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Charge Time: Electric Car Workers Accuse Tesla of Low Pay and Intimidation

Co-published by The American Prospect
Although its products epitomize the future, assembly line workers say Tesla’s labor conditions are mired in the past. BY DAVID DAYEN

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Tesla’s Fremont Plant: A 5.3-million-square-foot colossus. (Photo: Cindy Chew)

 Co-published by The American Prospect

Along Silicon Valley’s interlocking freeways, low-slung tech offices with obscure names like Way.com or Oorja are populated by fresh-faced technologists in badges and pleated slacks, striving to create the next great app. But off the I-880 in Fremont, a white colossus rises from the landscape, a 5.3-million-square-foot monster that stretches across two interchanges. The gray lettering is a full story high: TESLA.

Here, the company makes high-end, zero-emission vehicles, luxury cruisers for a climate emergency. Chief executive officer Elon Musk has cultivated a reputation as an economic visionary and has been hailed for solving the world’s great challenges with panache. Tesla’s Fremont factory brought hope to a blue-collar, racially diverse town with a manufacturing tradition. And this week, after reports of a 69 percent increase in first-quarter sales, the automaker passed Ford in market value. But though its products epitomize the future, workers like Richard Ortiz say Tesla’s labor conditions are mired in the past.

Ortiz is a production associate in the closures department, assembling hoods, doors — “anything that opens or closes” on Model S sedans and Model X SUVs. Though videos of the Tesla factory emphasize robotic automation, over 6,000 workers engage in intense manual labor to build the cars.

Richard Ortiz (Photo: Cindy Chew)Richard Ortiz: “They want to make sustainable cars. We need sustainable employment.” (Photo: Cindy Chew)

“I have an eight-pound rivnut gun,” Ortiz said, referring to a tool that installs rivet nuts. “I’m doing that all day long. I’m to the point where, if I pick something up with any weight, within 30 seconds I have to drop it. That scares me, I want to be able to use my arm when I retire.”

Tesla workers say circumstances like Ortiz’s are commonplace at a factory that prioritizes production goals over health and safety. Now they’re fighting back against low pay, hazardous conditions and a culture of intimidation, seeking to unionize through the United Auto Workers. Tesla is the only U.S. automaker using nonunion workers at a stateside plant, and breaking through would give organized labor a foothold in the tech industry as well. Until then, the Tesla experience reveals that green jobs aren’t necessarily good jobs without worker power. “They want to make sustainable cars,” says Ortiz. “We need sustainable employment.”

Tesla purchased the Fremont facility in 2010, after Toyota and General Motors shuttered what was then the nation’s most innovative auto plant. At NUMMI (New United Motor Manufacturing Inc.), management instituted Japanese production techniques that maximized efficiency. In the 1980s, “the productivity of the plant and the quality of the cars were equal to Toyota plants in Japan,” said Ruth Milkman, author of Farewell to the Factory, a study of U.S. autoworkers. “It was the plant to watch for a while.”

The Tesla experience reveals that green jobs aren’t necessarily good jobs without worker power.

Jose Moran worked at NUMMI for eight years, and Tesla hired him as a production associate on the body line in 2012. “In the beginning, management would always promise, ‘Things will be better,’” Moran said. “But they never got better. I felt it was time to speak up.”

In February, Moran went public with a Medium blog post, confirming the union effort for the first time. His grievances with the way the plant operates, Moran wrote, “can’t be resolved without workers having a voice and being included in the process.”

The issues start with wages. According to Moran and co-workers, wages range from $17 to $21 an hour, well below the $29.04 national average hourly wage for motor vehicle manufacturing. Tesla claims stock awards push total compensation above autoworker averages, but workers counter that the stock doesn’t fully vest until four years of service. “I can’t tell a little kid, I’ll feed you in a year,” Ortiz said. Raises and promotions are also rare; Ortiz mentioned a colleague who received only one increase in seven years.

Tesla workers make luxury vehicles that can cost $90,000 or more but, unlike the people at Henry Ford’s plant, have no chance of buying one. “Seventeen dollars to $21 without a lot of benefits is not much higher than you can get being a gardener or a hotel clerk,” said Nelson Lichtenstein, a labor history professor at the University of California, Santa Barbara.

The low pay shrinks further in the San Francisco Bay Area, which has one of the nation’s highest costs of living. Though the heavily Asian and Latino residential districts around the factory feature modest one-story tract homes and apartments – I even saw a large mobile home park – housing costs are so exorbitant that employees cannot hope to live near the worksite. The median two-bedroom apartment in Fremont rents for $2,640 a month, according to ApartmentList.com. For a married Tesla worker making entry-level wages and working 43 hours a week, that’s equivalent to 90 percent of take-home pay.

At the end of 2015, employees claimed, they worked every day for a month to hit the production number, including weekends, plied with Red Bull and candy to keep going.

Moran, a father of two, left Fremont because, he said, “I couldn’t make it, couldn’t save.” He now drives 59 miles to work from Manteca, in the San Joaquin Valley; his one-way commute can be as long as two hours. Jonathan Galescu, a body repair technician, lives 54 miles north, in Vallejo. Between gas and bridge tolls, “it costs me $15 to $17 just to get to work,” he said. Galescu did carpool with a colleague in Richmond to cut costs, but it took him additional time. “I had to make a decision: Do I take that extra gas money or spend 30 more minutes with my children?”

(Even parking can be an ordeal, as spaces are limited and far from the worksite. A gleaming new BART rail station opened in March, but it’s separated from the facility by freight train tracks, meaning workers using mass transit face a two-mile walk to work.)

Tesla has received numerous subsidies for its U.S. factories, including a 2015 California Competes tax credit of $15 million for expansion of the Fremont plant. The implicit bargain with these government subsidies is that the private sector will create good-paying jobs. But Tesla only had to promise a minimum salary of $35,000 a year and an average salary of $55,000 to maintain eligibility for the tax credit.

Told about pay at the Tesla plant, Madeline Janis, a member of the California Competes committee who voted against the Tesla tax credit, said: “As a longtime worker rights advocate, [I’d say] that’s an outrage. Tesla should and can do better, as we know from the success of the company. There’s no reason why they can’t create good jobs in California.”

Most workers get by with overtime that they have no choice of turning down. Sixty-hour weeks are mandatory on the Model S line (known colloquially as the “shit line”), which is entirely manual labor. Model X workers often don’t know how long they’ll be staying when they come into work. The schedule depends on a daily target number of cars to build.

“There’s not a lot of attention toward anything but hitting the production goal,” said Jose Moran. Breakdowns on the line can make the number impossible to reach, forcing employees to stagger breaks to catch up. At the end of 2015, employees claimed, they worked every day for a month to hit the number, including weekends, plied with Red Bull and candy to keep going.

Jonathan Galescu: “I see my kids grow up through Facebook." (Photo: Cindy Chew)Jonathan Galescu: “I see my kids grow up through Facebook.” (Photo: Cindy Chew)

Without the overtime hours, low pay would make it difficult for workers to survive. But with OT, work-family balance becomes impossible. “I see my kids grow up through Facebook,” said Galescu. “My son always cries for me to stay home – ‘Don’t go to work’!”

Galescu works the night shift repairing defects, mostly while the cars are still in motion. He and his five-man team jump in and out of cars, pulling out dents and dings. Management recently cut the repair work time per car from 180 seconds to 90. If workers can’t complete the task, it causes slowdowns on the line. Sometimes every car has the same defect, created by small pieces of dirt in the auto body stamping machine. “I have a friend in stamping who said if they’d just allow them a few more minutes to make sure they’re clean before they run, the defects would be way lower,” said Richard Ortiz.

Bruising Work: A welt that Galescu says he received from a job accident.Bruising Work: A welt that Galescu says he received from a job accident.

Two years ago,Galescu said, a part from a Model S rear underbody popped out and hit Galescu in the chest, sending him flying across the shop floor. “My chest was on fire,” Galescu said, showing me a picture of the massive welt it created. His supervisor tried to get him back on the line that day, but security personnel allowed him to go home. When Galescu returned to work, the supervisor berated him for the injury, even though he repeatedly warned the supervisor that the underbody machine was malfunctioning.

“He said, ‘You caused me to be late going home to my wife,’” Galescu said. “I really thought I was going to lose my job.”

In his blog post, Moran noted that six of the eight people on his team have been out on medical leave at one time. According to Occupational Safety and Health Administration statistics, since 2012 the plant has been cited for 40 different safety violations, compiling $143,835 in fines (about $6,000 of which are still being contested). By comparison, in its last five years of operation, NUMMI incurred only 17 violations, with $48,755 in fines, while pumping out far more vehicles. Tesla’s fines resulted from numerous accidents and investigations, including explosions, burns, and a 2016 case where a contract worker fell three stories from the plant roof. (Tesla CEO Elon Musk has claimed that Tesla’s injury rate was under half of the national average, and that Moran’s assertion was erroneous.)

Workers allege that Tesla stigmatizes reporting injuries. While the company offers workers compensation insurance, light duty off the line can reduce pay to the minimum wage. Supervisors allegedly brand those willing to report injuries as malingerers. “They blacklist you, they treat you like crap,” Galescu said. Ortiz added that workers have been fired for excessive medical problems. “They don’t say they’re fired, but all of a sudden they’re gone.” So workers often keep quiet about aches and pains.

Tesla spokesman Dave Arnold did not respond to a detailed list of questions for this story.

A voice on the job could help prevent unnecessary injuries, and make assembly lines more efficient. But unlike the NUMMI days, workers now have no say, and there’s no process through which to lodge grievances. “I had a supervisor say, ‘We’re not dealing with HR, they’re just a bunch of women in skirts who don’t know what they’re doing,’” Galescu said.

With workers pressured, overworked and battered by the line, and absent from family milestones, employee burnout is common and morale is low. “We’re employed, but not gainfully,” said Ortiz. “We need to see a future for ourselves.”

Elon Musk (Photo: Steve Jurvetson)

Elon Musk (Photo: Steve Jurvetson)

In the short term, things could get worse. In March, Tesla announced a $1.15 billion stock offering, to finance the launch of the Model 3, its newest, mid-priced vehicle. Tesla already has almost 400,000 Model 3s on back order, with deliveries expected later this year. Elon Musk has promised that the plant will produce 500,000 cars a year by 2018. That’s five times as many as current output, and it signals an even deeper attention to numbers.

But the Model 3 ramp-up also presents leverage for workers. Moran and his colleagues insist that they want to make the plant function better. “We work on the machines 10 to 12 hours a day, we know what could work,” Moran said. “We’re not trying to bash Tesla, we want the company to succeed.”

