Here Come the Teamsters: A Unionized Future for Tech Employees

By Matthew R. Lowe*

I. Introduction

Since the biggest tech giants came onto the scene, Silicon Valley has seen a tension between the companies and labor unions due to an arguable lack of employee representation.[1]  While there are numerous hypotheses for why unions have been unable to infiltrate the tech sphere, one of the most compelling explanations has been the simply technology-averse attitude of unions.  However, on March 12, 2015, Facebook agreed to a contract proposed by Teamsters Local 853 on behalf of shuttle bus drivers.[2]  The agreement could signal a major change in the landscape of employer-employee relations in the technology sector.

II. Background

A. Overview: The Changing Landscape of Employer-Employee Relations

The general employer-employee dynamic is in flux due in large part to the Obama administration.  Recently, the White House proposed a rule modifying the Employee Retirement Income Security Act (ERISA) of 1974, designed to “crack down on irresponsible behavior in today’s market for financial advice by better aligning the rules between employer-based retirement savings plans and IRAs.”[3]  In 2009, the Employee Free Choice Act was introduced into both chambers of the U.S. Congress[4] in order to remove the present right of the employer to demand an additional, separate ballot when more than half of employees have already given their signature supporting the union.[5]  Many companies have expressed serious apprehension about the possible implications of these changes.  The Teamsters union has been seeking to organize many of these companies, such as FedEx and Facebook, and the changes would make it easier for them to do so.  In response, these companies have threatened to scale back drastically in order to compensate for potential losses.[6]

B. Uber & Lyft

For quite some time, tech companies and labor unions have clashed.[7]  Until recently, none of the major tech companies had unionized employees.[8]  Much of the tension between tech companies and unions is derived from what can be construed as an adversity to technology on the part of unions.[9]  Companies like Uber and Lyft, which use mobile applications to connect passengers and cab drivers, have been under siege due to labor disputes.[10]  Currently, two lawsuits brought forth by drivers of the companies are seeking reclassification so that they are protected as employees as opposed to independent contractors.[11]  Earlier this year, the judges overseeing these matters decided that the cases would have to be decided by juries following Uber and Lyft unsuccessfully arguing that their drivers are independent contractors.[12]  If the drivers succeed in the courts, Uber and Lyft may have to change their business models entirely.

Generally, startups are able to develop more affordably and with less bureaucratic resistance when they are free to hire and maintain independent contractors.  When Uber and Lyft developed, they did so relying on and budgeting for independent contractors.[13]  Classified as employees, the drivers will be far more expensive to maintain, thus likely cutting largely into the companies’ revenue streams.  Employers “must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wage-paid” full-time employees.[14]  Further, employees would be able to organize formally.  As of 2014, Southern California Uber drivers have unofficially aligned with a local Teamsters union.[15]

C. Tech Companies and Immigration Reform

Tech companies and startups alike rely not only on independent contractors, but on foreign labor as well.  The issue with outsourcing is one that continues to be at the forefront of political discourse.[16]  Still, tech companies value high-skilled foreign labor, especially foreign engineers, whom the tech industry has continually fought to make it easier to hire.[17]  Expectedly, unions have aggressively spoken out against such efforts.  In 2013, a legislative representative for the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) stated, “The tech industry is, frankly, being greedy.  They are … blatantly trying to roll back requirements that give high-skilled American workers a fair shot at getting a job.”[18]

Recently, the Obama administration announced a new rule that would allow work permits to be provided to qualified spouses of highly skilled immigrants who are in the United States on temporary visas.[19]  This rule has been sought out by tech companies and other businesses in general.[20]  The change will primarily affect temporary workers from India and China and represents an effort both to help create jobs and to reform what has been widely acknowledged as a dysfunctional immigration system.[21]

D. Opening the Gates to Unions

In November of 2014, shuttle bus drivers under the employ of Facebook joined with the Teamsters Local 853.[22]  The alignment came amidst the drivers’ complaints of being underpaid, overworked, and unfairly compensated for time on the job.[23]  In February, the two entities formulated a union contract that was unanimously agreed upon prior to proposal.[24]  In March, Facebook accepted the terms, which included an increase in average pay “from $18 an hour to $24.50 an hour.”[25]  Other benefits include “11 paid holidays, up to five weeks of paid vacation, paid bereavement leave, paid health care for full-time workers and their families, guaranteed overtime and more.”[26]  While Facebook has set an example, it is not the only major tech company implementing improved working conditions for its employees.  Apple and Google will also be providing increased hourly pay and benefits to its shuttle drivers.[27]  Compass Transportation employees who shuttle Apple, Yahoo, eBay, Zynga, Genentech, and Amtrak have unionized recently.[28]

III. Analysis

Perhaps the shifting labor and employment landscape in Silicon Valley is indicative of a future wherein unions play a larger role in tech companies’ affairs; however, questions remain as to whether labor unions would be a good idea for developed startups and who is likely to be unionized within these startups.  As of now, drivers have been successful in either pushing forth important lawsuits, as in Uber and Lyft’s cases, or they have executed union contracts, as with Facebook.  Whether engineers, for example, will be successful in yielding similar achievements or whether they even want to do so is uncertain.

