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Dismissals to Go to Arbitration: Union Official: Philip Morris, Fired Workers to Discuss Allegations of Profit-Sharing Misuse

Posted on: Wednesday, 31 May 2006, 15:00 CDT

By Victoria Cherrie and Adam Bell, The Charlotte Observer, N.C.

May 28--CONCORD -- Philip Morris USA workers who say they were fired over claims they misused the company's deferred profit-sharing plan will get a chance to get their jobs back through arbitration, a union official said Saturday.

The Bakery, Confectionery, Tobacco Workers and Grain Millers Union Local 229T has hired Wallace and Graham, a Salisbury law firm, to represent the 47 workers who have been fired. An additional 39 have been suspended and others continue to be interviewed, said Bobby Hines, union president.

"There's no rhyme or reason as to why they are terminating some and not others. How they do it, I don't know," Hines said.

Most of the 25 current or former employees interviewed by the Observer insist the company is trying to replace older, better-paid workers with new, cheaper employees. They make between $24 and $35 an hour.

The union's executive board has agreed to approve arbitration for these cases. Philip Morris declined to comment Saturday.

Arbitration is the final step of the appeals process for a union worker to try to get his job back, according to their contract, Hines said. The decision is binding. It is not clear when the arbitration will occur.

"We're trying to push the company to do it as soon as possible," Hines said.

In Richmond, Va., between 70 and 100 people have been fired at the company's only other U.S. cigarette-manufacturing plant, union leaders there told Hines. None of those cases is currently being arbitrated, he said.

Some of the Concord employees might deserve to be suspended or disqualified from using the company's profit-sharing plan, but they should not have been fired, Hines said.

"Many of these are people who have been with the company 20-plus years," he said. "They trusted Philip Morris. They feel like this was their money."

Workers say they are being fired for falsifying or misrepresenting documents related to hardship withdrawals from the deferred profit-sharing plan, which Philip Morris touts as a lucrative benefit.

The plan is run similar to a 401(k); the company makes contributions based on operating profit and workers' eligible compensation. Employees can contribute up to 15 percent of pre-tax earnings.

Hardship withdrawals are designed to let people handle financial needs such as buying a primary residence or paying college expenses. Employees must exhaust other available loans first, and withdrawals are subject to taxes and certain tax penalties.

Several fired employees told the Observer they had submitted paperwork stating they were buying one house, but wound up getting a different one. Workers say some people spent the money on cars and other purchases not allowed under the plan. Some who later decided to return the money said plan administrator Fidelity told them they could not do so.

The Concord firings, which employees say started in October, may have been prompted by an audit by corporate parent Altria Group Inc., one source said.

The Observer could not confirm that information, and Philip Morris would not comment.

Suspensions continued last week, with supervisors and security guards escorting employees out of the plant in what some workers are calling "the walk of shame."

"We never know from day to day how many are being taken out," Hines said. "We usually get a call 10 minutes ahead of time that we need to get down there to represent someone."

Philip Morris spokesman Bill Phelps declined to comment Saturday, beyond the company's response to previous questions from the Observer last week. At that time, he declined to discuss any personnel actions.

Philip Morris has said its core set of values guides how its employees do business, which includes operating with integrity, trust and respect.

Phelps re-emphasized that Philip Morris has a process for disciplinary action if employees are suspected of violating company policy: An investigation is begun and information is gathered and presented to employees. They can explain their actions and provide clarifying evidence. Based on the evidence, Phelps said, the company takes appropriate action.

Workers told the Observer it was common for years for employees to make hardship withdrawals without being checked or challenged by the company.

Daniel Dextre of Concord worked at the plant for 15 years as an electronic technician before he was fired recently. He said he made a $60,000 hardship withdrawal to buy a house but backed out of the purchase when the appraisal came in higher than expected. He called Fidelity about returning the money but never heard back, so he used it to help pay off family college loans.

Fidelity said it does not comment about its clients.

"They walk us out like criminals," said Dextre. "We don't deserve this." -- Observer researchers Marion Paynter, Sara Klemmer and Maria Wygand contributed.

-- Victoria Cherrie; Adam Bell: (704) 786-2185

The Arbitration

Philip Morris has a four-step grievance process for workers being fired:

1. Worker meets with union representative and supervisor.

2. If there is no agreement, the worker, union representative and manager discuss what happened.

3. If no agreement is reached in Step 2, those people meet with the general manager.

4. If no agreement, arbitration occurs. This involves a meeting between the company, the worker and union representative and sometimes a lawyer. The sides choose a panel of arbitrators from the Federal Mediation and Conciliation Service, an independent agency. The parties agree on one person from the panel.

The outcome of arbitration for Philip Morris workers is binding. If workers lose, they do not get their jobs back.

IN CONCORD

Philip Morris USA is one of the area's largest employers, with 2,600 workers.

About 1,500 belong to the Bakery, Confectionery, Tobacco Workers and Grain Millers Union. Union officials said they are aware of several non-BCT members who were fired and who are represented by the Salisbury firm.

HEADQUARTERS

Richmond, Va., where it employs 6,300 people. About half are hourly employees who work at the production facility.

PARENT

Altria Group Inc., based in New York. Products range from Marlboro to Jell-O; the company also owns Kraft Foods, Philip Morris International and Philip Morris Capital Group. Altria's net revenue last year was $98 billion, up 9 percent from 2004. It employs 199,000 people.

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Copyright (c) 2006, The Charlotte Observer, N.C.

Distributed by Knight Ridder/Tribune Business News.

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Source: The Charlotte Observer (Charlotte, N.C.)

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