Moran’s open letter came after six months of internal organizing; the UAW confirmed hiring organizers for the plant in February. Tesla initially responded favorably. “You see safety people walking around, fixing things that weren’t fixed before,” Moran said. “It took one person to speak up.” In November, Tesla offered a 50-cent increase to base pay for the first time in years. Four months later, the company added another 50 cents.

But after originally describing Tesla as “union neutral,” Musk said on an earnings call in February that “there are really only disadvantages to someone to want the UAW here.” In a later email to workers, Musk delivered a point-by-point rebuttal to Moran’s Medium post, arguing that overtime had decreased and incident rates were below average. Instead of offering workers better wages and input on production, Musk promised “a really amazing party” for the launch of the Model 3, “free frozen yogurt stands” at the factory and “a Tesla electric pod roller coaster” connecting the parking lots. “It’s going to get crazy good,” Musk concluded.

Middle-class manufacturing workers seeking higher pay aren’t dazzled by the kind of perks Facebook coders enjoy. They chuckled whenever I brought up the yogurt and the roller coaster. “If I want to go on a roller coaster, pay me enough so I can go when I want to,” said Richard Ortiz. “It’s insulting, it shows you what he thinks of us.”

Labor historian Nelson Lichtenstein expressed horror at Musk’s rhetoric. “It was the worst kind of caricature of a capitalist, like it’s 1898,” he said. “They have these sophisticated systems of production and distribution, but their social arrangements are utterly retrograde.”

Moran has taken the assault from his boss in stride. “People come up to me and say you’re doing a good job,” he said. “It goes to show that [Musk] is 100 percent out of touch with what’s going on at the plant.” Moran and his colleagues have started a Facebook group, A Fair Future at Tesla, with videos of Moran and others telling their stories.

In November, workers were forced to sign an extremely broad, retroactive confidentiality agreement, one that vowed consequences if they speak publicly about Tesla – including about wages and working conditions. Confidentiality agreements are common in auto factories to protect trade secrets, but this was so far-reaching that five members of the California legislature wrote to Tesla, warning that the agreement violated protected employee activity guaranteed by the National Labor Relations Act.

Organizers say Tesla’s aim was to create a chilling effect. “When you try to organize, [the workers] are afraid, they think you’re undercover,” said Ortiz.

The UAW has tried unsuccessfully to organize nonunion auto plants run by foreign manufacturers, including a Volkswagen plant in Tennessee where UAW secured the neutrality of the employer and still lost a union vote. (A later vote partially succeeded, but is mired in court). Not only is the Tesla factory in the heart of blue-state California, but in a region with a strong organizing history. However, Tesla also sits at the nexus between blue collar and Silicon Valley, where organized labor has barely penetrated.

Heightened activism after President Trump’s election has forced tech firms to take stands of resistance, while union drives have arisen among security officers and cafeteria workers in tech office parks. But organizing Fremont would be an order of larger magnitude, especially because it would actually realize the promise of green technology jobs. “I’m always telling my environmental friends, don’t be enamored of these green capitalists,” said Joe Uehlein of the Labor Network for Sustainability. “We should be fighting for that missing leg of the sustainability stool, economic justice. And it’s important for the UAW to signal that they see a future in renewables and clean vehicles, that they’re not just a union of people who drive pickup trucks.”

Tesla has been praised for creating manufacturing jobs domestically rather than overseas. Clean energy in the U.S. is as big an industry as pharmaceutical manufacturing. But the jobs created aren’t automatically high-paying, good places to work. Politicians cite the quantity of green jobs without enough concern about their quality. The same problems of low wages, offshoring production and lack of collective bargaining prevalent throughout the economy can crop up in environmentally friendly enterprises. “No worker or community should ever be the roadkill on the path to a better world,” said Uehlein.

Richard Ortiz, who worked at NUMMI for 22 years and actually had retired before being drawn back to Tesla, continually expressed pride in working at a leading-edge manufacturer. “I love to wear my gear all over town,” he said. “I thank Tesla for giving me the opportunity to work there. They will give anyone a chance. But a chance at what?”

(Photo: Cindy Chew)(Photo: Cindy Chew)

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Golden State Green Rush

Golden State Green Rush: Cannabis’ Promise and Problems

Will the marijuana El Dorado bring new wealth to California and its inhabitants, or will it produce an historic buzz kill?

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Although medical marijuana use had been legal in California since 1996, it wasn’t until New Year’s Day that adults in this state could lawfully light up a joint for the sheer pleasure of it. Yet unlike the end of Prohibition 85 years before, the response was surprisingly subdued, and ever since then life in California seems to be business as usual. Except that it isn’t.

Everything is going to radically change, and probably sooner than later. For the legalization of pot is slowly unleashing a new gold rush — the so-called Green Rush — that, like many gold rushes before it, will likely lead to environmental dangers, racial injustices and economic disparities that we can only dimly perceive today. Will the cannabis El Dorado bring new wealth to California and its inhabitants, or will it produce an historic buzz kill?

Nearly two years ago Capital & Main presented a series of stories examining some of the possible effects of legalization, and this week, as the pot-centric date of 4/20 approaches, veteran journalist Donnell Alexander looks at the ways some Californians are preparing for the coming wave of change. As he notes, “No state has a relationship dynamic remotely like the one between California and marijuana.” Partly that’s because annually we consume 2.5 million pounds of the drug, while producing more than 13 million pounds of it.

In a report from Oakland, Alexander writes of the attempts by that city to legislate “cannabis equity” in order to prevent marijuana’s perennially victimized neighborhoods of color from being completely left out of the Green Rush. The strategy is to give would-be pot entrepreneurs there a leg up on deep-pocketed competitors.

Alexander also profiles an African-American grower, Bryant Mitchell, whose journey has taken the University of Chicago MBA from being a Chevron consultant to a master grower whose Blaqstar operation in East Los Angeles has produced an artisanal strain of weed called Birthday Cake. And, in a third story, Alexander interviews an Emerald Triangle bud trimmer, a woman living on the lowest-paying and most exploited rung in the cannabis hierarchy. “Matilda” describes a world of guns, loutish bosses, outhouses and wild bears. And yet marijuana’s legalization may offer the nomadic workers employed by larger pot farms hope in the form of state-enforced workplace protections and the chance to join a union.


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Labor & Economy

Is a Conflict-Minerals Law Helping or Harming African Miners?

A Dodd-Frank rule requires Silicon Valley tech companies and others to reveal whether minerals in their supply chains fund conflicts in Central Africa. Why do some progressives oppose this requirement?

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(ERIC FEFERBERG/AFP/Getty Images)

The conflict-minerals law’s opponents include progressive journalists and academics who say the rule rests on an overly simplistic analysis of a complex crisis.


By the end of next month Intel, HP and more than a thousand publicly traded companies are expected to report to the U.S. Securities and Exchange Commission on whether the minerals in their cellphones, laptops or other products were used to fund armed conflict in Central Africa.

This, despite concerted attempts by the Trump administration and Republicans in Congress to do away with an Obama-era rule that requires them to reveal whether their supply chains include tin, tantalum, tungsten or gold from the Democratic Republic of Congo (DRC) and surrounding countries.

The survival of Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act may look at first glance like a case of blue-state resistance with California’s tech companies—backed by their ethically minded consumers—standing strong against Republicans bent on destroying progressive, forward-looking regulations.


“The legislation has actually made the situation worse for these [miners].”


“Tech companies are the ones leading the way,” says Annie Callaway, deputy director of advocacy at the Enough Project, a Washington, DC-based human rights organization that led the campaign to pass the conflict mineral law. Their due diligence efforts have been among the best arguments against those who say the law is too burdensome, she says.

But the law’s opponents include progressive journalists and academics who say the rule rests on an overly simplistic analysis of a complex crisis. Some say it has done more harm than good to Eastern Congolese mining communities, whose livelihoods are already precarious.

The law has deprived “very vulnerable populations, already very poor people, of their sole means of livelihood,” says Séverine Autesserre, a political science professor at Barnard College and Columbia University, and a former humanitarian aid worker who studies the DRC. “The legislation has actually made the situation worse for these people.”

The law seems to have staying power, nonetheless. Eight years after its passage, tech companies have changed their sourcing practices, making it unlikely that the law’s repeal would alleviate companies’ concerns about having their products associated with violent militias, supporters and a critic of the measure say.

There are “very strong business reasons” to maintain the relationships and programs connected to Dodd-Frank, according to Michael Rohwer, who worked on conflict minerals for the Electronic Industry Citizenship Coalition, now known as the Responsible Business Alliance.

Companies increasingly recognize the efficiencies as well as the “risk mitigation” benefits, says Rohwer, now with BSR, a non-profit business network focused on sustainability.

The risks of sourcing from the DRC were made clear to companies in 2008 when U.S. human rights organizations launched a campaign that highlighted the role that the minerals found in jewelry and electronics play in funding violence, including sexual violence used as a weapon of war against women and girls, in the eastern DRC.


The goals of multinational companies—and their ethically-minded consumers—are not identical to those of any region, war-torn or otherwise.


That campaign drafted high profile celebrities, like actors Ben Affleck and Robin Wright, as well as idealistic college students eager to leverage their buying power and social media prowess to help a region that has seen millions die over the last two decades in the deadliest conflict since World War II.

Last fall, the Enough Project, a lead organization in the campaign, released a progress report that ranked the 20 largest jewelry retail and consumer electronics companies—industries that consume the most tin, tantalum, tungsten and gold–on their sourcing practices. Four of the five best performers—in terms of responsible sourcing practices–were Silicon Valley-based tech companies, with Apple securing the lead spot.

Thus far, the rule has withstood a lawsuit brought by the National Association of Manufacturers, a threatened executive order and House legislation aimed at its elimination. (The biggest threat to the rule remains the attachment of a rider to a continuing resolution in Congress, according to Arvind Ganesan of Human Rights Watch.)

The law has also withstood criticism from more than 70 critics who signed an open letter in 2014 that blamed Dodd-Frank for driving some unemployed miners to join militias or to turn to smuggling, and for misunderstanding the cause of the conflict. Last year, a journalist completed a two-part investigative series that found that the law imposed a monopoly on miners that suppressed prices and forced some to trade their wares illegally.

Both the rule’s advocates and critics agree that its roll-out was problematic. The DRC’s president, Joseph Kabila, instituted a six-month ban on mining shortly after the law was passed in 2010 but before it was implemented. A United Nations Working Paper, published in 2016, attributed a child mortality increase of 143 percent in mining communities to the implementation of the Dodd-Frank conflict mineral rule.

The Enough Project’s Callaway argues that most of the criticism of the Dodd-Frank rule relies on information from 2014 and earlier, in the aftermath of its implementation. “Since then, there’s been tons of progress,” she says. She points out that of miners producing tin, tantalum and tungsten, 79 percent of those surveyed in 2016 by the International Peace Information Society are no longer working under threat of armed groups and that less violence can pave the way for other improvements, “once the conflict is out of the mines.”

