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How Employers Limit Worker Rights, Using the Power of Government and Market Forces

The escalating attack on worker rights in the United States has taken several forms in recent years.  In some American states, right-wing politicians have passed laws denying public employees such as teachers, janitors, police, and firefighters the right to organize into unions and bargain collectively.  Some of these laws strip recognition and power from existing labor organizations.  In state legislatures and in the Congress — where the House of Representatives is now controlled by the Republican Party — limits on labor rights in the private sector are being proposed.

Against private-sector workers, multinational corporations have filed federal lawsuits claiming that labor union organizing efforts are a form of extortion.  These lawsuits present the legal theory that when workers conduct a public campaign to expose low wages and poor working conditions, and seek to influence a corporation to change its policies, this activity is not protected free expression but rather a form of criminal blackmail.

In “Job Loss, the Clintons, NAFTA, and a New Progressive Labor Rights Agenda,” I discussed “globalization” which has become a code for moving manufacturing and service activities out of countries where workers have the right to organize and to seek higher wages and better working conditions.  The jobs are then filled in countries where those rights hardly exist.

I used examples from computer and smartphone manufacture.  Here is another: In the 1990s, the labor cost for making a pair of Nike shoes in Vietnam was about $1.40, and the shoes would sell for more than $100.  Dramatic publicity campaigns in many countries revealed that low wages and unsafe working conditions were the norm in factories owned or controlled by multinational manufacturers.

Outsourcing

However, some jobs cannot be shipped to foreign countries.  Food must be prepared and served in schools, hospitals, hotels, public buildings, and restaurants.  Someone must clean the hotel rooms and office buildings.  Nurses and other health workers provide patient care in hospitals, medical offices, and patients’ homes.  Trucks must deliver goods.  On farms, agricultural workers must tend and harvest crops.  Police, fire fighters, and teachers perform vital public services.  Employers cannot send these workers’ jobs overseas: they have adopted other tactics, in an effort to reduce the wage bill and to control the work environment.

While workers in these economic sectors are universally seen as essential, they are among the lowest paid in the work force.  Many of them are members of racial and ethnic minorities, or are immigrants.  These workers are vulnerable to intimidation.  Their working conditions are often dangerous.  For example, agricultural workers are subjected to risks from pesticides and herbicides, as well as from farm machinery.  The health problems of those who work in the food processing industry have been documented.

Example: In the hospitals run by a California health care provider, the sheets, blankets, and other items were laundered on-site by workers who had reasonable wages and benefits and in many cases were protected by labor agreements.  The provider has “outsourced” the laundry function.  The items to be laundered are taken to a central location operated by Sodexo or some other multinational.  There, workers may deal with laundry from many sources.  They do not have labor agreements.  Their pay is lower than the wages received by those who used to do that work at the hospital.  As I shall describe, when these workers try to organize to better their wages and conditions, their employer strikes back.

Legal Obstacles to Union Organizing

If the employees try to rely on “traditional” American labor law, they are in for an unpleasant surprise.  By the 1970s, corporate and right-wing political interests in the United States had succeeded in limiting labor rights in significant ways.  The “election” process had become dramatically tilted in favor of employer interests.  This can be shown by the following example: Suppose workers in a factory want to join a union and to have the union represent all the workers to bargain with the employer.  The union announces an organizing campaign.  It seeks to have an election, in which the workers will vote whether or not to have the union represent them.

But the “campaigning” in this election places the greater power in the hands of the employer.  The employer can call all the workers to a compulsory meeting to discourage them from voting for a union.  It can and does send propaganda material to employees’ homes.  The propaganda need not be true, so long as it does not contain any direct threats.  Supervisors can and do confront individual employees in the workplace to discourage them from voting for a union.  The employer can and does threaten adverse job action against union sympathizers.  Although some of these threats may be unlawful, the process for seeking redress for them is difficult and lengthy, and statistics show that many employers do not hesitate to use them.  The employer may also threaten to move its operations to other locations if the employees vote for a union.

By contrast, the union organizers have no right to come on the employer’s premises to meet with workers or to distribute information.  They are limited to standing outside the workplace and attempting to meet with workers one by one, or to calling meetings at some location away from the workplace.  One can imagine the difficulty of trying to reach employees while standing at the gate to the factory parking lot as workers drive in just in time to start work.

