Asarco Sues to Avoid Paying Copper - Price Bonuses

Asarco sues to avoid paying copper-price bonuses
Tucson-based Asarco LLC has filed a federal lawsuit to avoid paying some workers
bonuses based on the price of copper.
Unions representing about 2,100 Asarco workers plan to fight the lawsuit.
Asarco, part of Mexico-based mining giant Grupo Mexico, alleges in federal court that
an arbitrator exceeded his authority in a December ruling requiring the company to
pay a copper-price bonus to union employees who are not part of the company’s
pension plan.
The issue affects about 550 employees and could cost Asarco upwards of $8 million in
back bonus payments, union officials say.
Asarco said the company, the United Steelworkers and other unions agreed in a labor
contract that only employees covered under Asarco’s pension plan would be eligible to
get the quarterly price bonus. The unions drafted the language and insisted on its
adoption as a precondition to entering a labor contract while Asarco was in
bankruptcy in 2007, Asarco said in a lawsuit filed in U.S. District Court in Tucson.
Management and the unions agreed to contract modifications in 2011, after the
company emerged from bankruptcy, including the provision that employees hired on
or after July 1, 2011, are not eligible for Asarco’s pension plan, Asarco said. That
precluded the newer employees from getting the copper-price bonus as well, the
company contended.
The unions later objected, saying they didn’t understand the effect of the agreement,
Asarco said. After attempts to resolve the dispute, Asarco said, the unions filed a
formal grievance that led to arbitration.
Asarco said the arbitrator, Michael Rappaport, agreed that the labor contract does not
require payment of the bonus to employees not covered by the pension plan, but
improperly rewrote a specific provision requiring those employees to get the bonus.
“The arbitrator in this case acted outside of the authority given to him under the labor
contract between Asarco and the unions,” Asarco Chief Operating Officer Manuel
Ramos said in a news release, adding that the arbitrator had no power to add to or
change the agreement.
The United Steelworkers, Asarco’s main union and bargaining agent for about a halfdozen other unions, will fight Asarco’s lawsuit, said Manny Armenta, subdistrict
director for the Steelworkers.
Armenta said the unions did agree to limit the pension plan to workers hired after July
1, 2011, but neither the union nor the company realized it would affect the bonus
“We never agreed they wouldn’t get the copper- price bonus,” Armenta said, noting
that the arbitrator ruled the situation was the result of a “mutual mistake.”
Even so, Asarco said in its lawsuit that acknowledging a mistake was made doesn’t
give the arbitrator the power to alter the agreement.
The copper-price bonuses are based on the average daily settlement price of copper on
the London Metals Exchange. After peaking at more than $4.50 per pound in 2011,
copper prices have slumped lately to around $2.60 per pound.