But “overall, armed presence at mining sites has persisted over the last years in eastern DRC,” according to the study by the Belgian International Peace Information Service that Callaway cites. That’s because the majority of gold mines – the most important mining sector in the region – remain under the influence of armed actors, even as the tin, tantalum and tungsten mines have seen dramatic reductions in violence, according to the report.

The law has supporters from the region. Representatives from more than a 100 Congolese civil society organizations signed letters in support in of the rule when SEC commissioner Michael Piwowar opened up public comment to explore whether it should be implemented early last year. “The people who are most impacted by these changes are saying please don’t mess with this,” Callaway said.

Ben Radley, a British doctoral student, who helped make a 2015 documentary sharply critical of the Enough Project, remains a skeptic of the law. But he argues that repealing it would also constitute “a backward step” and a futile one at a time when the DRC and the European Union are creating sourcing standards for mining.

It’s very difficult to measure the impacts of the law because information is so hard to come by in the region, adds Radley, who lives in Kinshasa. “The numbers are so easily manipulated from both sides of the debate” because of lack of quality data, he says.

Furthermore, the Dodd-Frank rule is not the only force affecting miners’ livelihoods for better or worse. The price of minerals has been falling in recent years. Meanwhile, a U.N. peacekeeping force of 18,000, the world’s largest, is stationed in the eastern part of the country.

The laws’ critics say there are lessons to be learned for consumers and businesses that want to make a positive difference in the region. Autesserre would like to see Western advocacy groups do a much better job consulting Congolese mining communities as they develop their policy agenda. Radley suggests that advocates focus on labor and human rights issues instead of ensuring products are “conflict free.”

The Enough Project’s report calls for increased investment in “livelihood projects” on the part of end-user companies doing business in the region. So far, such investment has been inadequate . Apple, Microsoft Corp., Google, Signet and Tiffany contributed a paltry $500,000 toward improvements in Congolese mining communities in the last fiscal year, a mere “rounding error of the more than $3 trillion combined market capitalization of the 20 companies Enough ranked,” as the report points out.

Most of the due diligence work conducted by multinational corporations happens outside the DRC, at smelters, the factories that extract the minerals from the ore. Radley says companies would have more credibility if they undertook the more resource-intensive approach of working directly at the mine site, where advocates hope to improve conditions.

Some companies are already moving in that direction. Bloomberg reported in February that Apple is in negotiations to secure cobalt, a mineral used in batteries, directly from miners. Cobalt is not covered under the Dodd-Frank rule, but a 2016 investigation conducted by Amnesty International found cobalt was mined by child laborers.

Still, the goals of multinational companies—and their ethically-minded consumers—are not identical to those of any region, war-torn or otherwise. Perhaps partly with the tangled politics and human rights landscape of Central Africa in mind, Apple pledged last April to one day end its reliance on mining entirely and make products only from renewable resources or recycled material.

That has BSR’s Rohwer feeling optimistic. “I’m eager to see more companies get involved in product reuse, repair, refurbishment and recycling,” he says. “I think that would be a huge benefit for the tech sector.”


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Immigration

Salinas Farm Workers March to Oppose Immigration Raids

Protest marches, which also commemorated the birthday of UFW co-founder Cesar Chavez, follow several months of UFW activity opposing immigration enforcement, and of organizing workers to defend themselves against it.

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David Bacon

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All photos by David Bacon


In Salinas, California, last Sunday, over a thousand farm workers and allies filled the streets of its working-class barrio to protest the Trump administration’s immigration policies, including an increase in immigration raids that, according to United Farm Workers President Arturo Rodriguez, are “striking terror in rural communities across California and the nation.” It was one of six marches taking place this month in agricultural communities around California, Texas and Washington state.

Highlighting the cost of the immigration crackdown were the deaths last month in Delano of husband and wife Santos Hilario Garcia and Marcelina Garcia Porfecto. On March 13, the couple, both farm workers, had just dropped off their daughter at school on their way to work when two black, unmarked Jeeps with tinted windows, driven by Immigration and Customs Enforcement (ICE) agents, stopped them. The couple drove off, but lost control of their car, hit a utility pole and flipped over, killing them both. They leave six children behind.

According to a police report obtained by the Los Angeles Times, immigration agents told police that they were not in “pursuit with emergency lights/sirens,” but that surveillance footage appears to show the ICE vehicles following the couple with emergency lights flashing. The Delano Police Department has asked Kern County prosecutors to investigate the discrepancies in the immigration agents’ accounts of the incident. On Monday, ICE spokesperson Richard Rocha sought to divert blame in a statement to the Times that sanctuary policies, “have pushed ICE out of jails,” and “force our officers to conduct more enforcement in the community — which poses increased risks for law enforcement and the public … It also increases the likelihood that ICE will encounter other illegal aliens who previously weren’t on our radar.”

The marches, which also commemorated the birthday of UFW co-founder Cesar Chavez, follow several months of UFW activity opposing immigration enforcement, and of organizing workers to defend themselves against it. The union has distributed fliers in the fields that tell workers, “Don’t sign anything and demand to speak with a lawyer. Take photographs, videos, and notes about what happens, including names, and license plates.” It lists a toll-free number to call for help.

Organizers are advised by the UFW Foundation to tell employers that ICE cannot enter the private area of their business without a signed judicial warrant, that in I-9 audits, employers have three work days to produce the forms, and that employers also have the right to speak to an attorney before answering questions or signing ICE documents.

In March, UFW protesters in Hanford, Visalia and Modesto picketed the offices of Republican Congressmen David Valadao, Devin Nunes and Jeff Denham, respectively. General meetings denouncing ICE actions were also held in Salinas and Orosi, and protests in Merced and Bakersfield.

“Do growers who supported and financed the campaign that put Donald Trump in office condone the climate of fear that is gripping farm worker communities?” a union statement asks. It points out that growers are currently supporting bills in Congress to remove protections from guest workers recruited in Mexico. “Such legislative schemes are aimed at driving down the wages and working conditions of all agricultural workers. We will fight them.”

The Center for Immigration Studies, an arm of the anti-immigrant lobby in Washington, DC, used Cesar Chavez’ birthday to announce the launch of National Border Control Day “in tribute to the late labor leader and civil rights icon’s forceful opposition to illegal immigration and support for strong border enforcement.”

UFW spokesperson Marc Grossman called that “an abomination.” A UFW statement in response said, “There are two separate and distinct issues — immigration reform and strikebreaking.” The union had a controversial history of trying to use immigration enforcement to remove undocumented strikebreakers in strikes during the late 1960s and ‘70s, but the statement says that from the first grape strike “the UFW welcomed all farm workers into its ranks, regardless of immigration status.”

It noted that the union opposed employer sanctions, which made it illegal for undocumented immigrants to work, and lobbied for the amnesty provision in the 1986 Immigration Reform and Control Act that enabled one million undocumented farm workers to become legal residents. Given that the union’s membership reflects the composition of farm workers generally, most of whom have no papers according to Farmworker Justice, a farm worker advocacy group in Washington DC, it is possible that a majority of the union’s members are undocumented.

According to Rodriguez, protesting immigration enforcement is part of defending farm laborers generally, both union and non-union. At the Salinas rally, Rodriguez told workers and supporters “Santos Hilario Garcia and Marcelina Garcia Porfecto, and their six orphaned children, are casualties of the Trump administration’s targeting of hard-working immigrant farm workers who toil and sacrifice to feed all of us.”


 

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Labor & Economy

The Big Money: Revealing the Chasm Between CEO and Worker Pay

Co-published by Fast Company
Thanks to Dodd-Frank, companies are now required to publicly disclose their CEOs’ pay in comparison to their median employees’ salaries.

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Co-published by Fast Company

If you’re among the roughly half of all Americans who don’t own stock, you may not care that April is the peak of proxy filing for stockholders. But if you have a 401(k) or investments in a pension or mutual fund, you do own stock and therefore have some say in the operations of the biggest corporations in the world.

This year you may want to pay a little extra attention. Eye-popping new information about outsize CEO pay is coming out in proxy statements filed with the Securities and Exchange Commission. Last year’s SEC rule mandated by Dodd-Frank Wall Street reform legislation for the first time requires companies to disclose CEO’s pay in comparison to the median employee salary range.

Now you can go online and see that Indra Nooyri, CEO of PepsiCo, purveyor of Cheetos, Doritos and an array of beverages, was compensated at a rate of 650-to-1—her payout of $31,082,648 compares to the median salary of $47,801. PepsiCo emphasizes that more than half of its employees are overseas in “developing and emerging markets such as Mexico, Russia, Brazil, China and India,” where market trends and the cost of labor can influence employee compensation rates.

Fresh Del Monte Produce CEO Mohammad Abu-Ghazaleh was paid $8.5 million last year, contrasted with the median worker salary of $5,833 annually, a ratio of 1,465 to 1. Factored into the equation are the 80 percent of employees who work in economies where the pay scales are at the low end–Costa Rica, Kenya, Guatemala and the Philippines.

The multi-million-dollar executive compensation figures (which include bonuses, cash and pension boosts) are on display in the fourth annual report on CEO pay released in March by the non-profit As You Sow. The foundation promotes corporate social and environmental responsibility through shareholder advocacy.

High CEO pay “over-emphasizes the impact of a single individual at a company, rather than rewarding the work of the many company employees,” the report says. “It raises economic inequality to such a level that it becomes increasingly incompatible with a well-functioning economic system.” Pay scales don’t correlate to CEO performance and higher returns for investors, the report notes.

Pay tables are sortable by company name and total compensation, but there’s no pay ratio data yet. Information is just trickling out as proxy season gets underway, one of the authors, Rosanna Landis Weaver, CEO Pay program manager at As We Sow, told Capital & Main. She has been busily gleaning it for the report next year from the 14A schedules that companies are required to file with the SEC to make available for the SEC website.

“This is fairly new,” she said. “Investors didn’t get to vote on pay until Dodd-Frank.”

The As You Sow Foundation suggests investors exert pressure in the direction of pay equity during proxy voting season and provides a how-to guide.

“One of the things you can do is move your money to a social investment fund,” Landis Weaver said. “You could talk to your adviser and say ‘I’m looking to move my money to a fund that votes against these pay packages more often.’”

There are other resources online. FundVotes.com explains proxy voting and tracks investment policies by issues such as gender pay equity.

It’s not a mass movement but as more information comes out, Landis Weaver said, “people are beginning to figure out how to use this and [are] making more and more noise about this stuff.”


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Labor & Economy

Study: Forced Arbitration Contracts Cover 60 Million Workers

According to Economic Policy Institute research, more than 67% of California’s non-union, private-sector workplaces are governed by mandatory arbitration agreements, compared to a national average of 54%.

