Verizon Gets Deal in Principle to End Landline Worker Strike

  • New 4-year contract lets landline workers return to jobs
  • U.S. Labor Secretary helped broker deal to end 44-day strike

Verizon Communications Inc. and its two unions reached an agreement in principle on a new labor contract, the U.S. Labor Department said, paving the way for about 39,000 landline employees to return to work after a 44-day strike.

The parties are putting the four-year deal in writing, and union members should return to work next week, said Labor Secretary Thomas Perez in a statement. The agreement will extend to about 165 Verizon wireless employees, a first for workers on the mobile side of the business. Full terms of the agreement weren’t disclosed.

The walkout by the Communications Workers of America and the International Brotherhood of Electrical Workers has been one of the largest in the U.S. in recent years. Perez helped broker the deal by bringing Verizon Chief Executive Officer Lowell McAdam and two union executives to Washington to discuss ways to resolve the dispute.

The union leaders thanked Perez for guiding the process in separate statements.

“This proves that when we stand together we can raise up working families, improve our communities and protect the American middle class,” CWA President Chris Shelton said.

IBEW President Lonnie Stephenson added that the tentative contract is an important step forward in helping to end the six-week strike and keep “good Verizon jobs in America.”

“Verizon is very pleased with this ‘agreement in principle,”’ Chief Administrative Officer Marc Reed said in a statement. “We look forward to having all of our employees soon back at work in their regular positions and doing what they do best -- serving our customers.”

Verizon shares rose less than 1 percent to $50.62 at the close Friday in New York. The stock has climbed 9.5 percent this year.

“In the end, it looks like everyone wins,” said Roger Entner, an analyst with Recon Analytics LLC. “The employees will get an increase over four years, which is a year longer than originally proposed. And Verizon can get all its employees back to work, including those that had been filling in on the landline side.”

The labor standoff pushed the number of striking U.S. workers to the highest in more than four years and could depress the May jobs numbers slated for release next week, data from the Labor Department showed.

To try and keep up with business demands during the strike, Verizon had dispatched managers and non-union workers to call centers and field-service assignments. Yet even with the temporary help, the strike has been a drag on the company’s landline business, Chief Financial Officer Fran Shammo said during an investor presentation earlier this month. Because of the strike, Verizon probably won’t add FiOS TV or broadband customers in the quarter, he said.

The new labor contract is the first since Verizon took full control of Verizon Wireless and agreed to buy AOL, two deals worth almost $135 billion that point toward a wireless-centric future. The company has been shedding union-heavy operations, including its FiOS business in three states last month. Landlines accounted for 29 percent of Verizon’s revenue, down from almost 50 percent in 2008. And as its strategy has shifted, the ranks have shrunk by about half from 78,000 union workers 13 years ago.

Facing years of declines in the landline unit as more people opt for only wireless service, Verizon pushed to have union workers pitch in more for health benefits and be flexible on temporary job relocations. The unions, which had been working without a contract since Aug. 1, wanted to limit those transfers of workers to other regions, protect jobs from being moved offshore and preserve pension increases.

Of the workers, about 29,000 are represented by the CWA and 10,000 by the IBEW, according Candice Johnson, a spokeswoman for the CWA.

“This might be the last big strike for Verizon because wireline will have less and less leverage in an increasingly wireless business,” Entner said.

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