Employer scare tactics are particularly effective against the most vulnerable workers — those in the lowest-paid jobs, members of racial and ethnic minorities who face discrimination in seeking alternative employment, and immigrants who worry about maintaining their right to remain in the United States.  And workers in some jobs — such as agricultural workers — are not entitled even to the limited rights of federal union organizing law.

Here is just one story of how employers try to prevent unionization by exploiting the advantages of the one-sided traditional organizing pattern: In Kalamazoo, Michigan, the United Food and Commercial Workers Union was called upon by workers in a chain of supermarkets to help them obtain collective bargaining.  The company targeted union supporters in the work force for discharge, threats, refusals to promote, and surveillance.  The union filed complaints against this behavior with the National Labor Relations Board, and the Board eventually held that the employer had acted improperly.  But in the meantime the employer was free to keep up its consistent anti-union propaganda.  The workforce in the supermarket industry is notoriously volatile, in the sense that there is a big employee turnover.  In the end, after many months of struggle, the union was not successful in using the employer-dominated mechanism for obtaining an employee vote on unionization.

There is no question that union organizing benefits workers.  In 2005, the average American worker who was a member of a union earned 28.1% more per hour than a non-union worker, and in addition was more likely to have health insurance and pension benefits.  One must recall that even with recent legislative changes in the United States, millions of Americans have no health insurance at all.  Almost all of those represented by labor unions have such insurance.  The net advantage for a union worker was thus 43.7% more compensation than the non-union worker.

In addition to benefitting from pro-employer changes in labor laws, multinational corporations used other tactics to avoid unionization.  Major automobile manufacturers opened plants in the American South, where there was a very weak tradition of union organization and where it was easier to persuade workers not to vote for a union.  Some employers resorted to race-baiting in order to foment hostility between white and African-American workers.  By the 1970s, some leaders of American labor unions saw the need to use new organizing tactics, to level the playing field between workers and employers.  Just as multinational corporations had formed alliances with political groups, and conducted media campaigns to portray themselves as socially responsible and advance their political agenda, workers saw the wisdom of forming alliances in the community to advance their interests.

Workers Fight Back — the New Organizing Tactics

Progressive labor organizations — such as the Service Employees International Union (SEIU) — are putting pressure directly on employers to recognize labor rights.  The strategy is known as the “community campaign.”  Basically, the union and the workers seek public support to pressure employers to recognize the union and to bargain without going through a protracted campaign under National Labor Relations Board supervision.

This strategy has advantages: The workers enlist community sentiment, making the point that better pay and working conditions benefit the community as a whole.  They seek to harness the buying power of consumers and the sensitivity of an employer to “public image” to induce the employer to behave reasonably.

The workers argue that a corporate refusal to pay adequate wages and to provide decent working conditions is not in the interest of the constituencies that the corporation claims to serve.  Of course, theories of corporate management often say that the corporation’s only duty is to make a profit for the shareholders and that management should be rewarded with huge salaries for achieving this goal.  But in the present social climate, most multinational corporations actively promote themselves as concerned about social, environmental, consumer, and worker issues.  Multinationals who must sell their products and services to the public, or who are subject to public regulation, are more likely to make these claims of social responsibility.

A supermarket chain tells consumers that it is a responsible corporate citizen, providing food and other items in a safe and clean environment, where one can expect good service from employees.  Supermarkets are sometimes controversial because they draw customers away from the city center.  They are sometimes located in places where their presence causes problems of traffic and environmental impact.  The community at large, and customers in that community, have a legitimate concern with the establishment and operation of supermarkets.  So, to return to our Kalamazoo example, suppose the union were to place its message in the media, and ask the community and customers to become concerned with the wages and working conditions of those who are working in the store where they shop.  This is exactly what community campaigns are about.

A community campaign may find allies among local political leaders.  In several major cities — New York and Boston among them — union representatives worked with people in local government to pass legislation calling for companies doing business in their cities and with public entities pay a decent wage and provide proper working conditions.  Some communities have passed minimum wage laws that improve significantly on the federal minimum.

The multinational reaches out with its publicity to the press, the public, the investment community, public officials, influential shareholders, and consumers.  The community campaign idea may be seen as turning the corporate agenda on its head.  The idea of using publicity as a means to influence corporate behavior is not new.  However, with the growth of the Internet and other means of rapid communication, it is an idea with greater power than in the past.