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Images of Oklahoma teachers in the streets demanding pay raises and education funding, and of hotel workers and Hollywood celebrities fighting sexual harassment in the workplace may have cheered labor advocates. But a new study, released today by the Economic Policy Institute, offers a sobering reminder of the eroding bargaining power of U.S. workers.

In a trend made possible by a series of Supreme Court decisions, American employers are increasingly requiring their employees to give up their rights to pursue claims in court by requiring them to sign arbitration agreements as a condition of employment, according to the study.

Those agreements push disputes over pay and discrimination into privately-funded and confidential arbitration proceedings that labor-side attorneys and some researchers say favor employers. Since the early 2000s, the share of workers subject to mandatory arbitration agreements has more than doubled and now covers 60 million private-sector workers, according to the EPI report.

“Mandatory employment arbitration,” the report claims, “has expanded to the point where it has now surpassed court litigation as the most common process through which the rights of American workers are adjudicated and enforced.”



 

Mandatory arbitration agreements are widespread in consumer contracts for everything from cellphones to nursing homes. Employee arbitration agreements have drawn less attention. But the “Me Too” movement shone a light on employment contracts that advocates say protect workplace predators from accountability.

Fox News anchor Gretchen Carlson, who ultimately won a settlement from the network for $20 million over sexual harassment, said last year that ending mandatory arbitration in employment contracts “has become my mission.” Her campaign, however, has been an uphill battle while Republicans are still in control of Congress.

The EPI report, an expanded version of one published last September, finds that such agreements are most common in workplaces with more women, African-American and low-wage workers.

California is one of three states where mandatory arbitration agreements are especially prevalent. More than 67 percent of non-union, private-sector workplaces in the state are covered by mandatory arbitration agreements, compared to a national average of 54 percent.

California’s employers’ embrace of arbitration agreements has long been viewed as a reaction to the state’s robust employee protections. But the EPI study points out that Texas, which is generally considered more generous to employers, has essentially the same proportion of workplaces covered by mandatory arbitration agreements.

The study, by Alexander Colvin, a Cornell University professor of Labor Relations and Conflict Resolution, reported on another growing trend among employers — requiring workers to give up their right to file class action lawsuits. Colvin found that 25 million workers who signed arbitration agreements as a condition of employment also waived their right to join together in a lawsuit.

That’s a right that labor lawyers say cannot be signed away. This spring, the Supreme Court will decide National Labor Relations Board v. Murphy Oil USA, Inc., a case that determines whether these so-called class action waivers are a violation of the National Labor Relations Act.


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Why a Pioneering Green Energy Investor is Optimistic About the Future of the Planet

Daniel Weiss, managing partner of Angeleno Group, describes on the latest episode of “The Bottom Line” podcast how clean energy has moved from the realm of politics and policy to that of the markets and economics.

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When Daniel Weiss co-founded Angeleno Group in 2001 to fund green energy companies, few would have regarded him as a master of timing.

Oil was trading at a lowly $23 per barrel. The California electricity crisis had recently triggered large-scale blackouts across the state. Enron had just gone belly-up.

“To launch an investment firm and raise capital to invest in this space . . . maybe we ought to have had our heads examined, ” Weiss, one of Angeleno Group’s two managing partners, told me on the latest episode of my podcast, The Bottom Line.

Seventeen years and $2.5 billion worth of investments later, Weiss and his colleagues have proven that they were lot more savvy than silly.

Along the way, they’ve kept their eyes on four fundamental drivers: an urgent need to replace an aging and inadequate power infrastructure in the United States and elsewhere; the steadily increasing demand for fuel and electricity as ever more of the world’s population enters the middle class and becomes urbanized; a push by different nations to secure their own energy independence; and the rise of global warming and other environmental issues as a major social concern.

“You add those four things up,” Weiss notes, “and we thought, ‘These are not 10-, 20-, 30-month trends. These are 20-, 30-, 40-year trends. And they’re going to create massive investment opportunities.’”

Plus, Weiss adds, the field was pretty wide open back then. “Not a lot of folks were focused on the next generation of energy,” he says.

At least not in the private sector. Two decades ago, most of those paying close attention to our biggest energy and environmental problems — and how we might overcome them—were public officials, nonprofit leaders, and scholars.

Not any longer, however. “We really are shifting,” Weiss says, “from a world in which adoption of some of these technologies is driven by politics and policy to a world . . . being driven by markets and economics.”

Actually, among Angeleno Group’s greatest strengths is its ability to draw on the assistance of those who have deep experience in both arenas—corporate and government. The firm’s advisory board includes John Browne, the former chief executive of British oil giant BP; Ernest Moniz, who served as Energy Secretary under President Obama; Bennett Johnson, the long-time senator from Louisiana who chaired the Energy and Natural Resources Committee; and nine others with similarly golden credentials.

Motivating these heavy-hitters — who take a very active role in helping Angeleno Group and its portfolio companies — is the belief “that this $6 trillion vertical of the global economy is an important one,” Weiss says, and that “technology, science, and entrepreneurship in this sector can make a really positive difference.”

Despite the ongoing threat of climate change and a number of backward steps on the environment made by President Trump and his administration, Weiss thinks so too. He points out that the companies Angeleno Group has invested in — a range of enterprises offering products and services in wind and solar, clean transportation, energy efficiency, and more — have had the effect in terms of reduced carbon of taking the equivalent of 50 million cars off the road per year.

But there’s another metric that hits even closer to home. In 1977, when Weiss was growing up in Los Angeles, there were more than 120 Stage 1 smog alerts. “You couldn’t go out and play on the blacktop” because the air was so nasty, he recalls. But now, “in my kids’ experience in elementary school . . . in Los Angeles there were zero Stage 1 smog alerts” — even though there’s far more traffic on the road.

What made things better, says Weiss, was a steady progression in which politics and policy helped to drive the adoption of new technology (in that case, the catalytic converter) until, eventually, market forces took over and spurred truly widespread change.

“I’m optimistic,” he says, “because of that track record and history that we have of innovating our way against some of these challenges.”

You can listen to my entire interview with Weiss here, along with Marty Goldensohn reporting on Coca-Cola’s “World Without Waste” sustainable packaging campaign, and Rachel Schneider pondering whether the United States can ever have lasting full employment.

The Bottom Line is a production of Capital & Main

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Battery Blood

Battery Blood: California Has Worse Lead Standards Than Arkansas and Texas. Why?

Battery recycling is considered one of the most potentially hazardous industries. Yet Vernon’s Exide workers were routinely being poisoned with nearly nonexistent intervention by Cal/OSHA.

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Cleanup of Exide's Vernon plant. (Photo: California Department of Toxic Substances Control)

How could California, the model state when it comes to tough environmental regulations, have failed to assess lead-contamination dangers at a battery-recycling facility?


In the summer of 2008, California’s Department of Occupational Safety and Health (Cal/OSHA) inspected Exide Technologies’ vehicle-battery recycling plant in Vernon, California, an industrial suburb of Los Angeles. The ensuing laboratory analysis of air from the plant’s smelter room, where batteries are melted down to reclaim their lead, revealed that levels of the neurotoxin exceeded federal standards by a factor of 13. Despite the toxic air, Cal/OSHA found no serious violations at Exide, issuing only a token fine of $150 for what it deemed a low-level violation.

Asked today about that inspection, Cal/OSHA spokesperson Erika Monterroza told Capital & Main that it was “handled appropriately,” adding that the high level of lead that smelter-room workers were exposed to would only have been excused if other safety measures, such as “protective clothing, onsite showers, clean change rooms, proper housekeeping, clean lunchrooms, medical surveillance, effective training and implementation of engineering and administration controls” were deemed effective in reducing “exposures to as low as feasible.” However, there is little to no evidence that Cal/OSHA’s 2008 inspection included the measures Monterroza cited.

Also Read:
How California Health Agencies Failed Exide Workers

How could California, perceived by many as the model state when it comes to tough environmental regulations, have fallen so short when it came to assessing lead-contamination dangers at the Vernon battery-recycling facility?

Part of the answer stems from how the Occupational Safety and Health Administration (OSHA) works in the Golden State. In 29 states, workers at private companies such as Exide are are protected by federal OSHA, which is administered by the U.S. Department of Labor. In the remaining 21 states, including California, state-run OSHA programs protect workers employed by private industry. Even so, according to Monterroza, “Cal/OSHA’s program is required to be, and is, at least as effective as federal OSHA.”


In California, communication about workers with high levels of lead in their blood was nearly nonexistent between Cal/OSHA and the Department of Public Health.


But our investigation found that when it comes to protecting workers from lead, California operates in a different universe from states with federal OSHA oversight. While workers were routinely being poisoned in Vernon, with nearly nonexistent intervention by Cal/OSHA, battery-recycling plants in federal OSHA states were facing inspections so robust they amounted to an existential threat to the plants. The message to these lead polluters seemed simple: Either clean up your act or be fined out of business. A case in point: The same summer as Cal/OSHA’s 2008 Vernon inspection, another Exide battery-recycling plant, in Fort Smith, Arkansas, was hit with $71,000 in fines for having high levels of lead in its smelting department, and for other serious violations, including poorly fitted respirators. All told, inspectors found 22 “serious violations” at the Arkansas plant. A serious violation, an OSHA press release about the Fort Smith citations noted, is “one in which the hazard could cause death or serious physical harm to employees, and the employer knew or should have known about it.”

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And after a 2012 inspection of a Johnson Controls battery plant in Ohio, federal OSHA issued 20 citations for “serious”and “willful” health violations, and issued $188,600 in fines. At yet another Exide facility, in Frisco, Texas, OSHA fined the plant $77,000 in 2011. That same year, Exide reached an agreement with Texas officials to pay $20 million for improvements to its engineering systems at the Frisco plant to cut down on lead emissions.

In Vernon, Cal/OSHA required no engineering changes that would impact levels of lead in the plant.

“OSHA is supposed to have workers’ backs,” said Rania Sabty-Daily, an expert in industrial hygiene and an assistant professor at California State University, Northridge. Sabty-Daily said Cal/OSHA completely failed to take into account a fundamental fact in its 2008 Exide inspection.

Photo: Laurie Avocado

“The records you dug up showed that lots of workers were being exposed to lead at levels high enough that their health was being compromised,” she said. “That should have led inspectors to seek out the safety problems causing the health problems. Any occupational hygienist knows that a real-world factory is imperfect — we can’t just rely on respirators, which are often not fitted properly. And there are other avenues for exposure. What happens when the worker takes off their boots? Are the shower facilities adequate?”

Making workplaces safer became a central OSHA focus in 2001, when the agency launched the National Emphasis Program on lead. This ambitious initiative sought to eliminate the conditions that had caused lead-related health issues in workers. The lead-reduction program was reinforced with even more stringent standards in 2008.

