News & Commentary

November 16, 2022

Jason Vazquez

Jason Vazquez is a student at Harvard Law School.

In today’s News and Commentary: whistleblowers expose employment law violations at Tesla’s massive new Texas facility; lingering uncertainty remains as to the fate of the tentative railway agreement; Starbucks shutters yet another unionized store; a local coffee chain discontinues operations after a successful unionization drive; and a management-side law firm explores the implications of the midterm elections for national labor and employment policy.

The Guardian reported yesterday that whistleblowers intend to file a complaint with the U.S. Department of Labor on the basis of exploitative pay practices and unsafe working conditions experienced by the thousands of construction workers building Tesla’s massive “gigafactory” in Austin, Texas—labor practices which allegedly contravene such federal employment statutes as the Fair Labor Standards Act and the Occupational Safety and Health Act. More specifically, the reports include, among other things, allegations of wage theft; onsite safety hazards; numerous accidents and injuries; and fraudulent OSHA certificates.

Tesla selected Austin as the site of its new facility after inducing the city to bestow tens of millions of dollars in tax breaks upon it, and broke ground on the sprawling compound in 2020, which is slated to cost over $1 billion and, extending across 10 million square feet of factory floor, to be one of the largest vehicle manufacturing facilities in the country. The emerging reports of exploitative employment practices and unsafe working conditions are certainly not the first such allegations to be raised with respect to the electric vehicle manufacturer—Tesla’s plant in California, for example, incurred nearly $250,000 in OSHA fines between 2014 and 2018, more than any other automobile manufacturing firm during that time, and the company’s other gigafactory in Nevada has witnessed a steady stream of workplace safety violations and injuries, including amputations. Moreover, Tesla has committed unfair labor practices on several occasions.

As Kevin reported on Sunday, lingering uncertainty remains as to whether the freight rail workers will approve the tentative agreement with the nation’s largest rail carriers next week. More than half of the railroad workers have yet to ratify the new contracts, and, according to POLITICO, there exists a highly organized effort by some—operating in part under the moniker Railroad Workers United (RWU)—to urge a “no” vote as the two largest rail unions, Sheet Metal, Air, Rail and Transportation Workers-Transportation Division (SMART-TD) and the Brotherhood of Locomotive Engineers and Trainman, head to the polls this coming Monday, November 21. Many rail workers perceive the compromise agreement, reached by union leaders and the railway industry in mid-September (with the assistance of the Biden Administration) as failing to sufficiently redress their workplace grievances or improve their working conditions, and as major union leaders crisscross the country campaigning for approval of the tentative agreement, RWU has been hosting counter events urging rejection, a message which is reportedly resonating with many of the frustrated freight rail employees. As things currently stand, the membership of seven smaller rail unions have voted to approve the agreement, whereas three have rejected it.

If the union members fail to approve the agreement by the end of the “cooling-off” period on December 9, the rail workers could commence a strike that would potentially cripple the country’s already-beleaguered supply chain, in a critical period preceding the holiday season. The possibility of such an outcome might prompt Congress to again intervene to extend the “cooling-off” period, during which workers are not permitted to walk off the job, or perhaps even to impose the recommendations of a presidentially appointed emergency board, a resolution that has been endorsed by the rail carriers. POLITICO reports that union officials remain uncertain as to which outcome will prevail—“it’s on a razor’s edge,” insists SMART-TD’s President, “it’s going to be tight.”

In the latest Starbucks development, the embattled coffee giant reportedly intends to shutter yet another recently unionized store, this one located in Portland, Maine. Employees at the Portland store voted to unionize just a few weeks ago, and Starbucks Workers United announced on Twitter yesterday that management plans to close the location next month.  The President of the Maine AFL-CIO lambasted the pending closure as “illegal union busting” and a “blatant violation of the right of workers to unionize free from retaliation.” Indeed, the U.S. Supreme Court has held, in Textile Workers Union v. Darlington, that shuttering a portion of an enterprise may constitute a violation of § 8(a)(3) of the National Labor Relations Act, if the purpose of the closure was to discourage labor organizing in the employer’s remaining facilities. Consistent with this holding, the NLRB recently filed a sweeping complaint against Starbucks Corporation charging, among other things, that the company had unlawfully retaliated against union activity by closing certain stores in New York, as I detailed earlier this month. It is unclear at this time whether unfair labor practice charges pertaining to the pending Portland closure have been filed with the Board.

In related news at the local level, the owners of Darwin’s Ltd., a small coffee chain that has developed into a Cambridge staple during the course of the business’s nearly three decades of operation, announced that they intend to discontinue service at all four of the company’s Cambridge storefronts in the near future. In addition to accounting for the widespread discontent certain to be afflicting caffeine afficionados across the Boston area in the coming weeks, the development is notable due to the disturbing labor relations overtones surrounding the Darwins’ managerial decision, given the ongoing union activity that the company has been experiencing since last year. Indeed, Darwin’s baristas unionized last September and, in the midst of first contract negotiations, recently instituted a picket outside the owners’ home, which, in an email to the Boston Globe, one of the Darwins bluntly conceded “resulted in the acceleration of our decision” to discontinue the enterprise. Although, as observed above, a partial business closure may constitute a ULP, the Supreme Court has explicitly held that the NLRA does not prohibit an employer from shuttering his or her entire business, even if the decision was motivated by anti-union animus. In any event, the Darwins must at least negotiate with the union regarding the effects of the closure on employees, which the owners have espoused a commitment to do.

Finally, the union-busting law firm Littler Mendelson published an article yesterday exploring the implications of the congressional midterm elections with respect to national labor and employment policy. The article, which assumes that the GOP will obtain a majority in the U.S. House of Representatives, something that, as of this writing, remains contested, predicts that a Republican majority in the House “will make labor, employment, and workforce development policy issues a key focus of its domestic policy agenda,” and highlights several of the Republicans’ pro-employer legislative priorities, including the Employee Rights Act, the reactionary antithesis to the PRO Act that would provide additional protections for secret ballot elections, mandate union recertification elections where membership dips below 50 percent, and require workers to affirmatively authorize union political spending; the Ensuring Workers Get PAID Act, which would enable employers to self-report minimum wage and overtime violations as an alternative to litigation; and the Working Families Flexibility Act, which would authorize employers to compensate their employees for overtime hours with time off rather than premium pay. Moreover, Littler Mendelson forecasts that a Republican-controlled House Education and Labor Committee will pursue an aggressive oversight agenda, a major element of which may involve examining conflict-of-interest issues surrounding the participation of certain Democratic members of the NLRB in Board deliberations and rulemakings, in addition to holding hearings in connection with certain issues that GC Abruzzo has emphasized in her recent memos, including revival of the Joy Silk doctrine and proscription of captive audience meetings.

The article further remarks that, given the likelihood of a legislative impasse, the Biden Administration will turn to the federal administrative apparatus to implement its labor and employment policy priorities, calling attention to pending rulemakings recently initiated by the Board, concerning joint employer status and decertification election rules, as well as the DOL’s Wage and Hour Division, regarding independent contractor status and overtime regulations. In sum, the firm concludes that the midterm elections “are likely to block most labor and employment legislation” and encourages employers to anticipate that the Administration’s labor and employment policy agenda will “move to the federal agencies.”

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