Verizon Tells Striking Workers It Plans to Suspend Benefits

Verizon Communications Inc. (VZ) told 45,000 striking workers that it will suspend certain benefits at the end of the month if they haven’t returned to their jobs, a move that a union official called a “scare” tactic.

Workers at two unions that have called strikes will lose basic health-insurance, dental, vision and prescription-drug benefits, said Richard Young, a spokesman for the New York-based telephone company. Verizon stopped funding the workers’ pensions when their former contract expired Aug. 6.

“Verizon is spending many millions of dollars a day providing health care for workers who willingly decided to strike,” Young said in an interview yesterday. “If they’re not employed and not working for the company, we’re not going to fund their pensions.”

The employees, represented by the Communications Workers of America and the International Brotherhood of Electrical Workers, went out on strike after they failed to reach an agreement on a new contract with Verizon, the second-largest U.S. telecommunications company. Verizon is asking the workers to pay more for health-insurance benefits, while the unions have said the company is profitable and executive compensation is healthy.

“This is the first time in the history of our negotiations with Verizon that they’ve threatened this much,” Bill Huber, a business manager for the IBEW, said yesterday after receiving the letter. “It’s a tactic they’re using to try to scare the people.”

Flared Tensions

The conflict between the two sides has escalated as the strike entered its 11th day. The company has suffered 155 incidents of sabotage and obtained injunctions to prohibit striking workers from disrupting business in New York, New Jersey, Delaware and Pennsylvania, said Young. On Aug. 12, workers protested outside Verizon Chairman Ivan Seidenberg’s home in West Nyack, New York.

Both sides last week also filed unfair labor practice charges against each other with the National Labor Relations Board. Verizon today started running three advertisements, one of which says the company needs to update the 50-year-old contracts in order to stay competitive. The ads will run in print publications.

“They claim we want to strip away 50 years of contract negotiations. THEY’RE RIGHT. We think that’s fair,” reads an ad posted on Verizon’s website.

Workers today held a rally in downtown Manhattan opposing New York City’s proposed $120 million telecommunications contract with Verizon coming up for vote at the city’s Panel for Educational Policy. John Liu, New York City’s comptroller, urged the panel’s members to postpone the vote until the contract dispute is resolved.

“Now is not the time to fund new projects, especially as thousands of New Yorkers and their families are in danger of losing their benefits,” Liu said in a statement.

Allowed in Contract

Young said the letter shouldn’t have been a surprise to the unions because the option of suspending benefits during a strike was in the workers’ contract. Verizon wants to give employees “as much time as possible to find alternative arrangements,” he said.

The striking workers are primarily from Verizon’s traditional land-line telephone business, with the company’s wireless business largely unaffected. The walkout is the largest since about 73,000 General Motors Co. (GM) workers went on strike for two days in 2007, said Jeffrey Keefe, professor of labor and employment relations at Rutgers University in New Brunswick, New Jersey.

Verizon rose 73 cents, or 2.1 percent, to $35.61 at 4 p.m. in New York Stock Exchange trading. The shares are little changed this year.

To contact the reporter on this story: Devin Banerjee in New York at dbanerjee2@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net

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