The directive legally mandates that when workers are found to have blood-lead levels above those considered by the U.S. Centers for Disease Control and Prevention (CDC) to represent a serious health risk (25 micrograms per deciliter or above), those cases “shall be considered high-gravity, serious and must be handled by inspection.” And it wasn’t just the 29 federal OSHA states that adopted the tough inspection standards. Nine states that have their own OSHA programs, including Indiana, Oregon and North Carolina, chose to adopt the same federal standards. For unexplained reasons, California did not adopt lead standards required by 38 other states.

Elsewhere, others saw a profound improvement. “Without question it’s an absolutely essential program that I saw make a difference when it came to protecting workers from being exposed to lead,” Clyde Payne, who retired in 2014 as the area director of U.S. OSHA’s Jackson, Mississippi office, told Capital & Main


“People were getting lead-poisoned in just a few months on the job. That tells you a lot about what conditions were like inside [Exide].”


While OSHA’s national directive remains largely intact today, President Donald Trump has made good on his promise to scale back all government regulations; OSHA’s current leadership has chipped away at the get-tough approach of the lead directive, changing its language to make some elements of the rules optional rather than mandatory.

Coordination with State Public Health Departments

Battery recycling is considered one of the most potentially hazardous industries for workers. Consequently, plants are almost always required to test workers’ blood for lead at least a couple of times per year. Most states’ departments of health — including California’s — are legally required to maintain those blood-lead results in what are called “blood-lead registries.”

A key component of the 2001 National Emphasis Program on lead is coordination with the custodians of blood-lead registries, the states’ individual public health departments. Scott Allen, a spokesperson for federal OSHA’s regional office in Illinois, underscored the importance of communication with state health departments. “Related to blood-lead levels, these medical referrals often come from health departments, medical providers or hospitals,” Allen stated in an email.

Workers Became Lead-Poisoned at Exide in a Matter of Months

Our investigation found that in California, communication about workers with high levels of lead in their blood was nearly nonexistent between Cal/OSHA and CDPH, the two agencies responsible for keeping workers safe from lead hazards.  Between 1994 and 2014, CDPH tracked over 2,300 cases of workers with blood-lead levels at or above 25 micrograms per deciliter at Exide’s Vernon plant; yet CDPH referred the Vernon plant for an inspection to Cal/OSHA just once, in 1996.

Along the way, there were health experts who saw warning signs.

Infographic:  Kelly Bergkamp

The Oakland-based Center for Environmental Health (CEH), which was concerned about airborne lead spreading from smokestacks at the Vernon plant to surrounding L.A. neighborhoods like Boyle Heights, filed a 2008 lawsuit to force the state to warn residents about lead that was known to be escaping the plant. “We also wanted to know what was going on inside the plant,” Caroline Cox, a CEH staff scientist, told Capital & Main. To figure that out, the nonprofit asked CDPH in 2009 for a year’s worth of blood-lead tests of Exide’s Vernon employees.

CDPH provided Cox with this data for more than 152 workers. Most employees had several tests per year.  “What I was most struck by were results from workers who clearly were brand-new employees,” Cox said. “These people started out like an average person — whose blood-lead level is around two micrograms per deciliter. After a few months on the job, [I saw that] in some cases these readings shot up to alarming levels. Essentially, people were getting lead-poisoned in just a few months on the job. That tells you a lot about what conditions were like inside, and you just worried that the workers perhaps had no idea what they were getting into.”

An Obscure Department Failed To Sound the Alarm

The Occupational Lead Poisoning Prevention Program (OLPPP) is a department within CDPH that tracks blood-lead levels and offers advice and expertise to companies to reduce lead-based health risks.


“You have an organization receiving data about spikes in blood-lead levels. That should spur some sort of action. If that didn’t happen, why?”


Our investigation found that between 1994 and 1996, OLPPP managers were very concerned about the Vernon plant’s lead problem. For example, in 1995, OLPPP determined that, at what was then called GNB Technologies, “compliance plan and medical surveillance plan are seriously deficient; written respiratory protection program is confusing and inconsistent; GNB has no protocol for systematically reviewing BLL [blood-lead levels].” In 1996, OLPPP referred the case to Cal/OSHA for inspection.

That 1996 referral inspection appears to be the last time the two agencies teamed up to limit worker exposure to lead at the Vernon site. CDPH remained aware of lead-exposed workers, yet appears not to have communicated concern or crucial data with the one agency that could levy fines or shut down the plant if it were deemed to be too hazardous.

Mariano Kramer, a former Cal/OSHA district manager who was in charge of the 1996 inspection, said he was troubled to learn that CDPH did not continue to refer information about lead-poisoned workers to Cal/OSHA. “What concerns me is that you have an organization [CDPH] receiving data about spikes in blood-lead levels. That should spur some sort of action or reporting. If that didn’t happen, I’m wondering, Why? What’s the point of medical surveillance if you don’t use it?”

CDPH declined repeated requests for interviews and declined to answer specific questions by email for this story.

After being provided with documents obtained by Capital & Main and the University of Southern California’s Center for Health Journalism program, Assemblyman Ash Kalra (D-San Jose) wants to change the system that California has been operating under, to make it correspond to the federal lead directive. Last month, based on our research, Kalra introduced Assembly Bill 2963, which would require the “State Department of Public Health to report to the Division of Occupational Safety and Health any instance where a worker’s blood-lead level is at or above a certain amount.”


Joe Rubin  wrote this story while participating in the California Data Fellowship, a program of USC’s Center for Health Journalism.


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Battery Blood

Battery Blood: How California Health Agencies Failed Exide Workers

California’s Department of Public Health and Cal/OSHA didn’t protect workers from lead contamination at a battery recycling plant. A state Assembly member will hold hearings for a worker-protection bill based on our investigation.

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Photo: Joanne Kim

Even as health agencies in other states issued six-figure fines and ordered multimillion-dollar safety improvements of battery recycling plants, California’s enforcement was strangely anemic.


 

For nearly a century a hulking industrial plant near downtown Los Angeles melted down car batteries to reclaim their lead. The facility, most recently owned by Exide Technologies, was shut down in 2015 in a deal the company made with the U.S. Justice Department to avoid criminal prosecution for polluting nearby residential communities. Neighborhood activists have criticized California’s Department of Toxic Substances, which allowed Exide to continue operating for years with a temporary permit, despite evidence it was a major polluter. But a year-long investigation by Capital & Main and the University of Southern California’s Center for Health Journalism has found that two other agencies, the California Department of Public Health (CDPH) and the Division of Occupational Safety and Health (Cal/OSHA), failed to take action during a simmering public health crisis involving hundreds of lead-poisoned workers at the plant.

Between 1987 and 2014, according to records we obtained from CDPH, California health officials were aware of more than 2,300 blood tests from the plant’s workers revealing blood-lead levels above 25 micrograms per deciliter — high enough to cause miscarriages, tremors, mood disorders and heart disease. While CDPH lacks the power to levy fines or mandate changes, it may refer cases to Cal/OSHA, which has that authority. But except for one fleeting moment in 1996, the agencies have operated in virtual silos, failing to coordinate actions or share incontrovertible evidence that the facility was a potential death trap.

Infographic:  Kelly Bergkamp

“It’s distressing to know that Exide workers were exposed at that level and chronically,” said Dr. Bruce Lanphear, a physician and leading lead researcher with Simon Fraser University in Vancouver, Canada. “We’ve known for decades that lead at those levels can lead to hypertension and chronic renal failure [kidney disease]. California regulators were aware of this information and should have better protected these workers.”

In contrast to the anemic enforcement by California officials, regulators in much of the rest of the nation have, thanks to a strict federal lead directive issued in 2001, cracked down on perilous battery recycling plants — issuing six-figure fines and requiring multimillion-dollar safety improvements. Although the federal lead directive is legally binding in states where workers are directly protected by federal OSHA and eight other state-run programs that adopted these standards, California, the nation’s most populous state, never embraced them.


Exide appealed a $280 Cal/OSHA fine. It was ultimately reduced to $150 — less than the cost of a speeding ticket.


Despite California’s seemingly lower standards, Cal/OSHA told Capital & Main that “Cal/OSHA’s program is required to be, and is, at least as effective as federal OSHA.” However, despite hundreds of workers who developed lead poisoning at the plant, the only fine specifically related to lead that we found issued by Cal/OSHA at the site, which recycled about 25,000 lead-acid car batteries a day, was a 2008 citation for $150 — less than the cost of a speeding ticket.

The lead problem at the Vernon plant, which was acquired by Exide in 2000, goes back a long time. In the 1970s Jim Dahlgren, today a retired physician, treated 120 severely lead-poisoned workers from the plant, then owned by National Lead, and helped qualify them for disability insurance. Dahlgren, who worked for the University of California, Los Angeles, at the time, claimed that nearly all of those men died prematurely from complications due to lead exposure and that several patients fell into lead-induced comas. Dahlgren said his patients’ blood levels routinely measured above 100 micrograms per deciliter (μg/dL), a potentially lethal level. “Every single organ system of the body is impacted adversely by lead,” Dahlgren said. “These men had symptoms that ran the spectrum — severe abdominal pain, vomiting, diarrhea, palpitations, chest pains, trouble thinking, headaches.”

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Dahlgren’s account was echoed in a 1973 Los Angeles Times article headlined “Plant Fumes Poisoning Plant Workers, Union Chiefs Say,” and an obscure 1976 documentary, Lead Smelter, which interviewed Dahlgren, along with gaunt, bedridden workers and their families.

Luis Rodriguez, a poet and writer who achieved fame with his memoir about escaping gang life, “Always Running, La Vida Loca, Gang Days in L.A.,” spent six months in 1978 working in the Vernon plant as a smelter. The plant’s huge furnaces melted down car batteries and separated out the lead into what is called slag.

“After you use the furnace, all the lead would fall to the bottom and there was a hole in the back called a slag hole,” Rodriguez said. “I had to use a jackhammer to hammer it open, and pull the slag out and put it into carts. A good friend of mine said, ‘You know you got to get out of there. Lead will kill you and your family.’ That woke me up, might have saved my life.”


California Department of Public Health warnings about the Vernon plant, which Exide Technologies purchased in 2000, took on the look of an annual form letter.


The CDPH declined interview requests or to answer specific questions by email, and instead issued a statement that read in part, “CDPH takes seriously any incidents that may affect the public health of the people in California,” adding that “there are always lessons to be learned, especially in the case of long-running complex community public health issues.”

Exide’s lead-poisoning problem, however, was well known to state officials. Because battery recycling involves potentially lethal exposure to lead, the company was required to test workers’ blood several times per year and to report the results to the CDPH. (Exide did not respond to emails and phone messages requesting comment.)

