San Jose Reaches Tentative Labor Agreement with Public Sector Unions, Averting Strike

San Jose has reached a tentative contract agreement with its public sector union workers, an action that likely prevents a city-wide strike and concludes a monthslong negotiation period regarding wages and workforce protections.

The agreement, struck on Thursday, addresses a deadlock between city leaders and two major public sector unions: IFPTE Local 21 and MEF-AFSCME Local 101. These unions collectively represent over half of the city’s approximately 8,000 employees. The new offer includes several additions for city workers compared to the city’s prior June proposal, such as a lump-sum cash payment and expanded protections concerning artificial intelligence. However, the proposed wage increases do not meet the unions' initial demands.

For the agreement to become final, both the unions and the city must ratify it. Membership votes by the unions are anticipated to take place early next week.

Negotiations began in February to replace the previous three-year contract, which expired at the end of June. Workers had rejected what the city termed its “last best and final offer” at that time. With contract discussions largely stalled, thousands of union members voted in August to authorize a strike if negotiations remained unresolved. Union officials indicated that if workers had proceeded with the strike, it would have marked the largest labor action in San Jose since 1981.

The city’s June offer proposed wage increases totaling 9% over three years. Workers argued that this increase, which was less than the 15% provided by the recently expired contract, would not keep pace with the rising cost of living in the South Bay. Furthermore, they contended that insufficient wages have led to significant employee departures, affecting the quality of city services.

Under the new tentative agreement, San Jose is offering a lump-sum cash payment equivalent to 1% of workers' base annual wages, intended to help offset living expenses. Additionally, the agreement includes a promise of another 1% pay increase in the contract’s third year, contingent upon the city’s budget meeting specific benchmarks.

City administrators released a statement on Friday acknowledging the tentative agreement, stating, "These agreements avert a strike and the interruption of city services." Carlos Murillo, an engineer at San Jose Mineta International Airport and an IFPTE bargaining team member, noted that the contract "is a step in the right direction," while also stating it was not everything workers or their families needed.

San Jose is navigating tight budget constraints. The $5.5 billion budget passed in June addressed a $50 million deficit by utilizing reserve funds and implementing service cuts across various departments. The city projects deficits exceeding $10 million for each of the next two fiscal years.

Earlier this week, the South Bay Labor Council, an influential political body, increased pressure on the city by authorizing its 105 member unions to undertake strike actions in solidarity if San Jose workers were to strike.

The final agreement also includes provisions to address worker concerns related to the city’s use of artificial intelligence tools. These safeguards prohibit the city from using AI software as the sole factor in decisions regarding hiring, firing, promotion, and employee discipline. City workers have expressed hopes of avoiding a scenario where AI-powered technology is used to automate tasks and reduce employee headcount to save money. Nick Rovetto, a city employee and president of the San Jose Chapter of AFSCME, remarked that the agreed-upon guardrails provide "safety nets surrounding that fear," anticipating a continued conversation on the topic.

Union leaders highlighted other benefits for workers in the new agreement, including the potential for expanded pension benefits, the introduction of fatigue pay for certain employees, and the extension of contract arbitration safeguards to more workers. Despite these gains, Rovetto cautioned that a strike cannot be entirely ruled out until the ratification process is complete, citing the strong feelings among members about being underappreciated.