The Labor Department Needs To Scrutinize Unions’ ‘Worker Center’ Loophole
Author: Michael Saltsman
Publication Date: January 2018
If you can’t win the game, change the rules.
This ignoble sentiment has become a slogan for the modern labor movement, which has struggled to reverse its steady decline in membership. Rather than taking a hard look at the reasons why employees have abandoned unions, some labor organizers have embraced a new brand: Worker centers.
The term sounds innocuous enough, but it’s legally significant. Worker centers aren’t bound by the same behavioral restrictions and transparency requirements as labor unions–allowing them to operate in a similar fashion to a union while dodging rules that were put in place to rein in excesses. Secretary Acosta has said he wants to examine this labor loophole, and the scrutiny couldn’t come soon enough.
Ground zero for worker center wackiness is New York City. In 2012, the Service Employees International Union launched its Fight for $15 campaign to organize the fast food industry using a New York City-based worker center. The campaign grew exponentially as the union spent more than $90 million to prop up its organizing apparatus, but the investment failed to yield new dues-paying members.
Seeking a sustainable business model, the union turned backed to worker centers–and to its friends on the New York City Council. The Council passed a bill last year written in large part by the SEIU, which requires fast food employers to deduct and remit employee “contributions” (read: dues) to an organization of their choosing. (The bill’s formal sponsor said it would “enable fast-food workers to form their own nonprofits” to “advocate for changes they need in their communities.”)
Put differently, the law allows labor unions to form union-like nonprofits and collect “dues” from employees in workplaces across the city–without ever having to go through the pesky inconvenience of a secret ballot organizing vote. (The SEIU has already created a vehicle to accomplish this.)
Even other labor groups are opposed to the SEIU’s workplace workaround. In one memo obtained by my organization via a public records request, New York City’s United Federation of Teachers warned that the law creates “a shadow nonprofit that takes on the responsibilities of a union but without a union’s oversight, elected representation, accountability or transparency.”
If the SEIU in New York City is feeling a bit cocky, it’s only because they’ve seen others get away with the same scam. One the oldest and best-known worker centers is the Coalition of Immokalee Workers (CIW), which describes itself as “a community-based organization of mainly Latino, Mayan Indian and Haitan [sic] immigrants working in low-wage jobs throughout the State of Florida.”
As a recent IRS complaint filed by the Center for Union Facts explains, the CIW actually exists to “serve a group of workers seeking concessions from their employers.” (Full disclosure: The Center for Union Facts shares a management firm with my organization, the Employment Policies Institute.) In other words, the CIW is a labor union without the title.
Why wouldn’t CIW want to be classified the same as it labor brethren? Simple: Federal rules that govern how labor union operate would put the CIW out of business.
The National Labor Relations Act prohibits unions from conducting secondary boycotts, i.e., pressuring companies that do business with an employer with whom the union has a dispute. Yet secondary boycotts are CIW’s modus operandi. CIW intimidates companies into giving higher wages to people who don’t work for them. CIW’s “Fair Food Program” demands that companies sign an agreement to set aside money for tomato pickers. Companies that don’t agree to these demands face boycotts, protests, and other pressure tactics.
Union Facts has asked the IRS to review CIW’s nonprofit classification–a reasonable request, given the organization’s union-like operations. In the meantime, Secretary Acosta and his team at the Labor Department can better serve employees by making sure that union organizers and the worker centers they prop up are playing by the rules.