Despite the fact that CDPH was aware of more than 2,300 concerning blood lead tests among workers at the Vernon site, our investigation found that CDPH referred the company to Cal/OSHA only a few times in the 1990s, and that between 1990 and 2013, inspections of the plant related to lead by Cal/OSHA occurred only in 1995, 1996 and 2008. Records we obtained show the 1995 inspection was triggered by a complaint to Cal/OSHA from a private physician who had treated a plant worker with symptoms of lead poisoning and alarming blood-lead levels. Cal/OSHA determined “no serious injuries or illnesses detected” and issued no fines. The company, according to the inspection report, also told Cal/OSHA that “engineering controls were not feasible at the plant.”

By then the plant had changed hands and was owned by GNB Technologies. Despite the new ownership, lead poisoning among workers was still a huge problem. Blood-lead testing tracked by CDPH showed that in 1995, 135 workers at the site that year had seriously elevated levels of lead in their blood, and 33 workers had blood-lead levels above 40 μg/dL.

The same year Cal/OSHA’s inspection report dismissed concerns about fundamental safety at the plant, CDPH was expressing extreme concern. In 1995 CDPH’s Occupational Lead Poisoning Prevention Program chief, Barbara Materna, wrote a letter to GNB’s regional director, David Wesley, noting that the Vernon workers had blood-lead levels high enough to cause “increased blood pressure, damaged sperm, and impaired learning ability in children exposed to lead during pregnancy.” CDPH also expressed grave concerns that airborne levels of lead found in parts of the plant were more than 50 times above federal safety standards.

By 1996 CDPH had had enough. “Our policy is to work cooperatively with those who are improving health and safety conditions in their workplace,” Materna wrote GNB. “However, if serious conditions are not addressed in a timely manner we are obligated to make referrals to Cal/OSHA for enforcement actions.”

Capital & Main spoke to Mariano Kramer, then a Los Angeles-area Cal/OSHA district manager, who CDPH sent the referral letter to. In 1996, after receiving a referral from CDPH, he supervised the only inspection we could find that appears to have had any teeth behind it.


Former Cal/OSHA Manager: “The agency is a battleground between those who see the prime directive as protecting workers and others who are fearful of hurting the bottom line of industry.”


Cal/OSHA told us it was unable to locate records related to the 1996 inspection. Kramer recalls the case vividly, however: “It was a very messy situation at the plant and a lengthy process. We required them to make substantial safety improvements.” The fines and required safety upgrades, which Kramer said were levied, seemed to make a difference at the plant. Lead poisoning cases dropped 25 percent the following year.

Photo: Joanne Kim

However, the monitoring of the Vernon plant, which Exide Technologies purchased in 2000, became less frequent and appears to have amounted to an annual form letter. In 2005 CDPH told Exide, “We recently received one or more reports of elevated blood-lead levels at or above 40 μg/dL for employees of Exide Technologies.” The letter continued, “Elevated BLLs indicate serious problems with your lead safety program that should be corrected. They may also indicate violations of the Cal/OSHA Lead Standard.”

By then, according to records provided to Capital & Main by CDPH, about 40 workers per year continued to show alarming levels of lead in their blood. It wasn’t until 2008 that Cal/OSHA performed a new lead-safety inspection at the site. The inspection stemmed from an anonymous complaint from an Exide worker, and the inspectors don’t appear to have been armed with any of the information collected by CDPH. When inspectors arrived at the sprawling Vernon plant, records show, they took just one swipe of a surface in search of evidence of lead dust. The sample was taken on a shelf next to a telephone — in an office that was designated a lead-free zone, where workers were supposed to be able to take breaks without wearing any protective equipment. While the shelf had lead levels far in excess of federal standards, Cal/OSHA fined Exide just $280 for the safety violation it labeled “low” in severity. Exide appealed the fine and the violation was ultimately reduced to $150.

Cal/OSHA appeared even less concerned with the toxic air to which workers were exposed in the plant’s smelting room. Alvin Richardson, a 20-year plant veteran, said he remembers Cal/OSHA coming to inspect the site in 2008 and affixing an air monitor to his clothing to measure the amount of lead that he and other workers were being exposed to. Richardson says he wasn’t told the results, even though he had become a canary in the coal mine.

Experts we spoke to, including Kramer, say the results from Richardson’s air monitor, which measured airborne lead more than 13 times above levels federal limits, could have required the evacuation of workers and at a minimum should have resulted in stiff penalties.

But when the results came back, Cal/OSHA may have employed some creative math. (See equation below.) Because Richardson was wearing a respirator mask, Cal/OSHA’s report reasoned its inspectors could divide the level of exposure by a factor of 50. (See formula below.) After the airborne lead levels were divided by 50, the inspection gave the smelting operation a clean bill of health, no fines were issued for the airborne lead, and the company was allowed to keep up its operation without making any engineering changes.

Cal/OSHA declined repeated requests for in-person interviews about its lead-related protocols or to comment on former workers who claim to be suffering today. In response to queries about the seemingly inadequate 2008 inspection, Cal/OSHA spokeswoman Erika Monterroza responded via email, “The division can only issue citations when it finds sufficient evidence of violations. The inspection was handled appropriately.”

But Clyde Payne, who for 23 years was the area director of U.S. OSHA’s Jackson, Mississippi, office, said that applying the equation employed by Cal/OSHA violated a fundamental OSHA principle. “The principle,” Payne said, “is you are not allowed to use the respirator to excuse toxic air. You have to implement other controls like ventilation and proper hygiene.”

Payne explained that the equation which Cal/OSHA employed is intended to be used to determine if employers are using proper respirators, or if they need to provide a better respirator. “Because we assume that workers are going to get exposed in other ways, you don’t utilize that type of division to excuse violations of the air standards.”  Payne added, “There is no question it’s challenging for companies to get those levels of airborne lead down, but if you do not have somebody riding your rear end, you won’t try.”

Mariano Kramer retired in 2011 and today works as an instructor at the Dominguez Hills OSHA Training Center. After reviewing the report of the 2008 inspection of the plant, he said the levels of airborne lead that Alvin Richardson and other workers were exposed to were completely unacceptable. “One of the basic tenets of safety and health is the hierarchy of controls,” Kramer said. “You start with administrative and engineering, and the last thing that you do is personal protective equipment. Because with ventilators, you are doing nothing to correct the hazard. All you’re doing is putting a barrier to the hazard.”


First Amendment Project Lawyer:  The Public Health Department “ends up being a shield for companies which expose the public and workers to toxins.”


A review of federal OSHA inspections carried out around the same time as Cal/OSHA’s 2008 inspection of Exide in Vernon does show that dramatically different standards were employed. For example, during their 2012 inspection of a Johnson Controls battery recycling plant in Ohio, OSHA inspectors affixed air monitors to workers just as they did with Richardson in California. The level of lead detected was one-third what Richardson and other Exide workers were exposed to. But because the OSHA inspectors did not employ the division formula utilized in California, they deemed the exposure levels as a “serious” violation of OSHA regulations. All told, OSHA issued to Johnson Controls Battery Group Inc. fines of $188,000, more than 1,200 times the $150 fine issued to Exide during Cal/OSHA’s 2008 inspection for violating lead standards.

Alvin Richardson told us that when he left the company in 2011 he suffered from what he believed to be lead-related symptoms, including exhaustion and tremors. After he departed his daily routine at Exide, Richardson hoped his symptoms would improve, but they worsened. Today the 53-year-old suffers from chronic weakness and kidney problems. “He can’t stand for very long,” Alvin’s wife LaShawn Richardson told us, adding that her husband had just received state disability status after a seven-year struggle.

Photo: Joanne Kim

Kramer believes that two long-running problems at Cal/OSHA likely contributed to an inadequate inspection in 2008. “The agency is kind of a political football, a battleground between those who see the prime directive as protecting workers and others who are fearful of hurting the bottom line of industry. Some staff also have a poor understanding of health-related safety issues like lead. The agency is better at recognizing a crane that might fall. When it comes to nearly invisible toxins like lead dust, that can be a problem.”

Rania Sabty-Daily, an expert in industrial hygiene and an assistant professor at California State University, Northridge, told Capital & Main that one of the stumbling blocks preventing better protection of California workers is long-delayed changes to the state’s lead standards. The standards formulated in the 1970s allow employees to continue working even with blood lead levels up to 50 μg/dL. Health experts consider those standards out of date because the U.S. Centers for Disease Control and other authorities say permanent damage can occur at levels as low as 10 μg/dL. In 2009 CDPH issued new recommendations and asked Cal/OSHA to call for removing workers with lead levels above 20 μg/dL and not returning them until they fall to below 15 μg/dL. In addition CDPH proposed that a more protective standard be applied to airborne lead.

Because CDPH can only make recommendations, CDPH petitioned Cal/OSHA in 2010 to adopt the new standards. In a statement, Cal/OSHA told us it agreed with the necessity to make some changes. “The existing lead standard is based on pre-1978 data and subsequent research has shown significant adverse effects at lower levels. The advisory committee met six times from 2011-2015 to draft a proposed industrial regulation that will lower the blood-lead removal level (BLL) and Permissible Exposure Limit (PEL). That process is ongoing.”

But the process to change California regulations appears to have bogged down. Cal/OSHA invited companies like Exide and other stakeholders to participate in advisory meetings over the new standards. During one advisory meeting in 2011, industry representatives, particularly from battery recycling companies, hammered the proposal. According to minutes from the sessions, Terry Campbell, an executive from U.S. Battery, said that one-fourth of the company’s Corona workers would have to be pulled from their jobs because of high blood-lead levels. Ultimately, the company said, it could be forced to close up shop and move to Mexico. Representatives from Exide echoed similar sentiments.

“It’s a totally dysfunctional system,” said Sabty-Daily. “We debate the toughest standards in the country — meanwhile, Cal/OSHA enforces what are among the weakest standards in the nation.”

There appears to be an even larger problem to fix. Our investigation found that workers protected by Cal/OSHA under the outdated standards continue to be harmed by unsafe lead conditions with little or no consequences.

In October we made a public records request asking CDPH for lists of workers who had lead levels at or above 20 μg/dL for the last 30 years. According to the data we received, the agency was aware of more than 26,000 blood tests from workers from more than 260 companies across the state.  Workers were counted once per year at their highest level according to CDPH. We also learned that between 2010 and 2017, even as California’s regulatory agencies continued to debate toughening lead standards,  CDPH was aware of an additional 2,256 blood tests at or above 20 μg/dL. Despite those alarming numbers, finding the locations of the workplaces that have had large numbers of lead poisoned workers is for the moment impossible.

