Workers at the largest U.S. rail union voted against a tentative contract deal reached in September, raising the possibility of a year-end strike that could cause significant damage to the U.S. economy and strand vital shipments of food and fuel.

Train and engine service members of the transportation division of the International Association of Sheet Metal, Air, Rail, and Transportation Workers (SMART-TD) narrowly voted to reject the deal. That unit, which includes conductors, brakemen and other workers, joins three other unions in rejecting a deal brokered via a board appointed by U.S. President Joe Biden.

"There's a lot of anger about paid sick leave among the membership" who kept goods flowing during the early days of the COVID-19 pandemic, said Seth Harris, a professor at Northeastern University.

Railroads, which have slashed labor and other costs to bolster profits, are fiercely opposed to adding more sick time flexibility that would require them to add additional staff. Those operators, which include Union Pacific, Berkshire Hathaway Inc's BNSF and CSX, say the contract deal has the most generous wage package in almost 50 years of national rail negotiations.

"Both sides have reason to compromise here. The union needs to get this done in advance of the new Congress as their involvement will unlikely result in 'better' for them," said Reliant Labor Consultants principal Joe Brock, a former Teamsters local president.

Republicans, who historically favor corporate interests over unions, earlier this month won control of the U.S. House starting in January.

"I see a minimal improvement in sick pay, and huge pressure from the (Biden) administration to accept a deal," Brock said.

Major industry groups complain that rail industry cost cuts have hurt service and have been calling on President Biden and Congress to intervene to prevent a strike ahead of the holiday season.

White House press secretary Karine Jean-Pierre said last month "any shutdown would be completely unacceptable. It is the responsibility of the parties involved to resolve this issue." The White House did not immediately comment on Monday.

CAN BE SETTLED 'WITHOUT A STRIKE'

A rail shutdown could freeze almost 30% of U.S. cargo shipments by weight, stoke inflation and cost the American economy as much as $2 billion per day by unleashing a cascade of transport woes affecting U.S. energy, agriculture, manufacturing, healthcare and retail sectors.

Last week, the U.S. Chamber of Commerce said Congress should step in to prevent any disruption, warning it would be catastrophic for the economy. Automaker General Motors has said a halt would force it to stop production of some trucks within about a day.

"The ball is now in the railroads' court. Let's see what they do. They can settle this at the bargaining table," said SMART-TD President Jeremy Ferguson in a statement. "This can all be settled through negotiations and without a strike."

The National Carriers' Conference Committee (NCCC), which represents the nation's freight railroads in talks, said the "continued, near-term threat" of a strike "will require that freight railroads and passenger carriers soon begin to take responsible steps to safely secure the network in advance of any deadline."

The railroads showed no sign of being willing to reopen talks and said "Congress may need to intervene – just as it has in the past – to prevent disruption of the national rail system."

The standoff between U.S. railroad operators and their union workers in September disrupted flows of hazardous materials such as chemicals used in fertilizer and disrupted U.S. passenger railroad Amtrak service as railroads prepared for a possible work stoppage.

Unions, including a separately contracted unit covering more than 1,000 SMART-TD yardmasters, have ratified nine of 13 agreements covering about half of the 115,000 workers affected by the talks.

The deal includes a 24% compounded wage increase over a five-year period from 2020 through 2024 and five annual $1,000 lump sum payments.

Three other unions that rejected the deal have already agreed to extend a strike deadline until early December.

Labor unions have criticized the railroads’ sick leave and attendance policies and the lack of paid sick days for short-term illness.

Beginning on Dec. 9, SMART-TD would be allowed to go on strike or the rail carriers would be permitted to lock out workers, unless Congress intervenes.

If there is a strike by any of the unions that voted against the deal, Brotherhood of Locomotive Engineers and Trainmen (BLET) and other rail unions that have ratified agreements have pledged to honor picket lines.

The Biden administration helped avert a service cutoff by hosting last-minute contract talks in September at the Labor Department that led to a tentative contract deal.