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Biden Administration out to prove its union credentials
13/05/2021
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The US-Mexico border
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John VDLD
John van der Luit-Drummond is editor of International Employment Lawyer

Union leaders are happy with President Joe Biden’s first 100 days in office. Having promised to be “the most pro-union president” they’ve ever seen, Biden hit the ground running with a slew of pro-worker policies since his inauguration. Objectively, the new administration has secured few victories; even an endorsement of Amazon unionisation failed to deliver a win. That may all be about to change, however, as the new administration looks to support workers on both sides of the US-Mexico border.

This week the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) – the largest federation of unions in the US – filed the first complaint under the rapid response mechanism of the new United States-Mexico-Canada Agreement (USMCA), the international treaty that replaced the North American Free Trade Agreement last July.

The federation alleges that a Mexican company, located in the city of Matamoros in the state of Tamaulipas, has for two years allowed workers to be harassed, intimidated and beaten in an attempt to deny their employees the right to organise and bargain for better wages and working conditions.

Tridonex, a subsidiary of Philadelphia-based Cardone Industries (which itself is owned by Canadian company Brookfield Asset Management), makes auto parts for the US market. According to the AFL-CIO, the manufacturer has refused workers’ demands to return their dues and stop transferring them to a “corrupt” protection union, SITPME, which is company-controlled.

The company has allegedly terminated more than 600 supporters of the independent SNITIS union that was formed after worker protests in 2019 over poor wages. US unions also claim Tridonex’s suppression of workers’ rights in Mexico has cost its members in Philadelphia hundreds of manufacturing jobs. The company and SITPME have both denied the allegations, according to a report from Reuters.

To add further intrigue to the story, SNITIS’s lawyer, Susana Prieto Terrazas, was recently jailed for a month after allegedly inciting a riot; charges that supporters have described as “trumped-up”. Amid accusations of state corruption, Prieto was only released from a “covid-19-ridden” state penitentiary after agreeing to leave Tamaulipas.

Under the USMCA’s rapid response mechanism, the US Office of Trade and Labor Affairs (OTLA) has 30 days to review a petition and determine whether to bring a case to the Mexican government. If a case is proven, labour officials on both sides of the border would then agree on penalties for the company, including a potential loss of any preferential tariffs for goods coming from the factory. The entire process must be resolved within five months.

Unions say their petition will test whether Mexico’s labour reforms and USMCA can deliver for Mexican workers. With the Service Employees International Union and International Brotherhood of Teamsters supporting the AFL-CIO move it is little wonder the new administration said it will “carefully review” all rapid response complaints. It seems unlikely, however, that OTLA will turn down the petition as it will allow yet another opportunity for Biden to demonstrate his commitment to the union cause.

This complaint will give the administration another opportunity to demonstrate it is for labour, by labour, and will do almost anything to prove its commitment to labour

Indeed, it was also reported this week that, following pressure from the US government, Mexican authorities ordered General Motors’ union in the city of Silao, Guanajuato, to redo a worker vote due to “serious irregularities” in a vote cast last month over a collective-bargaining agreement at the car manufacturer.

“President Biden has promised to be the most pro-labour president in our history. His administration is heavily populated by many people who wish to see his dream come true,” Michael J Lotito, shareholder and co-chair of Littler Mendelson’s Workplace Policy Institute told IEL. “Filing this [AFL-CIO] complaint, now, makes total sense in the context of presidential priorities. This complaint will give the administration another opportunity to demonstrate it is for labour, by labour, and will do almost anything to prove its commitment to labour.”

Biden officials also drew praise from unions last week after they blocked a Trump administration rule that would have made it easier for companies to avoid classifying gig workers as employees, limiting workers’ rights to a minimum wage and overtime pay under the Fair Labor Standards Act.

“By withdrawing the independent contractor rule, we will help preserve essential worker rights and stop the erosion of worker protections that would have occurred had the rule gone into effect,” said US Labor Secretary Marty Walsh. “Legitimate business owners play an important role in our economy but, too often, workers lose important wage and related protections when employers misclassify them as independent contractors.”

Walsh, a former leader of the Boston Trades Council representing construction unions, has previously commented that the successes enjoyed by gig-economy companies such as Uber and Lyft must “trickle down” to their workers, who should be considered employees with all the benefits associated with that classification.

However, platform companies that witnessed their shares dip last week at the prospect of reclassification are unlikely to lay down without a fight should the Department of Labor ultimately decide that the US’s estimated 12 million gig workers are, in fact, fully-fledged employees.

Banging the drum for worker “flexibility”, Uber has fought similar battles across Europe in recent years. And while it has lost several of these skirmishes, most notably in the UK, the tech giant and its peers will hope to win any war in the US, where they can bring their collective corporate war chests to bear in state legislatures and the courts, as they previously did with Proposition-22 in California, as well as in Washington, DC, itself.

Although the union vote might not have been a shoo-in for Biden last November, it nonetheless helped him win the presidency in key battleground states. But with a long battle against the likes of Uber, Lyft, and Doordash looming – as well as a full legislative agenda that includes criminal justice, healthcare, and education reform, not to mention leading the US out of the covid crisis – the president may have to decide just how much political capital he wants to spend on reshaping America’s gig economy.