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The
Growing Popularity of Dot-Com Unions
By
Jay Hollander
Jay Hollander, Esq. is the principal of Hollander and Company LLC, www.hollanderco.com, a New York City law firm concentrating its efforts in the protection and development of property interests relating to real property, intellectual property and commercial interests, as well as related litigation.
The content of this article is intended to provide general information relating to its subject matter. Providing it does not establish any attorney-client relationship and does not constitute legal advice. Personal advice in the context of a mutually agreed attorney-client relationship should be sought about your specific circumstances. Summary: Unions
-- long-associated with "old economy" industries -- soon
may have a place among high-tech companies. Though favored
by some workers, many Internet employers think unions would
be a bad idea. This article explains the pros and cons
of unions at Internet companies.
Introduction
Follow the bouncing dots of the past couple of years for
a moment. First, there were "dot-coms." Then, there were "dot-bombs." Lately,
we've had "dot-layoffs." The question is, are we now ready
for... "dot-unions"?
Could
be. Given the changes in fortunes of many high-tech companies, an idea that
had seemed almost an impossibility just a short time ago has taken on a new
currency.Long associated with old economy industries such as textiles, automobiles
and teamster workers, unions -- whose ranks already had been dwindling generally
as a percentage of workers in a healthy economy -- were thought to be at
a particular disadvantage when it came to penetrating the "domains" of the
high-tech sector.Why? Several basic reasons, really. First, unlike the manufacturing
industry, where there was not much turnover and where workers tended to stay
put as long as they weren't being laid off, high-tech workers have been in
short supply and high demand.Moreover, because their talents were largely
intellectual, tech workers had high mobility and didn't necessarily view
their current employment situations as lifetime contracts. This gave them
something many of their old economy counterparts lacked: individual bargaining
leverage.Second, many of these workers were in it for fast riches by way
of IPOs and stock options, not for incremental increases in hourly wages
and benefits -- the bread and butter of the union movement.Third, high-tech
companies have a disproportionate number of temporary workers and independent
contractors, ones who, by their very nature, had not expected, much less
received, benefits associated with long-term employment.And, of course, there
is the large immigrant component of today's high-tech work force. For these
workers in particular, the notion of union representation is still quite
a foreign concept.But, what a difference a year makes. As we enter a new
millennium in 2001, conditions giving confidence to high-tech industry union
organizers have never been more encouraging. And it's no accident.
Are
High-Tech Unions Necessary?
The factors underlying the potential revitalization
of the high-tech union movement have been both general, as a result of
an economic slowdown, and specific, flowing from dramatic victories in
symbolic cases. Union prospects have even gotten a lift from the inevitable
worker burnout associated with the pervasive fast-paced entrepreneurial
culture in the companies comprising the high-tech universe.As the carnage
from crashing dot-com companies threatens to continue, if not accelerate,
into 2001, and as increasing numbers of stock options have fallen beneath
their exercise prices, many workers are seeing the dark underside of
trading reliable benefits and employment security for enforced
overtime and speculative riches. And they don't like what
they see.The high-tech industry's increasingly outspoken
demands for less restrictive limits on immigration has raised
trepidations among many employees, especially older ones, already fearful
of losing their jobs to younger counterparts with lower salaries and
little or no benefits. The passage of recent legislation
almost doubling the amount of permitted H-1B temporary visas
to foreign high-tech workers has only increased the angst
level.All of these issues add fuel to the fire, but the real
catalyst is the increasing disparity between the haves and
the have-nots in the tech economy, a disparity that mostly
plays itself out in the dividing line between permanent employees
and temp workers.Go to almost any high-tech company and you'll
find the use of these "contingent workers" to be significant.
The practice has been a godsend to high-tech corporate America.