Although CDPH previously provided year-by-year anonymous data for lead-poisoned workers at Exide, the agency turned down our request for information about where those other cases in the state were occurring. Citing a “constitutional right to privacy,” CDPH says it is concerned that providing anonymous details about the extent of the problem at specific companies could somehow lead to identifying the individual workers. When there is “a high risk of re-identification, statistical masking must be applied,” the agency said in a March 14 statement.

Dr. Bruce Lanphear, the lead-poisoning expert, also was troubled by the withholding of specific numbers for where the lead poisoning incidents were occurring. “That’s just hogwash. One of the basic functions of public health is to make clear the extent of the problem and where it’s occurring. You can’t protect the public if you’re not armed with the information.”

James Wheaton, senior counsel for the First Amendment Project and a media-law professor at the University of California, Berkeley, called the agency’s rationale for keeping the information secret “bogus” and said he believed the agency had violated California law with its refusal to disclose the information.

“CDPH unfortunately has a tendency to jealously guard information which is vital to the public,” Wheaton said. “The net result is the agency ends up being a shield for companies which expose the public and workers to toxins.”

While Exide closed in 2015, several battery recycling plants continue to operate in the greater Los Angeles area, and they appear to represent an ongoing problem when it comes to workers exposed to lead. While CDPH would not provide Capital & Main with information about where the most serious cases are occurring, in response to a public records request the agency did provide similar data to the Los Angeles Times in 2016 for worker exposures in Los Angeles County from 2008 to 2014.

The data, provided to Times reporter Tony Barboza, show that Quemetco, another Los Angeles-area recycling plant which, unlike Exide, is still up and running, had 254 workers with elevated blood-lead levels (at or above 10 g/dL) between 2008 and 2014. By comparison, Exide had 175 workers during that same time period with similarly elevated levels. Quemetco also appears to have another Exide-like problem. Soil samples taken from homes within a quarter-mile of the plant, according to data we obtained from the Department of Toxic Substances Control, also show that surface soil is on average four times above acceptable levels, suggesting a multimillion-dollar cleanup could be necessary.

Prior to publication of this article we shared data we had gathered with several lawmakers and Bill Allayaud, the California director of the Environmental Working Group, a science-based watchdog organization. Allayaud’s group has spearheaded several proposed lead laws in California. “We all know how the neighborhoods around Exide were polluted with toxic lead over the long term, and now we are finding out how workers on the frontlines were neglected by the agencies that are supposed to monitor and demand that hazardous conditions be eliminated,” Allayaud said. “This needs to be fixed so this never happens again.”

Allayaud collaborated with San Jose Assemblyman Ash Kalra, who introduced legislation sponsored by the Environmental Working Group that would require CDPH and Cal/OSHA to follow federal standards recognized in other states. Kalra’s measure, Assembly Bill 2963, would legally require the “State Department of Public Health to report to the Division of Occupational Safety and Health any instance where a worker’s blood-lead level is at or above a certain amount.”

In a statement to Capital & Main, Kalra said, “Lead poisoning is a serious matter and we need to consider the gravity of this hazard by ensuring that our state agencies are properly scrutinizing cases involving workers’ exposure to high levels of lead — this means that adequate inspections need to be carried out whenever there is evidence of serious lead-related exposure.”

Kalra plans to hold hearings in April for his worker-protection bill based on our investigations. He told Capital & Main that he would like to have Alvin Richardson and other workers testify to educate the public about what it’s like to experience lead poisoning.

“Alvin’s a proud man,” said Richardson’s wife, LaShawn. “Going through this has been a long, incredibly difficult struggle for our entire family.” She said she was speaking to us in the hope that future workers wouldn’t have to endure what her husband has.


Joe Rubin  wrote this story while participating in the California Data Fellowship, a program of USC’s Center for Health Journalism.


Tomorrow —
California Has Worse Lead Standards Than Arkansas and Texas. Why?


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Labor & Economy

Why 24 Hour Fitness Is Going to the Mat Against Its Own Employees

Co-published by Fast Company
24 Hour Fitness’ policies have brought the fitness chain in the crosshairs of the National Labor Relations Board, which has said the company’s employee arbitration agreements violate federal labor law.

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24 Hour Fitness headquarters in San Ramon, California. (Photo: Coolcaesar)

Relentless pressure to sign up new members made one man question the chain’s commitment to changing people’s lives.


Co-published by Fast Company

On its website, 24 Hour Fitness says it has thousands of job openings. That’s great news for fitness buffs hunting for work. Or is it?

Disgruntled former employees of the San Ramon, California-based company have filed hundreds of cases over almost two decades, some resulting in settlements in the millions of dollars.

And the large payouts appear to have made 24 Hour Fitness one of the nation’s more aggressive advocates for curtailing workers’ ability to defend their rights in court, labor lawyers say. That advocacy has also put the almost four-million-member-strong fitness chain in the crosshairs of the National Labor Relations Board, which has said the firm’s employee arbitration agreements violate federal labor law.

The company’s dispute with the NLRB may make it to the U.S. Supreme Court, which could hear oral arguments next term as to whether the contracts the firm asks workers to sign when they are hired violate historic worker protections put in place as part of New Deal legislation adopted in the 1930s. Those contracts ask employees to waive their right to come together to file class action lawsuits.


Attorney:  “24 Hour Fitness has been pretty aggressive in stripping workers of their rights.”


Some workers say the company’s single-minded focus on selling memberships caused it to run afoul of wage and hour law.

“We worked basically 8 to 8 every day no matter what, and if you got a lunch break it was usually at the club, or you went out and came right back,” said Gabe Beauperthuy, a former general manager, who worked in fitness centers in Colorado before leaving the company in 2006.

At first, Beauperthuy said, he loved the work and embraced the company’s philosophy of personal transformation. But the long days and relentless pressure to sign up new members made him question the company’s commitment to changing people’s lives, and even his own priorities. He developed a single-minded focus on bringing in the “almighty dollar” for the company because, he explained, “you’re a product of your environment.”

“I’m thankful that I realized that, and I’m thankful that I’m no longer there,” said Beauperthuy, now a competitive amateur wrestler and coach.

24 Hour Fitness declined to comment for this story.

Beauperthuy was one of more than 900 managers, sales counselors and trainers to bring a collective action lawsuit under the Fair Labor Standards Act, alleging the company had misclassified them and denied them overtime pay. After the class was decertified and following seven years of litigation, the group settled for $17.5 million in 2013, according to published reports. The company settled another lawsuit involving thousands of California employees for $38 million, the nation’s sixth largest wage and hour class action settlement of 2006.

Those cases may have made 24 Hour Fitness more steadfast in defending their employee arbitration agreement that asks employees to waive their right to bring class action lawsuits in NLRB v. 24 Hour Fitness, which the U.S. Supreme Court may review next year, depending on the outcome of a related case. The fact that 24 Hour Fitness has an employee arbitration agreement with a “class action waiver” does not make it unusual. But the company has been especially aggressive in defending its arbitration agreement in the courts, labor advocates say.

“Historically, there have been a few companies who went out of their way to fight and defend arbitration,” says Cliff Palefsky, a San Francisco attorney who filed the unfair labor practice case resulting in the NLRB’s finding that 24 Hour Fitness had violated the law. “They’ve been pretty aggressive in stripping workers of their rights.”

About 60 million people—more than half of the non-union private sector workforce—are covered by mandatory arbitration agreements, according to an Economic Policy Institute study. These agreements require employees to resolve disputes through private arbitrators chosen by employers, rather than go through the courts.

An estimated 25 million of these arbitration agreements also include class action waivers, like those used by 24 Hour Fitness, in which employees give up their rights to band together to bring class action suits to address workplace disputes in the courts.

The contract language has received attention in recent months as the “Me Too” campaign has gained steam, and advocates pointed to the difficulty of raising workplace concerns individually in confidential arbitration proceedings that are crafted by the employer. Last year, U.S. Rep. Cheri Bustos (D-IL) introduced a bi-partisan bill that would prevent companies from keeping sexual harassment and sex discrimination claims from going to court, where the proceedings are typically in the public record.

A landmark case expected to be decided by the U.S. Supreme Court this term, National Labor Relations Board v. Murphy Oil USA, will determine whether class action waivers will be a continuing feature of employment contracts. It will also decide the fate of NLRB’s dispute with 24 Hour Fitness.

“If the NLRB loses Murphy Oil, then our case would suffer the same fate, essentially,” says Palefsky. In its Supreme Court brief, 24 Hour Fitness distinguishes its employment agreements from those at issue in the Murphy Oil case because the fitness employees are given 30 days to opt out of the class action ban.

But Palefsky counters that the rarely-used “opt out” provision is irrelevant because a worker’s right to act collectively is one that cannot be signed away.

The argument about class action waivers might seem an academic one to job seekers if 24 Hour Fitness is now complying with the law.

There have been 621 employment cases filed in the federal courts against 24 Hour Fitness since 2000. On a per-establishment basis, that’s more than eight times as many as have been filed against its competitor, Gold’s Gym, during the same time period, according to a Capital & Main review of federal court records.

The disproportionately large number of cases is likely linked to the battle that took place between 24 Hour Fitness and Beauperthuy’s attorney, Richard Donahoo, who continued to fight for his 900 or so clients even after a federal judge in San Francisco granted a 24 Hour Fitness motion in 2011 to decertify the class. (The judge’s ruling that the plaintiffs’ claims were not sufficiently similar prevented the case from moving forward as a collective action—not the class action decertification language–but the effect was similar.)

“Many times that means it’s the death of the case because people don’t want to proceed individually,” said Donahoo, who is based in Orange County. “Attorneys can’t do it economically.”

Nevertheless, Donahoo and his colleagues decided to “swallow hard” and fight for each plaintiff individually. They filed hundreds of individual petitions in federal court to compel the company to arbitrate claims in Northern California, where 24 Hour Fitness is headquartered, and successfully fended off 24 Hour Fitness’s efforts in 21 federal courts across the country to force the arbitration proceedings to take place near the clubs where each of the former employees had worked.

“Our case became a ‘careful what you wish for’ scenario for the company,” Donahoo said. The company ultimately agreed to a settlement that resolved the individual claims at once.

Since then, 24 Hour Fitness has changed ownership. AEA Investors LP, a New York-based private equity firm, Fitness Capital Partners of Palm Beach, Florida, and the Toronto-based Ontario Teachers’ Pension Plan purchased the firm in 2014 in a leveraged buyout. But reasons remain to be concerned about the practice of the fitness company, which employs about 20,000 workers and operates in a highly competitive industry.

In November, the company agreed to pay restitution and settled a lawsuit for $1.3 million filed by Orange County prosecutors, stemming from allegations the company increased annual renewal rates on prepaid memberships beginning in 2015 in violation of its contracts with customers. Customers were sold prepaid memberships and charged upfront fees with the guarantee of a low life-time renewal rate in 2006 but saw their rates rise as much as 300 percent nine years later, according to the Orange County Register. The company admitted no wrongdoing in the settlement agreement.

