WMATA: No to Employee Raises, Yes to Goodies for Catoe

Amalgamated Transit Union (ATU) Local 689, which represents WMATA employees, has filed a federal lawsuit seeking to enforce an arbitrator’s decision granting pay increases to its members. WMATA is crying poverty, claiming that they cannot afford the raises. But poverty did not stop WMATA from giving their General Manager, Jack Catoe, some juicy morsels in his contract extension just two months ago.

Last year, WMATA budgeted $44 million for FY 2009 for a 3% wage increase for non-union employees (including managers), another 2% for “salary adjustments and special recognitions” and an unspecified amount for “fair and affordable settlements on union contracts.” But since Local 689’s contract expired on 6/30/08 and was not renewed during the fiscal year, union employees received no raises while non-union workers and management received their 3% hikes.

By August 2008, the union began complaining that WMATA was not bargaining in good faith. Their President wrote in a newsletter:

It appears that although we are attempting to negotiate in good faith through very uncomfortable issues, we continue to hit a brick wall. Since April 4th every obstacle that could be placed in front of us has been attempted. From stone walling on the beginning of the process to just plain walking away from the table, you name it and they have done it. We have patiently sat in rooms talking for hours that have led to nowhere. It appears that what we are asking to improve upon, they refuse to give and/or the price they are asking us to pay is just too dog-gone high!

The union filed for arbitration a month later. On November 4, the arbitrator awarded three percent wage increases for each year beginning on 7/1/09, 7/1/10 and 7/1/11. WMATA seemed to anticipate having to pay an increase, originally budgeting $12 million in FY 2010 for a “wage settlement” before revoking it in February. Nevertheless, WMATA vowed to appeal the arbitrator’s decision, claiming that it broke federal law by forcing it to pay “salaries and other benefits that exceed the interstate compact agency’s funding ability.” In other words, WMATA claimed that it could not afford a wage hike.

Few public employees are getting substantial raises these days. In Maryland, the state government and most county governments are not granting any general wage adjustments to their employees. But WMATA’s argument would be easier to sustain if it had not already given raises to non-union employees and managers last year while giving nothing to union workers. And its position is further undermined by its lavish generosity to General Manager Jack Catoe.

Catoe has been WMATA’s General Manager since January 2007 and was named the top transportation manager in the U.S. in May. But then Catoe had to deal with the June 22 Red Line accident, the biggest disaster in WMATA history. While the National Transportation Safety Board (NTSB) has not determined the cause of the accident, much speculation centers on the old 1000-series Rohr cars that comprised the striking train. In 2006, NTSB advised phasing out the old cars because they were “vulnerable to catastrophic telescoping damage,” a recommendation that Catoe never implemented. Now the union is claiming that WMATA is allocating money to rehabilitating the HVAC systems in the old cars rather than replacing them. NTSB’s final report is sure to include plenty of finger-pointing directed at WMATA.

Despite the huge negative publicity and service disruptions caused by the crash, WMATA extended Catoe’s contract by three years in September. Catoe’s pay ($315,000 per year) and housing allowance ($5,000 per month) did not change, but the contract contained three generous new items.

1. Retention Incentive Payment (Section 3.3.2)

On the Effective Date of this Agreement, Executive shall receive a retention incentive payment of $50,000 net of taxes and other deductions. Should Executive remain employed with WMATA on January 30, 2012, then Executive shall receive an additional retention incentive payment of $50,000 net of taxes and other deductions.

2. Nonqualified Annuity (Section 3.5.5.2)

WMATA shall provide an annuity to Executive in the amount of $27,000 with WMATA retaining all incidents of ownership in such annuity. Such annuity will be subject to the claims of WMATA’s creditors. Executive shall be vested in 50% of the annuity amount upon completion of the first year as General Manager under this Agreement. Executive shall be vested in an additional 25% of the annuity amount at the completion of the second year under this Agreement and the remaining 25% of the annuity amount at the end of the third year of this Agreement.

3. Extra Health Care Payments (First Amendment to Agreement)

For calendar year 2009, WMATA will reimburse Executive for up to $6,000 incurred after the date of this First Amendment for additional medical or wellness premiums, costs or other expenditures not covered by the insured health care program. Reimbursement shall follow the procedure set forth in Section 3.4 of the Agreement. Executive shall bear the cost of any taxes imposed on such payments.

Catoe is also eligible for bonuses, is entitled to 26 weeks of pay if he is terminated without cause, gets 27 days of paid annual leave and participates in WMATA’s deferred compensation plan, qualified retirement plan and welfare plan.

And so WMATA, an agency that gave its besieged General Manager a $50,000 retention payment and a $27,000 annuity three months after the worst disaster in its history, is now claiming that it cannot give rank-and-file workers a dime more. If only they had made that claim prior to enriching Catoe, it would be easier to believe them.