Multinationals Resist Community Campaigns

Then came the lawsuits.

In 2008, Cintas, which provides work clothing and laundry services to business and individual customers throughout North America, filed a RICO suit in the federal court in New York.  Cintas claimed that the community campaign conducted by the International Brotherhood of Teamsters and its allies — including SEIU — amounted to unlawful coercion.  Cintas also named dozens of individual union organizers and members as defendants.

RICO is an acronym for Racketeer Influenced and Corrupt Organizations.  The RICO statute provides criminal penalties and a federal civil cause of action for certain allegedly criminal conduct done as part of a pattern.  The Cintas suit, and all the other cases brought by employers, claim that a community campaign is “extortion.”

The union had demanded that Cintas accept collective bargaining provided that the union obtained the signatures of a majority of the employees, affirming their desire to have a union.  When Cintas refused, the union and its allies conducted a public campaign criticizing Cintas for paying “poverty-level” wages, committing violations of the law, engaging in racial and ethnic discrimination.  The union also maintained a website telling the public about other uniform suppliers whose workforces were represented in collective bargaining agreements.

In March 2009, federal judge William H. Pauley dismissed Cintas’s claims (Cintas Corporation v. Unite Here, 601 F. Supp. 2d 571, S.D.N.Y. 2009).  He held that the community campaign was an exercise of free speech rights.  In December 2009, the court of appeals affirmed the dismissal.  See “Brandworkers Hails Dismissal of Cintas RICO Lawsuit Against Unions.”

Judge Pauley’s opinion dismissing the complaint sets out a number of significant legal principles.  First, the court held, the public campaign could not be classified as extortion because a collective bargaining agreement has potential benefits for both the employer and the union.  Such an agreement is not extortionate, but simply the result of “hard bargaining” that often occurs in the marketplace for goods and labor power.

Second, the court held that the right of free expression protects the public campaign of the type that the union and its allies conducted.  Simply put, the court said, “Cintas does not have a right to operate free from any criticism, organized or otherwise.”  And if public criticism leads consumers and others to have an unfavorable opinion of Cintas, the company has no right to complain.

A Florida federal judge used similar reasoning in dismissing a RICO suit by Wackenhut — the security company.  See Wackenhut Corp. v. SEIU, 593 F.Supp.2d 1289 (S.D. Fla. 2009).  (Readers with access to on-line legal research tools should check these citations before relying on them.)

The assertion that public pressure amounts to blackmail or other illegality reminds one of the similar arguments made against the direct action marches, pickets, and boycotts that were part of the civil rights movement in the 1960s.  See <www.crf-usa.org/black-history-month/social-protests>.

It is not blackmail to reveal that a corporation has a policy of opposing labor rights while claiming to support them.  This hypocrisy is not a private secret, but rather an example of contradictory public conduct.  It is not extortion for members of the public to make a public and nonviolent appeal for a corporation to behave in a certain way, such as lowering its prices, paying more attention to its impact on the environment, avoiding racial and ethnic discrimination, or honoring worker rights.

Another dramatic story of RICO use involves Smithfield Foods, a North Carolina-based packager of pork and poultry.  Smithfield began in the North Carolina city of that same name.  But by 2008, through mergers and acquisitions, it was the largest pork and turkey producing company in the world, with annual revenues of $12 billion.  Smithfield management feared that if workers at its core facility in Smithfield, North Carolina, were to gain collective bargaining rights, this would lead to unionization campaigns throughout the company.

The United Food and Commercial Workers Union began to organize Smithfield workers.  Smithfield retaliated.  It reported immigrant workers who were union supporters to the federal immigration authorities, so that the workers would be deported.  It fired other union supporters.  Smithfield harassed union sympathizers.  All the while, working conditions at the plant were unsafe and workers labored for low wages.  The union filed administrative complaints, but these did not succeed in making extensive and lasting changes.

Finally, the union and its sympathizers embarked on a community campaign.  They sought support in the community the Smithfield factory was located, and in the food service industry generally.

Smithfield responded by using the RICO weapon.  Smithfield management no doubt believed that this weapon would deter the union and would influence workers not to support collective bargaining.  Two-thirds of Smithfield’s workers were African-American, living in the American South and working for low wages.  Many other workers were immigrants.1  Smithfield’s RICO lawsuit sought millions of dollars in damages.

