Archive for August, 2019

High Standards, Poor Behavior

Thursday, August 22nd, 2019

It is amazing how much attention is being paid to the Statement on the Purpose of a Corporation just issued by 181 chief executives of large corporations under the auspices of the Business Roundtable. We are supposed to think it is a major breakthrough that big business is claiming to do more than maximize returns for shareholders.

In fact, Corporate America has long given lip service to the notion that it has an obligation to other stakeholders such as employees, communities and suppliers and that it needs to promote sustainability in its operations. The language of the Roundtable statement could have been taken from similar pronouncements that have been made by the vast majority of large companies under the rubric of corporate social responsibility or a similar phrase. The website of Exxon Mobil, for instance, contains a page on its Guiding Principles, which are said to include adherence to “high ethical standards.”

The question, of course, is whether these high-minded statements have any real meaning—whether they result in more responsible practices or are designed mainly to let corporate executives pretend to be moral exemplars.

The answer seems clear. If large corporations truly had a commitment to their employees, they would not engage in so many exploitative practices and fight so hard against unionization. If they truly cared about the environment, they would take more aggressive steps to reduce pollution and address the climate crisis. If they truly cared about ethical supply chains, they would stop sourcing from low-road producers.

Not only are most large corporations far from ethical leaders—in many cases they cannot bring themselves to adhere to their most basic responsibility: obeying the law and complying with regulations.  

For the past few years, I’ve spent most of my time documenting corporate lawlessness by building the Violation Tracker database, which now contains more than 360,000 examples of misconduct that have resulted in $470 billion in penalties since 2000.

I ran the names of the 181 companies whose CEOs signed the Roundtable statement through Violation Tracker and, not surprisingly, the results were eye-popping. The signatories and their subsidiaries together account for more than $197 billion in cumulative penalties, or more than 40 percent of the total penalties from tens of thousands of companies.

Twenty-one of the signatories have penalty totals of $1 billion or more, and three with $25 billion or more. At the top of the list is Bank of America, with more than $58 billion in penalties from 128 cases largely involving mortgage abuses and toxic securities. JPMorgan Chase comes in at $30 billion from similar cases. As a consequence of its role in the Deepwater Horizon oil spill and other disasters, BP ranks third with $27 billion in penalties.

The list continues with other big banks (Citigroup, Goldman Sachs, etc.), big utilities (American Electric Power, Duke Energy, etc.), big pharmaceutical manufacturers (Pfizer, Abbott Laboratories, etc.), other big oil companies (Marathon Petroleum, Exxon Mobil, etc.), and others such as Boeing and Walmart.

It is significant that two of the worst corporate miscreants of recent years, Wells Fargo and Volkswagen, are missing from the list of signatories. Perhaps they or the Roundtable realized that their inclusion would have detracted from the message.

Yet the track records of many of the other signatories are not much better. Large corporations that repeatedly break the rules concerning consumer protection, environmental protection, workplace protection, investor protection and every other kind of protection cannot profess that they are committed to serving the well-being of all their stakeholders. Until they change their behavior, their purported principles mean little.

The Continuing Battle Over Workplace Rights

Thursday, August 15th, 2019

The claim that everyone is entitled to his or her day in court is supposed to be one of the bedrock principles of the U.S. legal system. This notion, as it applies to workplace abuses, took a big hit in the Supreme Court last year, and now the National Labor Relations Board is making matters worse.

In its controversial Epic Systems ruling in May 2018, the high court held that employers can compel their workers to sign agreements waiving their right to sue over issues such as wage theft and discrimination and limiting their redress to arbitration actions. Because these actions are individual rather than collective and are not part of the public record, arbitration makes it much easier for corporations to avoid paying out substantial damages for their misconduct.

The pro-business majority on the NLRB just pushed through a decision that gives employers an additional opportunity to implement a mandatory arbitration system. The board ruled that companies may impose such a system after a Fair Labor Standards Act collective action lawsuit has already been filed, in order to prevent additional employees from signing on to the suit.

The board also affirmed the right of an employer to discharge a worker who refuses to sign a mandatory arbitration agreement.

This patently unfair decision is another indication of the lengths that the corporations and their advocates will go to circumscribe the rights of workers. We should expect to see more of these moves, because the Epic Systems ruling has not yet put a major dent in class action lawsuits.

There has not been a significant decline in the number of cases filed, and there continues to be a steady stream of settlement announcements, especially for cases filed in California, which gives workers additional legal tools to deal with wage theft in particular.

Here are some recent examples of these settlements:

Wells Fargo agreed to pay $35 million to a group of 38,000 bank employees who alleged they were improperly denied overtime pay.

Kraft Heinz agreed to pay $3 million to settle a suit brought on behalf of 4,000 workers alleging that the company violated California labor law by failing to pay overtime.

The operator of hundreds of Panera Bread restaurants agreed to pay $4.6 million to settle allegations that it improperly classified assistant managers as executives to deny them overtime pay.

A group of drivers and their assistants who delivered Best Buy merchandise signed a $3.25 million deal to settle a lawsuit alleging they were misclassified as independent contractors and consequently shortchanged on pay.

