FairPoint Proposes Freezing Worker Pensions, Benefits

FairPoint Communications and its unionized employees in northern New England have returned to the bargaining table. Their current five-year contract agreement expires Aug. 2.

The company is seeking cuts to all manner of benefits, according to union representative Mike Spillane, of IBEW Local 2326.

The chapter represents about 350 workers in Vermont. Another 100 customer service representatives in Vermont are represented by Communication Workers of America. The negotiations collectively cover about 1,800 employees in Vermont, New Hampshire and Maine.

FairPoint Vermont President Beth Fastiggi said in an April interview that the company is looking for cost savings.

“We need to update our contract with employees so we can be more nimble for our customers and have the flexibility to be the provider of choice,” Fastiggi told VTDigger. “It’s really talking about how we move forward and to be financially viable so we can continue to invest.”

FairPoint’s stock is trading in the $13 range, up from roughly $11 at the start of the year. It was as low as $3.62 in October 2011, eight months after the company emerged from bankruptcy.

FairPoint CEO Paul Sunu has proposed a four-pillar strategy for increasing value in the company’s shares: operations, regulations, revenues and labor negotiations.

On the labor side, Spillane said Thursday that FairPoint’s first proposal was stark.

“Right now, FairPoint has basically said they want to reduce every benefit we’ve gotten over the last 40 years,” he said. That includes health care coverage, tuition reimbursements and wages for starting workers — and freezing pensions.

Sunu said in a quarterly conference call this month: “Our core proposals include freezing the defined-benefit pension plan, discontinuing post-retirement health care benefits for active employees, moving bargaining unit employees to the contributory benefit plans available to other employees, making changes to layoff and recall provisions and the elimination of the related costs and changes to various other work rules that will allow us to more effectively serve customers.”

He said that what he outlined was just an opening bid. The company “will bargain in good faith and will show flexibility and creativity in working towards acceptable solutions,” Sunu said, so long as the unions demonstrate a reciprocal effort.

Spillane said the union is willing to engage in give-and-take on certain aspects of the bargaining agreement.

“Doing away with our pension is probably not one,” he said. “They’re fighting words. You go after my pension, we’re going to fight.”

Spillane said he is about 52 and has worked for the company that’s now owned by North Carolina-based FairPoint Communications Inc. for 27 years. He said he’s one of perhaps 50 individuals in Vermont who are at or near retirement age.

To date, the union workers receive 100 percent health care premium coverage and defined benefit retirement contributions, plus unlimited sick days. For management employees, FairPoint covers 75 percent of health care and the first 5 percent of 401(k) retirement savings plans.

It’s a generous package by modern standards, he acknowledges.

“That’s something that we fought hard for,” Spillane said. He noted that IBEW workers have chosen to strike in the past over proposed health care cuts, but he said that’s a tool of last resort.

Coping with chronic financial strains, FairPoint hopes to restructure to benefits plans “similar to what other businesses have,” Fastiggi said. A company spokesperson confirmed FairPoint wants to move union employees closer to the benefits packages for other FairPoint employees, including management.

The spokesperson said union wages with the company average about $115,000 per year, including benefits but not including future pension funding and other post-retirement benefits.

“The current union benefit plans cost too much,” Angelynne Amores said in an email. “Our proposals are trying to bring all employees on the same playing field and in the end, we will still be a company that Vermonters will want to work for.”

FairPoint has brought in an outside negotiator to lead the company’s bargaining team. Previous contracts have been forged in-house.

The negotiator, Stuart Newman, is an Atlanta lawyer with an extensive background in labor law and employment restructuring.

“The thought process is that negotiations are complex and we wished to have an experienced negotiator lead the team,” a company spokesperson said.

The next bargaining session is slated for Nashua, N.H., in mid-June.

An unrelated lawsuit between the parties, in which FairPoint was found to have violated the current collective bargaining agreement, is now closed after the company lost its second appeal.