Can Trust Busters Help Deter Union Busters?

Photo courtesy of iStock

As workers flex their power in strikes and walkouts across the country, more retail employees are trying to organize corners of the large, low-wage, anti-union sector.

This includes a union drive in Barkhamsted, Connecticut, at a Dollar General store, a rapidly expanding discount chain known for low wages and harsh working conditions. Dollar General has more than 157,000 employees, and in 2020 a store employee’s median annual income was $14,571. Meanwhile corporate profits increased 54% between 2019 and 2020 to $2.6 billion.

Shortly after Dollar General workers in Barkhamsted filed for a union election in late September, the corporation hired anti-union consultants for $2,700 per consultant per day and sent corporate managers to patrol the store. After weeks of one-on-one meetings with workers, anti-union presentations, alleged threats to close the store, and a specious termination of a union-sympathetic employee, the union election looks likely to fail. Last Friday, two workers voted for unionizing, three voted against, and two ballots were contested. The National Labor Relations Board (NLRB) will make the final call.

In a statement sent via email, Dollar General said that “we disagree with the claim raised by our former Barkhamsted employee, as well as any allegation of retaliation or harassment” and that the company “believe[s] a union is not in our employees’ best interests.”

 “It’s been the most aggressive anti-union campaign that I’ve seen,” says Jessica Petronella, director of organizing with UFCW Local 371. “They are worried about the bigger picture. They don’t want these workers at Barkhamsted to organize because … they don’t want workers in other stores to feel empowered.”

Petronella alleges that Dollar General violated several labor laws and plans to file unfair labor practice charges with the NLRB. But the agency’s weak fines generally do not deter illegal union busting by firms determined to block worker organizing. “It’s a cost of doing business,” says Nelson Lichtenstein, labor historian and professor emeritus at University of California, Santa Barbara.

Harsher penalties and stronger labor protections could change this business calculus, as could a new approach to competition policy. Labor advocates have long sought to prevent firms from competing in a race to the bottom on labor costs. Antitrust enforcement could embody this principle by establishing that labor law violations are an unfair way for corporations to corner markets.

Antitrust laws bar businesses from dominating industries through “unfair” or “anticompetitive” means. But there are few clear legal definitions of unfair or anticompetitive conduct. Congress gave the Federal Trade Commission (FTC) broad authority to define and prohibit so-called “unfair methods of competition,” but the agency has read this power narrowly and used it sparingly in recent decades. This could change – the FTC formed a new working group to explore fair competition rulemaking, and new chairwoman Lina Khan is committed to tapping unused authority. 

Courts have held that businesses cannot acquire or maintain monopolies using fraud, deception, and other generally prohibited practices, according to research by Open Markets legal director Sandeep Vaheesan. In the late 1970s, FTC Chairman Michael Pertschuk extended this interpretation and floated the idea of prosecuting companies that violated employment, environmental, labor, and other laws. By breaking these generally applicable laws, Pertschuk argued that firms used “unfair methods of competition” to obtain advantages over honest rivals that complied with the law. What Pertschuk suggested was not farfetched but rooted in Supreme Court interpretations of the FTC’s authority. In a 1972 decision, the Supreme Court stated the FTC can act as “a court of equity” and “consider[] public values beyond simply those enshrined in the letter or encompassed in the spirit of the antitrust laws.”  

In the case of Dollar General, maintaining low labor costs is a central part of its competitive edge. But if Dollar General holds down wages and working conditions by breaking labor law and illegally busting unions in order to drive out retail competitors, especially in small towns, that could be deemed an unfair method of competition. Antitrust scholars including Vaheesan and University of Chicago law professor Eric Posner have made arguments along these lines.

David Seligman, executive director of the nonprofit law firm Towards Justice, says some lawyers have recently tried using labor law violations as evidence of unfair competition. Most notably, private plaintiffs and the state attorney general in California argued corporations that illegally misclassify employees as independent contractors gain an unfair competitive advantage by evading minimum wage, overtime, workers compensation, and other labor standards (thus lowering their labor costs). Courts agreed this conduct violated California competition and labor laws, but in a private suit the court did not find any violation of federal antitrust law.

Seligman says other antitrust practitioners could do more to expand this legal theory. “One key thing that public enforcers and academics ought to be doing is reinforcing the ways in which conduct fits together to amount to unfair competition,” says Seligman. “Unfair labor practice[s] can be part of a pattern of conduct that results in unfair competitive advantages.”

Lichtenstein also pointed to mechanisms beyond antitrust and traditional collective bargaining that can take squeezing labor out of competition, such as sectoral bargaining. Governments can establish standard-setting boards or councils where worker and business representatives come together to set wage, benefits, safety, and other standards across entire industries. New York state raised fast food workers’ minimum wage through this type of board, and Seattle created a multi-stakeholder board that sets labor standards for domestic workers. Participatory standard-setting boards can be especially useful in sectors, such as retail, where corporations manage many outlets or independently owned franchises that are hard to unionize.

“I don’t see traditional collective bargaining as it was envisioned in the [National Labor Relations] Act able to organize Dollar General,” Lichtenstein says. “They have ten thousand stores, it’s so easy for them to shut down the stores that get unionized.”

Even though it is illegal to shut down a store for unionizing, it happens. Only one Dollar General store has ever successfully unionized and three months after the union was finally certified, Dollar General closed the location citing “future profitability” concerns.

What We’re Reading

• Company data collected by the House Select Subcommittee on the Coronavirus Crisis reveals that COVID-19 cases and deaths among plant workers at top meatpacking companies were up to three times higher than previous estimates. More than 59,000 workers contracted COVID-19 at Tyson, JBS, Cargill, Smithfield, and National Beef plants and 269 died. (Reuters)

• Long Island vineyard workers formed New York state’s first-ever farmworkers union. A 2019 state law expanded the right to organize to farmworkers, who are otherwise excluded from many aspects of federal labor law. (Documented)

• A new coalition of trade groups — including the National Grocers Association, Organic Farmers Association, Protect Our Restaurants, and the National Association of Convenience Stores — urged the Federal Trade Commission on Thursday to better enforce the Robinson-Patman Act, a law that regulates concentrated buyer power. (Press Release)