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Worker Centers Primed to Test We’re-Not-Unions Stance in Court

Jan. 17, 2020, 11:01 AM

An ongoing federal investigation in which regulators believe a Minneapolis nonprofit is a labor union rather than a worker center has created an existential crisis for similar groups across the country.

Some worker centers are changing their tactics to try to avoid government scrutiny. The broader worker center community is preparing for legal action if the Labor Department tries to force the targeted group to comply with federal laws for unions.

The DOL’s two-year probe into the status of Centro de Trabajadores Unidos en Lucha, known as CTUL, led the department’s Office of Labor-Management Standards to determine it “has reason to believe” the group is a labor organization under a 1959 law meant to curb organized labor corruption by ensuring union transparency and democracy.

CTUL and other organizations have grown in influence in recent decades as an alternative to unions in providing low-income, vulnerable workers with training and other tools to improve workplace conditions. CTUL has successfully pressured Target Corp. and other retailers to contract with unionized janitors, part of a trend of company-focused actions that prompted the business community and political conservatives to increase pressure on the Labor Department to review certain worker centers’ operations. Critics believe some worker centers are essentially union fronts.

The stakes are extremely high for CTUL—and, by extension, all worker centers—because federal enforcement of a final determination that the group is a union would subject CTUL to onerous financial reporting and internal governance requirements. Labor organizers and attorneys at worker centers contend the groups are exempt from union-specific disclosure law because they don’t bargain directly with employers. For the business community and Republican lawmakers, the DOL probe represents a breakthrough in a decades-long push for the department to classify certain worker centers as unions.

“I would absolutely say that if the DOL moves ahead with it, the worker center movement is going to push back,” said the National Employment Law Project’s Charlotte Noss, who coordinates legal strategy for worker centers nationwide. She noted that DOL and the National Labor Relations Board have previously held that worker centers aren’t unions. “Any attempts by the DOL to exert coverage would be challenged in court,” she added.

Many worker centers have weighed in with support for CTUL and hope for a lawsuit to avoid a precedent-setting determination.

Worker centers and allies first learned the department is probing CTUL when Bloomberg Law reported on the investigation in 2018 and in November published a letter from the department to the group indicating the likely outcome of its investigation. The department gave CTUL a chance to submit more evidence before it wraps up the investigation with a final determination, but next steps are not clear.

CTUL officials have not said whether they will comply or pursue legal action if the department moves to enforce a final determination that the group must adhere to federal laws pertaining to unions. CTUL declined to comment. A DOL spokeswoman also would not comment.

The probe has put worker centers “on hyper alert,” said Erica Smiley, executive director of Jobs With Justice, a union rights organization. Smiley and other worker center allies say the investigation is an attempt by the DOL under President Donald Trump to harass worker centers at the behest of the U.S. Chamber of Commerce. Worker center allies believe it is a strategy to squelch successful, creative worker organizing campaigns by bogging them down in paperwork.

Chamber Encouraged

Supporters of the department’s investigation acknowledge CTUL could likely delay enforcement of a final determination by appealing the decision or by simply refusing to comply by not submitting required reports. The latter option would force the DOL, in concert with the Justice Department, to file a civil lawsuit seeking to compel the organization to comply with the Labor-Management Reporting and Disclosure Act.

Glenn Spencer, who heads the Chamber’s employment policy division, said he is encouraged by the investigation. Spencer said it signals DOL is committed to adopting what he argues is the proper interpretation of when a worker center qualifies as a labor organization.

When asked about the potential that department action against CTUL could be dragged out in court, Spencer said, “How quickly they move will depend on whether these entities decide they want to start following the law.”

The Chamber of Commerce has issued a series of reports arguing that some worker centers operate as unions in disguise to unlawfully skirt disclosure requirements. A 2018 paper listed five groups that it said “likely” meet the definition of a labor organization, including the Coalition of Immokalee Workers, Restaurant Opportunities Centers United, and Organization United for Respect at Walmart. A 2014 Chamber report profiled CTUL, among other organizations.

But Spencer said most worker centers don’t function as unions, because they don’t deal with employers.

“What we’ve said all along is the vast majority of worker centers are not engaged in activities that would make them a labor organization. They’re doing perfectly reasonable and helpful activities—education and training,” Spencer said. “So those groups shouldn’t feel any chilling effect at all. It’s the groups that are pushing beyond that and are attempting to pressure employers to engage in certain activities that perhaps should feel a little concerned.”

Next Targets?

The Labor-Management Reporting and Disclosure Act, which DOL enforces, defines a labor organization as a group engaged in “dealing with employers” concerning workplace conditions such as wages, labor disputes, or grievances.

The DOL indicated in its letter to CTUL that it may be adopting a broader interpretation, compared with prior administrations, of the term “dealing with employers.” That threatens to expose more worker centers to a labor organization classification, especially if they follow the CTUL model of applying pressure tactics against particular employers.

For instance, the letter cited CTUL’s picketing of Target and other retailers—campaigns designed to get the companies to sign “responsible contractor” policies—as possible instances of “dealing with employers” to improve the working conditions of employee members.

“Not all worker centers have that model, but there are certainly a fairly significant subset that are experimenting with those kinds of strategies,” focused on pressuring companies at the top of supply chains, said Kate Griffith, an associate professor of labor and employment law at Cornell University’s School of Industrial and Labor Relations.

“I legally don’t think that is connected to a labor organization, but given that there’s been this focus on the strategy of CTUL, then, yeah, I think those groups would be considered potential next targets,” said Griffith, who researched worker centers for a November article in the Harvard Law & Policy Review.

Stepping Back

While worker-center attorneys say they’re optimistic they have the law on their side, some groups have chosen to change course. Jobs With Justice and other national workers’ rights groups said they have talked to leaders at some small, local worker centers that decided to step back from campaigns against corporations, to avoid being investigated by the DOL.

“A lot of these other smaller worker centers are tiny, they’re loosely staffed, they really couldn’t withstand such an attack,” Smiley said.

In some cases worker centers have sought to avoid government scrutiny by discarding their 501(c)(5) status as a labor organization with the IRS in favor of other tax-exempt nonprofit designations.

Others started providing only direct services to workers, such as Spanish-to-English lessons and helping them recover lost wages, Smiley said.

Most worker centers have no in-house attorneys or accountants, but there is no shortage of people in the broader labor movement who are coming to their aid.

“It’s a really important issue,” said Sheila Maddali, who has close partnerships with worker centers as co-director of the National Legal Advocacy Network. “My hope and belief is that CTUL and their attorneys would push back on this attack and also other organizations and attorneys like myself would be supportive in joining in on that effort for the sake of the broader movement.”

To contact the reporter on this story: Ben Penn in Washington at bpenn@bloomberglaw.com

To contact the editors responsible for this story: John Lauinger at jlauinger@bloomberglaw.com; Karl Hardy at khardy@bloomberglaw.com

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