management said it had taken several steps to improve liquidity: eliminating incentive compensation for its officers as well as merit increases; cutting its 401-k match; and cutting employment costs through layoffs and furloughs. However, the cessation of payments to the Central States fund was not mentioned.
The call also was notable for the fact that analyst questions were not permitted.