Leaders from Verizon, the Communications Workers of America (CWA) and the International Brotherhood of Electrical Workers (IBEW) today announced a tentative agreement on a new, three-year contract covering 65,000 employees in the Northeast and Mid-Atlantic states. We plan to sign the agreement later this evening.
“We approached bargaining with an interest in solving problems, and the result is an agreement that will keep us focused on providing our customers with the best in broadband, communications and entertainment,” said Marc Reed, executive vice president-Human Resources.
“From the start, it has been our goal to continue to provide our employees with a package of competitive wages and benefits. We were able to achieve this goal while also mitigating our growing benefit liability. At this time, we must remain focused on the important business of competing and winning customers.”
Reed added that replacing the five-year agreement with a three-year agreement gives us the opportunity to align future agreements to changes in the fast-paced marketplace.
A key focus of the bargaining was on the long-term cost positioning of Verizon and jobs of the future. Overall, the contract provides for a defined contribution retiree medical approach for new hires, changes to health care and prescription drug plans for active and retired employees, and wage and pension increases for current employees. The company and the unions also agreed to form a Labor and Management Partnership for Health Care Reform committee to seek public and legislative support for health care reform and potential solutions for affordable, quality health care in the future.
A summary of key compensation and benefits changes in the new contracts is included below.
Base Wage: Base wages will increase 3.25% in the first year, 3.5% in the second year and 3.75% in the third year. A cost-of-living provision in the third year of the contract may adjust basic wages based on the year-over-year change in the Consumer Price Index for Wage Earners (CPI-W).
Pension: Pension payments will increase by the same percentages as base wages, and Verizon will continue to offer the option of a lump-sum pension payment.
Retiree Health Care: To mitigate increasing costs, the company will shift from a defined benefit to a defined contribution retiree medical approach. For employees covered under the agreement and hired after Aug. 2, 2008, the company will contribute a fixed dollar amount per year of service toward their future annual retiree health care premium cost.
Health Care Plans: The indemnity health care plan for employees and retirees in New York and New England will be replaced by an actively managed Preferred Provider Organization (PPO) plan designed to help employees and retirees better manage their health and health care costs while providing the company with cost savings through better discounts.
Prescription Drugs: Employee and retiree cost sharing will increase for brand name prescription drugs in order to encourage employees, retirees and their families to use generics when appropriate.
Retiree Life Insurance: The company will continue to provide retiree life insurance for future retirees, but the benefit will be frozen at the employee’s pay as of Aug. 2, 2008. New hires will receive retiree life insurance at a fixed dollar amount instead of life insurance at one times pay. This is an important step towards managing future benefit costs.
Expedited Arbitration/Mediation Process: The company and the unions agreed to a more expeditious process to resolve certain types of discipline cases. Mediation with pre-determined mediator panels is the key component of the revised process, which will be trialed for an 18-month period.
Reclassified Associate Positions: In settlement of a pending labor arbitration resulting from the creation of Verizon Business, Verizon will move 600 Verizon Business technician positions from the Northeast and Mid-Atlantic states to Verizon Telecom. Significantly different work rules will apply to this group. Separately, we will also reclassify 90 technicians in the Video Hub Offices, and reclassify 900 temporary unionized employees as permanent positions.
“I want to thank everyone involved in the negotiations for working so hard to get a contract that benefits both our employees and our company,” added Virginia Ruesterholz, president-Verizon Telecom. “Now it is important that we get on with the business of winning customers, providing great service and beating our competitors.”
The tentative agreement will be presented to employees covered by the contract for ratification over the next several weeks.
Sugar-coated. The "Reclassified Associate Positions" has some particularly interesting wording.