Verizon Sunday averted a potential labor strike by completing a new labor pact with two unions representing roughly 65,000 employees.

Verizon, in conjunction with the Communications Workers of America and the International Brotherhood of Electrical Workers announced that the new agreement guarantees wage increases totaling 10.5% over three years and preserves the company's current policy of fully paying healthcare premiums for all active and retired employees. The unions note, however, that all future employees will "have a defined contribution formula" for their post-employment healthcare benefits, and that Verizon's contributions for these benefits is subject to change under future contracts.

In addition to covering wages and healthcare costs, the new pact will also add approximately 2,500 new union members from Verizon's workforce, including some temporary workers who will be given permanent positions. Among the new union members are about 600 former MCI technicians who  work at Verizon Business and who the unions say have "been seeking representation for nearly two years."

Although the unions and Verizon have typically signed five-year labor agreements in the past, the shorter agreements will give the company more flexibility to adapt to the highly competitive telecom market by letting it revisit labor contracts at earlier dates, says Marc Reed, Verizon's executive vice president for human resources.

In total, the two unions represent around 28% of Verizon's 230,000 workers nationwide, with the vast majority of union employees located in Northeastern and Mid-Atlantic states. On Friday, the unions said they had set an early Monday morning bargaining deadline, thus paving the way for a potential strike to commence this week. If Verizon and the two unions had not reached an agreement Sunday and the unions had decided to strike, then it could have disrupted the Verizon FiOS fiber-optic network rollouts that the company has been planning for several areas in the Northeast, particularly in New York City.