Last May, the ratings agency Moody’s changed 24 Hour Fitness’ investment outlook from “stable” to “negative.” In justifying the downgrade, the report pointed to the growing number of fitness centers and the fact that the company is highly leveraged. The purchase of the company in 2014 was financed with $1.35 billion in debt, about 75 percent of the total cost, according to the Moody’s report.

Moody’s also singled out rising labor costs due to increases in the minimum wage in many of the regions where 24 Hour Fitness operates, suggesting the company employs a large number of low wage workers. Most of the clubs are concentrated in three states — California, Texas and Colorado.

“The company should be able to offset some of the pressure from minimum wage increases by using labor optimization, and reallocating the labor force within clubs based upon their age and member profile,” according to Moody’s report.

The economic pressures 24 Hour Fitness faces may explain the experience of one Ms. Randle, a former Kids’ Club attendant, who asked that her first name not be used. She worked at a 24 Hour Fitness in Orange County from 2014 to 2016.

She said managers told her not to leave her post to take a break or use the rest room during her four-hour shift because the other staff on duty lacked the necessary clearance to work with children. She complained to managers and eventually to the human resources department, but had to file a complaint with the California Labor Commissioner’s Office to resolve the issue and secure back pay for missed rest breaks, she said.

Ms. Randle thought that one of her co-workers endured repeated urinary tract infections that could have been caused by not being able to take bathroom breaks. Randle felt the managers lacked proper training. “They were always focused on selling memberships,” she said. “They didn’t care too much about their employees.”


Roxane Auer provided additional research for this story.

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Labor & Economy

Freeway Robbery: Confronting Hollywood’s Wage-Theft Culture

Lawbreakers who happen to be bosses are, in cases of misclassifying employees as “contractors,” treated with an enviable amount of understanding by the IRS.

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Charles Davis

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The head of a company can pay a lawyer or an accountant to tell them to break the law and then get away with doing just that.


I got a letter from the Internal Revenue Service the other day and, as far as those go, it was one of the good ones: It said I was right, and that I’d been wronged, and that soon the world would know.

“We’re going to make the enclosed copy of your Form 14430, SS-8 Determination Analysis, available for public inspection,” it said. I had filed a request for that analysis about five years earlier after having worked as a segment producer on a late-night talk show.

In 2012, I thought that job was cool: “A segment producer, in Hollywood,” is how I could describe myself. In time, however, I came to realize, as many workers do, that I was being taken advantage of, by people making a lot more than me, in ways I hadn’t considered.


Casting Producer: “You don’t want to be seen as a whistleblower. If you go down that route you’re nailing your own coffin shut. You’re fucked. You’re never going to work again.”


It began with my title: “Producer” sounds better than “writer,” but the latter is actually protected by a collective bargaining agreement, ensuring basic rates of pay and benefits; the former is not. I was not an employee at all, apparently — the questions I proposed that the host ask, sometimes written down, were ostensibly the product of my own firm, and definitely not “writing.” I was, for tax purposes, an independent contractor, denied overtime, health care and, to top it off, charged twice as much in payroll taxes — my employer (who wasn’t) did not contribute a dime to Medicare, Social Security or the unemployment insurance I would later collect.

“As is the case in almost all worker classification cases, some facts point to an employment relationship while other facts indicate independent contractor status,” the IRS said in the letter. If, however, an employer tells you what to do and when to do it, providing services that are “a necessary and integral part of your business,” that employee is in fact an employee “and not an independent contractor.” I was, according to the federal government, “a common law employee.”

And the consequences? None so far. One has to file another form for those, which at best will mean that sketchy boss of mine will pay some back taxes. But that’s not guaranteed. Lawbreakers who happen to be bosses are, in cases like these, treated with an enviable amount of understanding. According to a pamphlet from the IRS, section 530 of the tax code allows employers to skirt ramifications for their actions if, for example, “You [the employer] treated workers as independent contractors because you knew, and can substantiate, that was how a significant segment of your industry treated similar workers.”

Just because everyone else is doing something does not mean it’s safe or legal, but in the case of employers misclassifying employees, the federal government does consider it an extenuating circumstance. A boss, after being caught, can also say he or she relied on “some other reasonable basis,” like “the advice of a business lawyer or accountant who knew the facts about your business,” and be absolved of their sins under the law.

In essence, the head of a company can pay someone to tell them to break the law — to advise them that breaking it would not in fact be illegal — and then get away with doing just that.

In the entertainment industry, everyone ignores the labor code,” said Christiane Cargill Kinney, an attorney at the firm LeClairRyan who focuses on employment issues within Hollywood. “There’s obvious reasons for that,” she said in an interview, “and it’s not exclusive to entertainment as far as the misclassification goes. But it is rampant.”

For one, there is the way that things have always been done. A manager may treat workers on a production as independent contractors because that’s what the person before them did — and those employee “contractors” may be accustomed to it as well. And complacency begets a culture. But the main reason, “obviously, is employers and production companies have a great incentive to misclassify: They can save thousands of dollars,” Kinney noted.

And if a worker doesn’t like it? In Hollywood, there are plenty more willing to make yet another sacrifice to make their dreams come true.

Workers like Lisa know this. She currently works as a casting manager on a cable television show, the sort of thing she’s done for the last 12 years. She’d always been treated as a traditional employee — until 2018, when she accepted a position, doing what she’s always done, but as an “independent contractor.”

“I took it because I desperately need the money,” she said, asking that her last name not be used. She works on a show aired by a well-known cable news network. As with most productions, the show is actually made by a separate production company, not the network itself, which allows for some plausible deniability. For example, when the makers of a Showtime documentary on basketball star Kobe Bryant were caught using unpaid researchers, Showtime proclaimed innocence and blamed the production company.

Françoise Carré is the research director for the Center for Social Policy, based at the University of Massachusetts, Boston. She’s seen this before. “When lead firms set up either chains or networks,” she said, “and then the lead firm essentially determines the level of resources in the system, the more segments in the chain or the more intermediaries, the more working conditions for workers on the periphery will be undermined.”

That is: A big company can hire a smaller company, give it a tiny budget, and look the other way with respect to how that budget is met. And if someone down the line gets caught, so what? In a 2015 report for the Economic Policy Institute, Carré noted that, “As a rule, companies found to be misclassifying workers and violating tax laws by the Internal Revenue Service usually do not get penalized by federal authorities due to legal constraints on the IRS.”

In her case, Lisa doesn’t even work for the production company hired by the network, but by a separate casting company that the former hired. She complains of a bait and switch, having accepted the rate offered, thinking it meant 40 hours a week, but in practice it meant “about 80 hours,” for roughly half the paycheck an employee entitled to overtime would collect.

“My boss has texted me every day, even on weekends, saying, ‘We need this. We need that,’” she said. “And because I want a job again, I gotta do it.”

She will, at least, have gained an appreciation for the difference between a W-2 and a 1099: lots of money, the latter requiring her to pay another 7.7 percent in taxes on her wages to make up for those her employer should be paying but does not. (Independent contractors do get some benefit from the 2017 federal tax law, which lets them deduct the first 20 percent of their earnings.) A 1099 also means no paid sick days or employer health insurance.

Lisa does plan on filing unemployment after this gig is over. And she will get it, despite her employer having classified her a contractor and not paying any money in to the state insurance program.

When assessing an alleged contractor’s unemployment claim, California’s Economic Development Department applies much the same test as the federal government. Does the employer “control the manner and means by which the work is performed”? If yes (if one’s hours, for example, are set by one’s boss) the employee is an employee and entitled to an unemployment check.

The other things an employee is entitled to, however, require more work to attain, and most won’t bother appealing to the IRS — not for a formal determination, much less the back taxes owed by past, delinquent employers that require yet more paperwork. That hurts the employee, but it also deprives the state of revenue and puts at a disadvantage other businesses that do follow the rules.

It is not like bosses don’t know what the rules are, even if that’s what some claim when the IRS comes around. Entertainment Partners, one of the largest payroll firms in Hollywood, is unequivocal: as far as it is concerned, in film and television production there is no such thing as an independent contractor.

“The federal government considers any person under your direction or control an employee,” the company states on its website. “As such, withholding, as well as employer taxes (e.g., FICA, [state unemployment insurance] and [federal unemployment insurance]), are due on wages and taxable allowances,” it says, noting that a failure to comply means “potential liabilities exist for all unpaid federal/state/municipal taxes…. Therefore, EP does not pay independent contractors.”

But culture often trumps the letter of the law, and the same culture that for so many years condoned unpaid internships — before the class-action lawsuits came — tolerates this particular form of wage theft as just another cost of doing business. That culture is, of course, the product of power dynamics: What’s a worker going to do: say no? Turning down a job or burning a bridge by defending one’s rights can cost a career.

“You don’t want to be seen as a whistleblower,” said Christina, a casting producer on a popular network dating show. She has been working in the entertainment industry since 2009, almost always as an independent contractor. She complains to her friends, but not to the state. “If you go down that route you’re nailing your own coffin shut,” she said. “You’re fucked. You’re never going to work again.” (She did not want her last name used for this story.)

So much depends on individual initiative, in terms of catching employers who misclassify. And there’s also the question for understaffed state agencies: Where to start?

“It’s a whack-a-mole dilemma,” said Kinney. “There’s so many people that have been misclassified. We’re talking [such] vast, vast numbers, that our bodies of government that are designated with regulating these things cannot manage. So people are going to get away with it.”

Misclassification, then, remains a systemic issue treated as an individual’s problem, with misbehaving employers given the benefit of the doubt — a benefit that no worker who has run afoul of the law is likely to receive.

There have been efforts to change that, however.

In 2013, Ohio Democrat Sherrod Brown introduced legislation in the U.S. Senate that would have eliminated the get-out-of-an-audit provision in the current tax law for employers who misclassify their employees. Among its 10 cosponsors were some big names — Vermont Senator Bernie Sanders, Massachusetts Senator Elizabeth Warren and Illinois Senator Dick Durbin, the second-highest ranking Democrat in the chamber — none of whom were Republicans.

The bill went nowhere.

States could pick up the slack, but the 2017 tax law that reduces some of the financial burden on contractors also makes it harder to raise revenue for state-level enforcement of labor and tax laws. That won’t change under the current president. What potentially could, however, is the culture: A status-conscious industry like ostensibly liberal Hollywood can arguably be shamed into living up to its alleged values. In fact, a crusade against misclassification can be seen as consistent with, if indeed not part of, the Me Too campaign: under federal law, independent contractors have a much harder time fighting sexual harassment in the workplace.


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