Is Unionizing Contagious?

How should dot-coms respond to union activism among their workers?
Craig SchneiderNovember 27, 2000

Some companies in the New Economy may be more vulnerable to organized labor than they realize. If’s union woes have you thinking that you may be one of the vulnerable ones, thank your leftover turkey that there is still time to do something about it.

It may be tempting to think that the New Economy is a union-free zone. But as the bellwether of Internet retailers can attest, union drives in the New Economy can breed in Old Economy crevasses, namely dissatisfied employees at dot-com call centers and warehouses.

Unless management has a company-wide strategy in place to deal with labor organizing, it can spread worse than the flu through an office. Some management experts are particularly fearful for Amazon’s competitors, the smaller Internet retail startups, which by and large have yet to give any thought to unions.

Drive Business Strategy and Growth

Drive Business Strategy and Growth

Learn how NetSuite Financial Management allows you to quickly and easily model what-if scenarios and generate reports.

“When a union shows up, they’re in a state of shock,” says Michael Lotito, managing partner at the San Francisco office of the law firm Jackson Lewis and chairman of the Society for Human Resource Management. “They are more able to handle the employee leaving the company and what to do to protect intellectual property.” doesn’t have it much easier. The company is currently trying to quell union drives among its customer service representatives in Seattle and fulfillment workers at eight U.S. distribution centers. Labor organizers are also targeting the latter group with campaigns at various overseas locations.

Customer service and fulfillment are generally two of the most important departments for any E-tailer. These are also the groups that are most likely to work overtime during peak periods and become breeding grounds for unionization drives, as workers become more stressed.

“Warehouse and order fulfillment operations at many traditional catalog companies are unionized,” explains Bill Schurgin a partner with Seyfarth Shaw, a Chicago-based law firm specializing in union organizing. “So a union targeting that portion of is not very surprising.”

Schurgin adds that some warehouse employees may also come in contact with shippers, such as the unionized UPS, on a daily basis, which can help feed the idea of unionizing.

Increased dot-com layoffs in the marketplace have also helped the union cause in the New Economy. Worker concern about job security — a huge campaigning issue for unions – – has become more important as the fortunes have waned at many dot-coms. In’s case, customer service reps are also fearful because the company is outsourcing operations to India and moving some Seattle jobs to North Dakota to cut costs.

And while dot-coms have been notably good about enticing employees with stock option plans, the declining tech market has made many packages worthless, thereby creating a call for fair compensation from many hourly employees.

“There’s never really been a serious organizing drive,” at, says Marcus Courtney, co-founder of The Washington Alliance of Technology Workers (WashTech), the group that is attempting to organize’s 400 Seattle customer service representatives. “It should shatter the myth that high-tech workers in the U.S. economy don’t want to seek unions on the job and unions are irrelevant in the 21st Century.”

WashTech (which is affiliated with the Communications Workers of America) and others have failed in prior attempts to unionize high- tech workforces, such as Web-site programmers and software engineers. For the most part, high-tech workers have perceived little value in unionizing.

Given the tight labor market, it’s been widely assumed that an unhappy employee can bargain for a better paycheck or benefits package, or simply go across the street for a better deal. That independent mindset also runs counter to the group mentality at the heart of trade unionism.

But making inroads with the lower-tech fulfillment group at a dot-com would still represent a major windfall for organized labor. It could serve as a point to target others in the industry and the high-tech community within

On Sunday, WashTech reported that’s management has announced three policy changes for its Seattle customer service employees.

Courtney says his ultimate goal is a collective bargaining agreement at

The United Food and Commercial Workers and the Prewitt Organizing Fund are separately targeting fulfillment employees at distribution warehouses. But spokesperson Patti Smith says unionizing drives have been attempted twice before, but failed to gain enough support.

Of course, these battles are still in their infancy. It’s important to note, however, that they are being waged not only during’s busiest time of the year, but also at a point when Wall Street has grown impatient with the company’s failure to turn a profit.

And while many startups are far from’s scale, experts say size is not necessarily a precursor to establishing preventive policies and procedures. As dot- coms grow, they develop more traditional functions such as labor intensive warehouse and fulfillment operations.

“The vast majority of elections are held with 50 people or less,” says Lotito of Jackson Lewis. “It’s easier to organize in smaller units versus larger units.” A company that is fairly small won’t typically have a union resource function and may not have policies and procedures to ward off union organizing drives.

But management can take plenty of steps long before worker dissatisfaction breeds union activity. Bob Kristoff, an attorney with Paul, Hastings, Janofsky and Walker in San Francisco, suggests some basic preventive measures.

  • Have effective human resource practices and policies.
  • Communicate with employees.
  • Treat employees as you would want to be treated.
  • Have knowledgeable supervisors and managers that know what to say to employees.

Perhaps could have forestalled the current unionization effort among its workforce had it followed Kristoff’s advice much sooner. The company is already facing a signing campaign, and organizers are attempting to gain at least 30 percent of the targeted signatures, or 120 of 400 customer service reps.

But WashTech’s Courtney believes they will need more in the range of 70 percent to 80 percent to succeed at, for its part, is responding to the organizing drive with management anti-union meetings and sessions with employees to discourage them from joining the union.

If organizers gain the 30 percent of card signatures needed to file with the National Labor Relations Board, the company can then end up in the third and final round: election campaigning. If a majority of employees sign, the union can approach the company directly and ask to be recognized. If, however, the union is denied, it then files a motion with the National Labor Relations Board.

While no dot-com has yet held a union certification election, unions tend to win an average of 50 percent of certification elections, Lotito says. All the more reason that startups should take the time early on to have effective HR practices and policies in place.