Since temps technically aren't employees, employers do not
have to provide real benefits such as health insurance or
retirement plans. Nor do they have to worry about layoffs
or unemployment insurance when a project is over. Simply put, end of
project, end of temporary assignment, even after months of
these workers doing the same tasks side by side with better-paid
permanent employees.Considering these issues, you might be
tempted to think that unions would have an easy time organizing
in places like Silicon Valley, but you'd be wrong. There
are very real forces working against any broad-based support
for high-tech union efforts.From the employers' point of
view, there is an undeniable logic to favoring a steady diet
of temp workers rather than wholesale increases in permanent
employees. Especially among software and other development
companies with varied product lines, once a program is developed,
the need for continuing with the same complement of staff
as was required in the initial development period makes little
sense. The same theory goes for workers concentrating on
a software program that fails in the marketplace. And shaving
these expenses goes right to the bottom line of the companies'
per-share earnings.Then there's the hard-to-quantify but
undeniable attraction of the high-tech industry to just the
kind of independently motivated, self-starter type of employees
who haven't grown up in an era where unions dominate the labor landscape,
as was the case in their parents' generation.These modern high-tech workers
don't want to be paid based on seniority or arcane shop rules. They actually
like the mobility of being able to bolt a position for a better-paying
competitor or after an IPO gives them a big payday. For these
people, unions often appear to have little to offer in exchange
for mandatory lifetime monthly dues.At any rate, the shortage
of skilled high-tech workers has forced employers to voluntarily
give benefits equal to or better than the ones unions traditionally
have fought to obtain. Most established high-tech companies gladly give
generous medical insurance plans, flexible hours and stock
options to induce employees to emotionally buy in to the
company and stay for awhile. Start-ups also offer fun atmospheres
with pool tables, basketball courts, latte bars, etc., to
lure younger skilled workers.If you worked under these conditions,
would you feel oppressed?
The Microsoft "Permatemp" Case and the Verizon Strike
Still,
there are enough of the have-nots in the high-tech world that the anti-union
dike is beginning to leak in places. Two well-publicized cases deserve
special mention here.Following an investigation by the
IRS that re-classified many of Microsoft's so-called "contingent" temporary contract workers as common-law
employees for payroll tax purposes, a class action was brought to compel
Microsoft to provide these reclassified workers with the same benefits as
would have been provided if they had been recognized as permanent employees.
Overturning a lower court decision in Microsoft's favor, the Ninth Circuit
ruled in 1997 that these workers were, indeed, entitled to participate in
the company's 401(k) and stock purchase plans, among other benefits.This
decision came as a group of temporary workers at Microsoft called on the
company to recognize them as a group and collectively bargain with them.
While Microsoft refused, the result of the effort was that the temp agency
through whom the workers were hired began providing better benefits than
had previously been provided.Elsewhere, Verizon workers went on strike in
the summer of 2000 to facilitate the union's efforts to organize the vast
majority of workers performing services for the company's wireless and broadband
divisions, to reduce the prevalent high-tech practice of "forced overtime" and
to try to limit the amount of work given by Verizon Wireless to outside
temporary workers.While the strike was settled, the gains achieved by
the Verizon action on decidedly high-tech issues set an example for similar
workers elsewhere, a fact that was lost on no one monitoring the situation.
An Uphill Battle
for High-Tech Unions
Despite these isolated symbols of success from
the union point of view, the overall hill for high-tech union organizers
remains a steep one to climb. Recent efforts make it clear that unions
realize that organizing high-tech workers will require some important strategic
changes.At the forefront of changing the labor union business model is
a Seattle group called Washtec, affiliated with the AFL-CIO. Rather than
hitching all its horses to a wagon of broad-based high-tech worker membership,
the fledgling group has picked its battles, concentrating on temp workers
and on becoming a voice and a resource for high-tech workers. Among its
accomplishments, a non-profit temp agency was formed, giving temporary
workers better benefits than were available through the private agencies,
while still allowing high-tech companies to remain in the contingent worker
market. Focus also has been given to portability of benefits, in an effort
to ensure that temporary workers can take their benefits with them from
job to job.As much as from any impetus flowing from a prolonged decrease
in stock option values or layoffs stemming from a slowing economy, union
efforts to be a force in the high tech sector and the evolving U.S. economy,
will be made or broken largely to the extent that examples like those mentioned
above will be followed and expanded.
While
the question of organized labor success in this area is still an open one,
it is clear that, to avoid an early retirement from influence in the nation's
biggest sector of growth, unions will have to sell high-tech workers something
other than the equivalent of their father's Oldsmobile. Copyright © Jay Hollander, 2007. All Rights Reserved.
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