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Striking Verizon workers to return Wednesday after deal reached

Workers on strike outside of the Verizon building in Boston last month.
Workers on strike outside of the Verizon building in Boston last month. Jessica Rinaldi/Globe Staff/file

NEW YORK — Verizon reached a series of tentative agreements Sunday and Monday with two major unions representing nearly 40,000 striking workers, most likely bringing an end to a 6½-week work stoppage.

The deal is a retreat by Verizon on some of the major points of contention, including proposals for pension cuts and for greater flexibility to outsource work and transfer employees to different geographic areas.

“This contract is a victory for working families across the country and an affirmation of the power of working people,” said Chris Shelton, president of the Communications Workers of America in a statement.

But the tentative agreements also give the company some important tools for paring down its workforce in the coming years.

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“The tentative agreements reached today are good for our employees, good for our customers and will be good for our business,” Marc Reed, Verizon’s chief administrative officer, said in a statement. “They also include key changes sought by the company to better position our wireline business for success in the digital world.”

The four-year contracts award workers a nearly 11 percent increase in pay overall, up from the 6.5 percent increase that Verizon had proposed before the strike, as well as modest ratification bonuses and profit-sharing.

The striking members in both unions, the Communications Workers of America and the International Brotherhood of Electrical Workers, must now vote on the agreements, which is likely to happen in the next two or three weeks, but they are widely expected to approve them. They will return to their jobs beginning Wednesday as part of a short-term “back-to-work agreement.”

Verizon had long argued that it needed to cut costs and increase its flexibility to manage its workforce and preserve the competitiveness of its wireline business, which includes landlines, video and Internet service that run through wires.

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That business, which employs the overwhelming majority of the striking workers, has declined in profitability in recent years as mobile phone service and hand-held devices have gained popularity. Many of the company’s competitors are not unionized and, therefore, better able to rein in labor costs.

The unions say the company is more than profitable enough — with nearly $18 billion in net income last year — to support a large workforce with good benefits and wages.

They say that Verizon’s fiber-optic FiOS network, which provides telephone, video and Internet service, remains lucrative. But they argue that the company’s interest in it has flagged because the labor costs are much higher than for its wireless business, which is overwhelmingly nonunion.

Perhaps the most consequential issue at stake in the standoff was Verizon’s ability to outsource work. The previous contracts included a provision requiring that a certain percentage of customer calls originating in a state be answered by workers in that state — ranging from just over 50 percent for some types of calls in some states to more than 80 percent in others. Verizon sought to significantly lower those numbers.

Under the tentative new contracts, a similar percentage of calls must be answered by a unionized worker somewhere in Verizon’s wireline footprint, which runs from Virginia to Massachusetts, rather than the particular state from which the call originates.

Both sides claimed victory in the change.

“We only care that our members somewhere in the footprint are doing the work,” said Robert Master, assistant to the district 1 vice president of the Communications Workers of America. “The push to outsource call center work was rebuffed.”

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Lending partial vindication to this claim was a commitment by the company to create more than 1,000 unionized call center jobs over the next four years to accommodate new demand from customers. The company also agreed to reduce the number of call center closings.

For its part, Verizon argued that the new call center rule allows it to wring out inefficiencies. Under the old contracts, a call that originated in New York City would frequently be answered in New York City, then transferred to New Jersey or another state, where a worker with the right expertise could handle it. Now, the representative in New Jersey can answer the call directly more often.

The company also won the right to offer buyout incentives to employees once a year without first winning the union’s blessing, making it easier to eliminate jobs that the new rule could eventually render obsolete.

Elsewhere, the unions managed to beat back proposed pension cuts, including a cap on the accrual of pension benefits after 30 years of service.

The company also agreed to withdraw a proposal that would have allowed it to relocate workers for up to two months anywhere in its geographic coverage area, although it had already expressed an openness to withdrawing the proposal before the strike.

Proposals to change seniority rules and to make the company’s sickness and disability policy more strict were also withdrawn, and the company agreed to change a performance review program in New York City that many workers had considered abusive.

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Significantly, the new contracts also cover some 65 unionized workers at Verizon Wireless stores, marking the first time that retail wireless workers at the company have been included in a union contract, a potentially important precedent.

Some labor experts argued that these victories could reverberate through the broader economy.

“Workers overall have been greatly diminished in their bargaining power, and wages have been stagnant for quite some time,” said Jeffrey H. Keefe, a professor emeritus at the Rutgers School of Management and Labor Relations, who has studied the telecom industry for decades. “I want to see the details of this contract, but this may be a real shot in the arm for unions.”

Verizon, for its part, also achieved at least one clear victory in the new contracts: hundreds of millions of dollars in health care cost savings.

The unions had largely signaled that they would accept these health care measures before the strike.

The standoff between the two sides grew more bitter during the first month after the strike began April 13, and the unions came under particular strain when Verizon discontinued health care benefits for the striking workers May 1.

But the tone appeared to shift in mid-May, after Labor Secretary Thomas E. Perez and Allison Beck, director of the Federal Mediation and Conciliation Service, began to broker the talks.

Verizon had initially predicted that the strike would not materially affect its financial position in the second quarter, but its chief financial officer conceded at a recent investor conference that the strike’s effect on installations could hurt the company’s performance.

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Keefe said that it was quite rare for a strike in the telecom industry to have a significant economic impact on the target company, as opposed to a public relations impact. But, he said, Verizon may have been vulnerable because so few of its replacement workers, typically managers, had experience with installations.

“There’s more to running a network than hiring a few replacement workers and running them through school,” Keefe said.

Richard J. Young, a Verizon spokesman, rejected that argument, saying Verizon’s replacement workers had begun installing FiOS for new customers a few weeks earlier than initially planned, and for more customers than expected.

The company’s real miscalculation may have been its assessment of the unions’ ability to hold out.

“The total number of installations is off, and it’s not unexpected, considering it was a six-week strike,” Young said. “You never know going in. You hope it’s a short duration, but you have to deal with the hand you’re dealt.”