Labor unions are typically brought in to assist in improving working conditions for laborers, but startup companies are generally known for taking great care of their employees.  Google and Facebook both made Forbes’ “20 Best Places to Work in 2015” list and it is no wonder.[29]  These companies not only innovate the products of tomorrow, but they also have a hand in innovating the work environment.[30]  They are able to recruit attractive talent through “[c]ushy salaries, luxurious dining amenities, and decentralized management structures.”[31]

Even for less elite and renowned companies, labor unions could harm a natural flow that exists within the tech industry.  Specifically, there has been a longstanding reliance on freelance-type workers, especially in the development process.[32]  While this preference may signal a potentially exploitative nature on the management side of relations, it is one that has been beneficial to laborers as well.  As the tension between unions and tech companies began to crystalize as far back as 2001, Alvin Bost, a freelance web designer, told CNET that he thought “unionization would ruin the free spirit and innovation in the high-tech industry,” and went on further to note that it would be terrible for people like him.[33]  Designers, engineers, and other contract workers enjoy a level of agency that allows them, as the term “freelance” itself suggests, to move freely from company to company, thus emphasizing an important and characterizing feature of the industry: choice. Tim Colson, a software engineer, noted of working conditions that “about the only detriment [can be] the long hours” but laborers are usually “compensated in some way for the effort,” and “if a particular environment isn’t acceptable, you can simply move on.”[34]  An employment attorney in Palo Alto, Victor Schachter, said over a decade ago that “employees are going to be very reluctant (to organize) when they see the obligation of dues and the possibility of strikes and the realities of what collective bargaining is … in the end, very few, if any, of these companies will find that they have union-represented employees.”[35]  To this day, his prediction seems to hold true.

On the other hand, labor unions may be able to find a foothold with service-level workers, such as janitorial staff, who are not able to share in the wealth, prosperity, and growth of the tech industry[36] and expand from there.  As of now, there is evidence to suggest that booms in the industry benefit engineers and investors primarily, with very little trickling down to workers not at the top of the wage pyramid.[37]  Drivers, for example, seek collective bargaining for the purpose of keeping up with the rising cost of living in the Bay Area.[38]  One of Facebook’s shuttle bus drivers, Jimmy Maerina, illustrated this when he stated that he is happy to be able to live where he wants and to also “be able to put some food on the table.”[39]

IV. Conclusion

The tech industry as a whole presents a very unique platform for labor and employment relations.  This platform has paved the way for various innovations from work environment modernization to comprehensive immigration policy reform.  Still, what makes the industry particularly unique is its relationship—or lack thereof—with labor unions.  For decades, Silicon Valley has thrived with minimal union influence.  However, as the labor and employment field continues to make notable shifts, unions may be able to reformulate their tactics and develop an effective strategy for gaining a foothold in the industry through service employees.  The need for companies to provide for and maintain their service workers is acknowledged by both the workers, like drivers for Uber, Lyft, and Facebook, and management, like Facebook, Google, and Amazon.  With a greater occupation within the tech sphere, unions may be able to expand their influence, thus potentially changing not only the procedural characteristics of the industry, but perhaps entire business models as well.

 


*J.D., University of Illinois College of Law, expected 2017. B.A., English and Political Science, University of Massachusetts-Amherst, 2012. I would like to thank the board of the Journal of Law, Technology, and Policy for giving me the opportunity to contribute this piece. Special thanks are given to Andrew Lewis and Iman Naim for all of their advice that went into writing this piece. I also would like to thank my mentors for their ongoing and invaluable guidance: Allison Maue and Professor Paul Healey. Finally, a huge thank you always to my parents, Chrissalee and Lesly, and my sister, Victoria, for their constant encouragement.

[1] Gregory Ferenstein, Why Labor Unions And Silicon Valley Aren’t Friends, In 2 Charts, TECH CRUNCH (Jul. 29, 2013), http://techcrunch.com/2013/07/29/why-labor-unions-and-silicon-valley-arent-friends-in-2-charts.

[2] Queenie Wong, Facebook Approves Union Contract for Shuttle Bus Drivers, SILICON BEAT (Mar. 12, 2015, 4:28 PM), http://www.siliconbeat.com/2015/03/12/facebook-approves-union-contract-for-shuttle-drivers.