Late in 2008, Smithfield and the union reached a settlement.  The terms of this settlement are secret, having been sealed by the court.  According to public news reports, Smithfield withdrew its RICO allegations. The union has discontinued its public campaign.  There has been a successful union election at Smithfield.  From the available public evidence, therefore, the RICO strategy once again did not achieve success in the sense of a judicial victory.  It did, however, force the union into an expensive court battle.

The Smithfield tactics show that some employers do not bother to set up a separate entity where wages and working conditions are lower.  They hire undocumented and other vulnerable workers and underpay them.  When the employees try to organize, the employer fires them or reports them to immigration authorities.  In North Carolina, this has been the tactic of many employers.  And Donald Trump is an expert at it, adding to the long list of his hypocrisies.

Summary and Some Conclusions

In tomorrow’s post, I will suggest some strategies of resistance to multinational conduct and support for worker rights.  However, let me recapitulate the themes of yesterday’s and today’s posts.  Employers — and their allies in government that they can influence with unlimited campaign cash — have successfully limited worker rights.  Federal and state labor laws exclude entire categories of workers from full protection, including agricultural workers, home workers, and public employees.  The workers nominally under the protection of labor laws are hobbled with great and increasing barriers to effective organization.

Not content with exploiting the limits placed by law, employers exploit market forces to drive down wages and erode working conditions.  The two major components of this strategy are “outsourcing” and “globalization.”  Outsourcing moves jobs into a new corporate entity where workers do not have the rights they might previously have enjoyed.  Globalization is a name for moving jobs to low wage and deplorable working condition areas of the world.

A Footnote from Across the Pond

In 1986, a small London organization devoted to environmental protection published a pamphlet attacking McDonald’s on a number of grounds.  The pamphlet, written by Helen Steel and David Morris, said that McDonald’s seeks to deny its workers the right to join labor unions, underpays its workers, causes environmental and social harm in third world countries by its purchasing practices, sells unhealthy food, and uses misleading advertising.  McDonald’s reacted by hiring investigators to infiltrate the organization, steal documents, and gather evidence.  McDonald’s sued the pamphlet’s authors for libel.  (Perhaps McDonald’s believed that Steel and Morris were telling Whoppers.)

At several points, McDonald’s offered to dismiss its lawsuit if the pamphlet’s authors would “stop criticizing McDonald’s.”  Eventually, McDonald’s won a civil libel judgment against Ms. Steel and Mr. Morris for £40,000.  However, Ms. Steel and Mr. Morris sued Scotland Yard for having unlawfully provided private information to McDonald’s and won £10,000.  Throughout the litigation, Ms. Steel and Mr. Morris acted as their own counsel, sometimes with the assistance of a volunteer law student.

After the court proceedings in the United Kingdom were over, McDonald’s announced it would not try to collect the judgment it had obtained.  Ms. Steel and Mr. Morris filed a claim in the European Court of Human Rights against the government of the United Kingdom.  They alleged that the UK laws on libel, as applied to them, violated the European Convention on Human Rights provisions on freedom of expression.  The Court in Strasbourg issued its judgment on February 15, 2005.  The Court held that the UK courts had violated article 6 of the European Convention on Human Rights by not giving Steel and Morris a fair trial, and that their conduct was protected by article 10 of the European Convention on Human Rights guaranty of free expression.  The Court awarded Ms. Steel and Mr. Morris £24,000 in damages, plus their costs of litigation, that to be paid by the government of the United Kingdom.

 

1  For the dramatic story of another labor struggle — in the hills of North Carolina — see Leon Fink’s book The Maya of Morganton: Work and Community in the Nuevo New South.  Fink tells of the years-long struggle of Central American workers at a chicken processing facility.


Michael E. Tigar is Emeritus Professor of Law at Duke University and Emeritus Professor of Law at Washington College of Law.  He has been a lawyer working on social change issues for many years.  His books include Law and the Rise of Capitalism (Monthly Review Press, second edition, 2000), Fighting Injustice (ABA Press, 2002), and Thinking About Terrorism: The Threat to Civil Liberties in Times of National Emergency (ABA Press, 2007).




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