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AT&T Sees Its First Labor Problem In Years With Rejected Contract Proposal

July 18, 2016, 1:44 PM UTC
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In this Tuesday, Oct. 21, 2014 photo, people pass an AT&T store on New York's Madison Avenue. AT&T says it will buy Mexican wireless company Iusacell for $2.5 billion including debt and says it plans to grow in Mexico. (AP Photo/Richard Drew)
Photograph by Richard Drew — AP Images

A group of more than 40,000 unionized workers in AT&T’s wireless business rejected a proposed benefits contract, marking the first contentious labor negotiation at the telecom giant in several years.

The proposed contract, which mainly covers health care benefits, was completed in June between AT&T and representatives of the Communications Workers of America. Wages, pensions, and work rules are covered under different contracts.

Neither side had much to say initially in Monday. An AT&T spokesman called the vote “unfortunate” and said the company is reviewing its next steps. The current contract does not expire until the end of the year and includes a no-strike provision, he noted.

“We’ve got time to work this out,” said the AT&T spokesman. In a statement last week, the company said the two sides have “agreed to meet in a continuing effort to reach an agreement.”

“We are in discussions with AT&T management on negotiations from another tentative agreement,” a spokeswoman for the CWA said.

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Although the tiff is at an early stage and the sides have already agreed to meet again, the rejection will raise concerns in the industry, especially coming just months after some 40,000 workers at Verizon Communications went on a seven-week strike. That walkout hit Verizon’s (VZ) traditional telephone service as well as its FiOS cable TV and Internet business as replacement workers couldn’t keep up with the demand to install service for new customers.

Secretary of Labor Thomas Perez ultimately had to intervene to get the two sides to come to an agreement.

The CWA members’ rejection at AT&T (T) ended a lengthy streak of approved agreements between the union and the carrier of late. In April, 9,400 wireless employees in the southwest region approved a new contract, and 24,000 workers in the old telephone side of the business agreed to a new contract in December.

The last major strike at AT&T occurred in 2012 when 21,000 workers in California, Connecticut, and Nevada walked out for two days, according to Department of Labor reports.