[3] Press Release, White House: Office of the Press Secretary, FACT SHEET: Middle Class Economics: Strengthening Retirement Security by Cracking Down on Backdoor Payments and Hidden Fees, WHITE HOUSE (Feb. 23, 2015), available at https://www.whitehouse.gov/the-press-office/2015/02/23/fact-sheet-middle-class-economics-strengthening-retirement-security-crac.

[4] Steven Greenhouse, Fierce Lobbying Greets Bill to Help Workers Unionize, NY TIMES (Mar. 10, 2009), http://www.nytimes.com/2009/03/11/business/11labor.html?ref=business.

[5] Christopher Beam, Uncivil Union: Does Card Check Kill the Secret Ballot or Not?, SLATE (Mar. 10, 2009, 7:09 PM), http://www.slate.com/articles/news_and_politics/politics/2009/03/uncivil_union.html.

[6] Alex Roth, FedEx Threatens to Cancel Jet Orders: Package-Delivery Company Puts Boeing Order in Question over Bill to Make Unionizing Easier, WALL ST. J., http://www.wsj.com/articles/SB123791678454427343 (last updated Mar. 25, 2009, 12:01 AM).

[7] Ferenstein, supra note 1.

[8] Id.

[9] Id.

[10] Maya Kosoff, How Two Lawsuits Could Destroy Uber and Lyft’s Business Models – and Set a Precedent for the Rest of the Sharing Economy, BUS. INSIDER (Mar. 12, 2015, 10:12 AM), http://www.businessinsider.com/uber-lyft-business-models-and-lawsuits-2015-3.

[11] Id.

[12] Id.

[13] Id.

[14] Independent Contractor (Self-Employed) or Employee?, IRS, http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Self-Employed-or-Employee (last updated Oct. 2, 2014).

[15] Press Release, Int’Press Release, Intr, UBER Drivers In Southern California Form Association with Teamsters Local 986 (Aug. 27, 2014), available at http://www.noodls.com/view/C19CF63DBBE3AF02F6046DB0DF9A25636FFE7946?9043xxx1409176202.

[16] Chris Isidore, Rick Perry: ‘Unemployment Rate Is a Sham’, CNNMONEY (Feb. 27, 2015, 4:37 PM), http://money.cnn.com/2015/02/27/news/economy/perry-unemployment-rate-sham.

[17] Gregory Ferenstein, Major Union Calls Tech Industry news/eco for Wanting to End Hiring Wait Period for Immigrants, TECH CRUNCH (May 17, 2013), http://techcrunch.com/2013/05/17/union-tech-industry-is-greedy-for-wanting-to-end-hiring-wait-period-for-immigrants.

[18] Id.

[19] Julia Preston, Rule Change Sought by Tech Firms Will Allow Some Spouses of Immigrants to Work, NY TIMES (Feb. 24, 2015), http://www.nytimes.com/2015/02/25/us/rule-change-sought-by-tech-firms-will-allow-some-spouses-of-immigrants-to-work.html?_r=0.

[20] Id.

[21] Id.

[22] Kristen V. Brown, Facebook Bus Drivers Unanimously OK Union Contract, SFGATE (Feb. 23, 2015, 6:31 PM), http://www.sfgate.com/business/article/Facebook-bus-drivers-unanimously-OK-union-contract-6097483.php.

[23] Id.

[24] Id.

[25] Id.

[26] Wong, supra note 2.

[27] Id.

[28] Id.

[29] Kathryn Hill, The Best Places to Work in 2015, FORBES (Dec. 10, 2014, 10:43 AM), http://www.forbes.com/sites/kathryndill/2014/12/10/the-best-places-to-work-in-2015.

[30] Mariana Simoes, Why Everyone Wants to Work at Big Tech Companies, BUS. INSIDER (Feb. 7, 2013, 4:12 PM), http://www.businessinsider.com/everyone-wants-to-work-at-tech-companies-2013-1.

[31] Ferenstein, supra note 1.

[32] Id.

[33] Troy Wolverton, High Technology Discovers Unions, ZD NET (Jan. 18, 2001), http://www.zdnet.com/article/high-technology-discovers-unions.

[34] Id.

[35] Id.

[36] Amy B. Dean, A Rising Silicon Valley Doesn’t Lift All Boats, AL JAZEERA (Mar. 9, 2015, 1:45 AM), http://america.aljazeera.com/opinions/2015/3/does-a-rising-silicon-valley-lift-all-boats.html.

[37] Id.

[38] Wong, supra note 2.

[39] Id.