Reference no: EM131745306

Verizon Compromises after Workers Strike

Verizon Communications faced an increasingly uncommon situation in 2016 when about 39,000 of its work- ers went on strike. Those workers, represented by the Communications Workers of America (CWA) and International Brotherhood of Electrical Workers (IBEW), were employees of the wireline division in several states on the East Coast. These workers install and repair cables, as well as field questions and problems from wired-line customers in call centers. The strike was by far the larg- est in the United States in years. It followed 10 months of unsuccessful negotiations, during which time Verizon trained thousands of its nonunion employees to cover work performed by strikers and the union refused the idea of bringing in a federal mediator.

Company objectives focused on managing costs—for example, by reducing retirement benefits and having employees pay more of the cost of their health care. The union sought greater pension benefits and limits on jobs lost to outsourcing. After a strike of six and a half weeks, Verizon and the unions reached a compromise and workers overwhelmingly approved the deal. Included were raises amounting to more than a 10% increase spread over four years (versus 6.5% initially offered by Verizon) but no pen- sion cuts. Verizon gained flexibility in where it routes cus- tomers’ phone calls, cuts to the costs of its health benefits, and the right to reduce its workforce by offering employees buyout incentives once a year without first seeking union consent.

One long-term outcome may be a larger role for the CWA at Verizon. The contract includes about 70 retail workers in seven Verizon Wireless stores in New York and Massachusetts who had voted for union representation but previously failed to negotiate a contract. So far, unions have had difficulty organizing wireless workers, especially in stores because they are high-turnover jobs spread among many locations, often in malls, on private property, where union demonstrators may not be welcome or as visible. The union hopes that as other workers in the wireless divi- sion see the gains made by the store workers (for example, less of their pay being linked to sales targets), they will seek union representation, too. Initially, according to the CWA, Verizon was unwilling to include these workers in the contract negotiations.

Statements from Verizon suggest it sees the mostly union-free status of the wireless business as an advan- tage. Union gains there could make competitiveness more difficult in its prime business. In contrast, the wireline unit has played a declining role in the company, as more customers shift their services to the more profitable wire- less division.

Questions

1. What options does a company in Verizon’s situation have for avoiding a strike?

2. Suggest one or two labor relations goals for Verizon, and explain how it might achieve them.