A Massachusetts court gave preliminary approval to a $3.9 million settlement of a class action brought by former commission-only salespeople at the mattress retailer Sleepy’s who argued they should receive overtime pay.

If corporate interests get their way, these settlements will disappear, and workers who are cheated on the job will have to settle for the crumbs they may get through individual arbitration filings.

Targeting Migrants in the Workplace

Thursday, August 8th, 2019

Perhaps to avoid giving the impression that the Trump Administration was getting soft on immigrants by having the president go to El Paso to console the victims of a mass shooting aimed at Latinos, Immigrations and Customs Enforcement chose the same day to carry out the largest workplace raid in more than a decade.

The more than 600 people taken into custody at several sites in Mississippi were not apprehended while engaged in criminal activity, but rather in the course of supporting their families by performing some of the most unpleasant and dangerous work in the U.S. economy: poultry processing.

There were no arrests of managers at the companies involved – which included Koch Foods and Peco Foods, whose spokespeople insisted they carefully screened new hires using the E-Verify system. This came as no surprise, as employers are rarely prosecuted for immigration offenses, whether or not they use E-Verify, or if they are lax in applying the system.

Among the more than 300,000 entries in Violation Tracker there are fewer than 50 cases of immigration-related employer penalties, and only 18 with fines of $1 million or more. Countless other companies have gotten away with employing undocumented workers, among them the Trump Organization.

They also often get away with other workplace violations, though sometimes they are caught in the job safety or wage & hour enforcement net. Koch Foods (not part of Koch Industries), for instance, has been penalized more than $4 million for its Mississippi operation, including three OSHA violations, one wage & hour violation, two environmental violations and a $3.75 million settlement with the EEOC concerning sexual harassment and national origin and race discrimination.

Peco Foods has had five violations at its Mississippi plants, including two from OSHA and three from the EPA.

Mike Elk, writing in Payday Report, notes that some advocates have speculated that workers are targeted for raids after their facilities get cited for workplace violations. He cites several examples in which that happened.

Since companies face little risk of being prosecuted for immigration offenses, it is possible that they may be the ones tipping off ICE, seeing the raids as a way of discouraging whistleblowing by workers about abusive conditions. While the raids cause temporary disruption to their production, these employers hope to discourage replacement workers from being outspoken on the job.

Trump and other immigration hardliners often claim that their aim is to help native-born workers by eliminating the supposed job competition created by migrants. If that were the case, then they would crack down on employers who hire the undocumented.

Instead, they enable those employers to maintain a business model based on worker intimidation.

Corporate Accountability from Within

Thursday, August 1st, 2019

It appears that no one working for the public relations giant Edelman balked in 2006 when the firm went all-out to help then-besieged Wal-Mart by setting up a war room to plan attacks against the retailer’s critics and creating bogus front groups to create the illusion that the company had widespread public support. Nor apparently did Edelman staffers have any problem over the years when the firm took on clients such as tobacco companies, military contractors, the petroleum industry and the American Legislative Exchange Council.

Times are changing in the corporate p.r. business. The New York Times just reported that a staff revolt forced Edelman to abandon a plan to work for the private prison company GEO Group and improve its image in the face of criticism of its role in operating immigrant detention centers for the Trump Administration.

The Edelman situation is not unique. The Times noted that the marketing and p.r. firm Ogilvy has been facing staff unrest over its work for Customs and Border Protection, and employees at Deloitte and McKinsey tried to get their firms to end contracts with Immigration and Customs Enforcement. Pressure on management over work for these agencies has also been reported at tech companies such as Microsoft and Amazon as well as the online furniture retailer Wayfair.

Employees at large corporations are making their feelings known about other issues as well. Staffers at Amazon have pressed the company to do more to address the climate crisis. Perhaps the most dramatic move came last November when thousands of Google employees around the world walked off the job to protest the company’s handling of sexual harassment complaints.

These actions have come at a time when the conventional wisdom is that collective action by workers is a largely thing of the past. It is true that unions continue to struggle, as shown, for example, by the recent defeat of another organizing drive at Volkswagen’s operations in Tennessee in the face of intense opposition from management as well as public officials.

Yet what the actions at Edelman and the tech companies show is that workers – including some who may be very well paid – are finding different ways to express their dissatisfaction.

What’s particularly powerful is when employees launch campaigns that combine self-interest with altruistic goals. That’s what happened at Google, where the aim was both to change practices within the company and to support the wider MeToo Movement.

It’s also what gave such potency to the wave of teachers’ strikes that began in early 2018. Those walkouts were prompted both by the urgent need to raise salaries and the need to improve school funding to address overcrowding and other problems affecting students.

The willingness of employees to take on issues such as migrant abuse can also serve to expose the shallowness of much of what goes under the banner of corporate social responsibility. Edelman, for instance, claims that it is committed to being a “force for good.”

That somehow got forgotten when its managers initially agreed to work for GEO Group. It took a bold stance by the staff to overcome the hypocrisy.