Verizon proposes three-year agreement for 38,000 union workers

Verizon (NYSE: VZ) has proposed a new three-year contract with 38,000 union wireline employees represented by the Communications Workers of America (CWA) and International Brotherhood of Electrical Workers (IBEW) it says will offer wage increases during the period.

Depending on whether the two unions sign an agreement by Aug. 1, the new contract would include three elements: a 2 percent wage increase effective Aug. 2, 2015; a 2 percent increase one year later; and a $1,000 lump sum payment in the third year.

Verizon said that the average annual salary and benefit package for an associate in their Eastern region is $130,000. In the New York City/Long Island region, Verizon technicians currently have an average total wage-and-benefit package worth in over $160,000 a year.

The service provider has also given pension-eligible employees the option of either earning pension benefits under the defined benefit plan with some limitations and forgoing the existing 401(k) company match, or opting for the enhanced 401(k) plan currently offered to management employees (which includes a bigger company match and a profit-sharing contribution) with a frozen pension benefit. Excluding union-represented employees that were hired since Oct. 28, 2012, employees under these collective bargaining agreements currently have both a defined benefit pension plan and a 401(k) savings plan with what Verizon says is a "a generous company match."

Another key issue that Verizon addresses in the proposed agreement is cost controls to healthcare benefits in order to keep its wireline business unit competitive. The telco is proposing an $8.10 a week increase next year for individual health care premiums.

Verizon said that the cost of medical coverage for an East employee and one or more family members currently averages nearly $20,000 a year. In one of the company's East plans, the annual cost for this coverage is over $23,000 a year. The company said these costs are higher than the national average for family healthcare coverage of about $16,800.

In addition to proposed health care concessions, the telco is seeking greater flexibility in managing its workforce.

Robert Mudge, Verizon's executive vice president for wireline operations, said in a release that while it has been reinventing its wireline business through equipping homes in its territory with fiber, the cost structure has remained a challenge.

"No company anywhere has invested more in providing fiber-optic networking all the way to customers' homes," Mudge said. "Transforming this part of the business will position us for future growth. The reality, however, is that our cost structure has not changed nearly fast enough to align with today's market realities and customer needs."

Today, Verizon's union-represented workers in the East region work under 27 collective bargaining agreements in nine Eastern states and Washington, D.C. The current contracts expire Aug. 1, 2015.

CWA did not officially respond to the proposal yet, but issued a statement by Ed Mooney, vice president for District 2-13, asking for fairness in the process.

"We are united in our commitment to fight for fairness--we are the foundation upon which the success of Verizon rests," Mooney said in a release. "We have helped to boost the company's earnings and productivity even through a global recession. It is now our turn to share equitably in that growth."

The ramp up to the negotiation table has been nothing but contentious.

CWA and IBEW representatives have made allegations about Verizon not properly maintaining its existing copper networks and falling behind on its FiOS buildout commitments in New York City. In response, Verizon said that the audit in New York City contains erroneous information and that the union's allegations about its copper network are nothing more than a tactic they are using to advance the contract bargaining process.  

For more:
- see the Verizon release
- and the CWA release

Related articles:
Verizon union negotiations begin amidst charges of failing on copper, FiOS commitments
New York City audit says Verizon failed to deliver on FiOS promise
CWA accuses Verizon of abandoning broken wireline facilities in the Northeast
Verizon faces pressure from unions to expand FiOS into new markets

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