ROC, a union front group, picked a peculiar issue on which to attack Puzder. ROC alleges that CKE Restaurants, the parent company of Hardee’s and Carl’s Jr. of which Puzder is CEO, fails to comply with federal labor law.
It is peculiar on two fronts. One, corporate run Hardee’s and Carl’s Jr. establishments did not have any Fair Labor Standards Act violations during the Obama administration, according to research conducted by Bloomberg BNA.
Two, ROC’s business model is based on skirting federal labor law. Even though ROC looks and acts like a union, it labels itself as a 501(c)(3) public charity. This allows ROC to collect tax deductible contributions and pay no taxes itself. More important to ROC’s sustainability is that it does not have to comply with certain provisions of the National Labor Relations Act and Labor Management Relations and Disclosure Act.
A Federalist Society report, “Labor Organizations by Another Name” summarizes how these so-called “worker centers” operate as labor unions:
...worker centers are directly engaging employers or groups of employers to effectuate change in the wages, hours, and terms and conditions of employment for their members. Indeed, when it comes to such direct engagement, these worker centers act no differently than the traditional labor organization.
Co-founder and Executive Director of ROC, Saru Jayarman, explained in a paper on worker centers, “New Institutions for Worker Representation in the United States: Some Theoretical Issues,” how it is legally advantageous for organizations like hers to be labeled as non-profits rather than labor unions.
One, worker centers can avoid the “duty of fair representation,” a legal requirement that labor unions represent members and non-members equally.
Under the NLRA, there are a number of restrictions placed on labor unions that engage in picketing or secondary boycotts. ROC is not beholden to these restrictions as a “charity” and has taken full advantage by frequently protesting at restaurants that fall in its crosshairs. Under the NLRA, there are limits on how long unions are allowed to picket a company before calling for an election to represent the employer’s workers. However, as a charity, ROC may picket and protest with very few restrictions.
Three, ROC, at the time that the paper was written, wanted to open a restaurant and thought that a non-union organization would have more legal flexibility to own a company. Unfortunately for workers, ROC did open a restaurant, COLORS, which has been described by employees as “one of the most abusive in the city,” and another employee said “ROC-NY used us and many others to perform hundreds of hours of unpaid work.”
Four, another attribute is that ROC does not have to file financial reports under the Labor Management Reporting and Disclosure Act like labor unions. While ROC does not disclose its finances, ROC is partially supported by tax dollars.
One potential drawback for workers centers, described by the above mentioned paper, is that labor unions likely have greater freedom to engage in political activities than charities. However, restrictions placed on charity organizations’ political activity is not something ROC has taken seriously. As mentioned above, ROC is currently engaged in grassroots lobbying activity to derail Puzder’s nomination and Jayaraman states in her book, Behind the Kitchen Door, that “Over the last several years [ROC has] lobbied for paid sick days at the local, state, and federal levels…”
ROC’s uncertain legal status caught the attention of the House Committee on Oversight and Government Reform a few years back and has been brought to attention of the National Labor Relations Board and Department of Labor. Unsurprisingly, under the Obama administration, little attention was granted to the issue.
It is certainly time to reinvestigate the issue of “worker centers,” which operate outside of the traditional boundaries of labor law.