Verizon unions threaten strike on plan for ‘gutting health care’

NEW YORK - Lowell McAdam, who just started as CEO at Verizon Communications Inc., is facing the possibility of a strike by thousands of repairmen, service workers and phone operators his first week on the job.

The New York-based company is negotiating with more than 45,000 workers at two unions over the terms of a contract to replace one that expires at midnight Aug. 6. Among the issues to be resolved, health care has the company and unions most sharply divided. Verizon wants workers to contribute more for health benefits, including beginning to pay monthly premiums for the first time, while the unions say their members can’t accept the financial burden given the current economy.

“The company is insisting on gutting health care,” Bob Master, a legislative and political director for the Communications Workers of America, said in an interview. “I have never seen bargaining this unproductive in 25 years.”

Richard Young, a spokesman for Verizon, said the company is only asking that union workers contribute upfront for health care like other employees do. The changes are necessary to keep the country’s second-largest phone company competitive, he said.

If Verizon can’t reach an agreement with the CWA and the International Brotherhood of Electrical Workers by the contract deadline, union leaders could call their workers out on strike on Aug. 7. Such a move could disrupt installations for telephone and Internet service, delay service calls and result in non- union workers taking over a range of unionized jobs.

Health-Care Premiums

McAdam, who took over as CEO from Ivan Seidenberg Aug. 1, had run Verizon Wireless for more than three years before becoming president at Verizon Communications last year. He wants to bring the competitive culture of the wireless business to the parent company. In an interview last month, McAdam, 57, said changing the union contract would ultimately benefit workers because lower costs would help the business compete.

“If we do that, I think the union will have a much stronger future because the company will be stronger,” he said.

Verizon’s revenue and profit fell last year as declines in the wireline business offset growth in wireless. The number of wireline access lines, including residential and business customers, slid 8.2 percent to 26 million at the end of last year, extending declines since 2003. Over the same period, the wireless subscribers more than doubled to 94.1 million.

Its rivals include AT&T Inc., the biggest U.S. phone carrier and second-largest wireless operator. AT&T has proposed acquiring Deutsche Telekom AG’s T-Mobile USA, allowing it to surpass Verizon Wireless as the country’s largest provider.

‘$400,000 an Hour’

Verizon wants unionized workers, who currently pay no monthly premiums for health care, to begin contributing at least $100 a month, or $1,200 a year.

“We’re looking to bring our union more in line with what the rest of the workers pay,” said Young, adding that about 130,000 of the company’s approximately 196,000 employees already contribute to health-care premiums.

“Verizon pays $400,000 an hour on health care,” he said. “This is a significant cost factor.”

The CWA called the proposal a radical change. Verizon is a profitable company that pays senior executives well and isn’t in danger of going out of business, said Master.

“These are really, really hard economic times,” he said.

“This is a significant cost shift to our members,” said Bill Huber, a business manager for the IBEW. “If you’re retired and on a fixed income, this is going to be a very difficult pill to swallow.”

1963 Work Rule

McAdam also wants to change several work rules, including one dating to 1963 that requires two service people on calls to the Upper East Side. The practice was instituted when the neighborhood was considered dangerous, though now it’s arguably the safest in the city, he said.

“It’s an antiquated rule that doesn’t make any sense,” McAdam said.

Another work rule proposal would allow the company to route service calls to other states with more capacity to handle them and allow phone representatives to answer technical questions rather than transferring calls to tech support.

Master said Verizon also wants to limit sick days to five a year from an unlimited number, and to freeze pensions for current employees while eliminating them for future workers.

The union isn’t giving ground.

“There is no movement at the bargaining table whatsoever,” said Master. Young declined to comment on the specific issues under negotiation.

Strike Authorized

The CWA said July 28 that in a vote by 35,000 of its Verizon members, 91 percent authorized the union’s leaders to call a strike after the current labor contract expires at the end of Saturday. About 12,500 Verizon workers with the IBEW have also voted for a strike.

On July 30, thousands of workers took to the streets outside Verizon’s Manhattan headquarters, carrying signs that read “We are people, not machines.”

“We will strike you,” they chanted.

Though the unions authorized strikes in 2008 and 2003, they haven’t been on strike since 2000. The 18-day standoff affected 28 million customers and cost Verizon $40 million in revenue. The company ended up agreeing to a 12 percent wage increase over three years.

This time, Verizon has trained more than 40,000 managers and contractors over the past several months to step into the roles of union workers if need be, Young said.

“We’re confident that we will be able to handle an adverse scenario,” he said.