Oakland, Calif.-based AC Transit management and the Amalgamated Transit Union Local 192 (ATU), which represents the agency’s bus operators and mechanics, tentatively agreed to terms of a new labor contract for the 1,625 bus operators and mechanics.

The new agreement provides for a wage increase of 9.5% that will be phased in over the three years of the contract. On the more troubling matter of ATU employees making contributions toward health care costs, the agency and ATU agreed on monthly contributions of $70, $140 and $180, respectively, for each of the three years.

The agreement heads off a threatened strike that could have begun within less than an hour from the time the tentative contract was announced. A walkout by operators would have halted AC Transit bus service for 181,000 daily riders who depend on buses for transportation throughout the East Bay and onto the Peninsula and San Francisco.

AC Transit began bargaining with the ATU in March and has repeatedly re-adjusted its proposals to keep negotiations on track and minimize the chances for an employee work stoppage.