In the cutthroat world of big-box retail, few corporations have cultivated a reputation for decency as assiduously as Costco. The company pays an average wage of over $20 an hour. Eighty-eight percent of its employees have health insurance. Fifteen thousand are covered by a collective bargaining agreement. Due to an internal hiring policy, stockers and callers on its floors can seriously aspire to a lifelong career at the company.
This brand of voluntary Keynesianism is not just a model for other retailers. According to the company’s Supplier Code of Conduct, “Costco Wholesale Corporation is committed to protecting the working rights and safety of the people who produce the merchandise it sells.” Intending to leverage the purchasing power of its 658 stores to raise wages and working conditions throughout its supply chain, the company claims that it “will seek to identify and utilize suppliers and facilities who share our commitment,” and that “Costco reserves the right to cease doing business with any supplier who does not share our commitment.”
So shoppers at a Brooklyn Costco may have been surprised to encounter a picket line on July 26. The crowd, estimated by organizers to be around 100 protesters, was not targeting the company’s treatment of its own employees. Rather, workers fired from Pactiv, a packaging supplier used by Costco, were protesting the wholesaler’s continued business with their former employer. They appealed to Costco’s pro-labor record in their call for a national boycott of the company and its owner, Reynolds Group Holdings, the manufacturing conglomerate behind Starbucks cups, Reynolds Wrap, Hefty paper towels and take-out containers of every shape and size.
The workers allege that the company unlawfully retaliated against them after they attempted to unionize their Kearny, New Jersey, packinghouse and manufacturing facility. The Kearny workers’ allegations are some of the latest in a raft of charges filed against Pactiv, which employs 12,100 workers across its forty-nine North American facilities, according to its annual SEC filing. Their campaign is illustrative of the monumental advantages given to employers under the National Labor Relations Board’s election procedures, and their fate exposes the limitations of voluntary corporate responsibility.
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In the past five years Pactiv has closed at least five unionized factories, displacing hundreds of workers. Its parent company, Reynolds Group Holdings, owns a growing share of the food packaging manufacturing market, having merged with or bought competitors Pactiv, Evergreen, Graham and the German firm SIG over the same period of time. Under the auspices of union-avoidance law firm Seyfarth Shaw, the company has meticulously dismantled unionization drives—as at the Kearny, New Jersey, facility where protesting workers were formerly employed—while eroding working conditions won in the past through collective bargaining.
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Since 2009, unions and individuals in ten different plants have filed at least nineteen charges of unfair labor practices against Pactiv. These allegations range from refusal to bargain and repudiation of contract, to unlawful discipline and discharge of employees regarding protected activity. In the latest charge, Region 15 of the Board settled with Pactiv over unlawful language in its employee handbook. The handbook included clauses denying employees the right to discuss wages, hours and other terms of employment; prohibiting employees from addressing concerns about working conditions in non-work areas during non-work times; and suggesting that unionization is futile.
But the company’s brand of labor discipline extends far beyond handbooks. According to a 2008 internal employee evaluation, the “very rigorous work schedule” of Pactiv’s then director of labor relations left him “stretched entirely” across multiple plants, attending to labor disputes in California, Mississippi, Wisconsin, Illinois, Indiana and Ontario. “With respect to union avoidance activities,” the Director wrote, “I was sucessful…in working with the local management to assure no imminent union activities would occur,” and “I was quite effective in providing union awareness and avoidance presentations to employees”. To take just one example, the previous year the director provoked an unfair labor practices charge during a Bakersfield, California, unionization drive undertaken by the Teamsters when he, according to the Teamster’s charge, “told [an] employee that he would receive unspecified punishment if he did not attend the Employer’s anti-union meetings,” and that he “stood within about 1 foot of the employee and whispered a derogatory remark about the employee’s race, mother, and courage.”
Charges like these “are commonplace in union organizing campaigns,” the former director later admitted in a publicly available civil-suit declaration, adding that “it was well understood that these types of charges come with the territory of defending against a union’s effort to organize its employees.” For companies where such conduct is commonplace for human resources personel, flirting with labor law violations are effectively a cost of doing business. Though in his evaluation the director “accept[ed his] responsibility” for the charge, Pactiv’s then vice president of human resources nonetheless determined that the director of labor relations “Achieved Expectations” in all rating categories, adding only that the employee “need[ed] to establish a good working relationship with Seyfarth Shaw’s labor relations department.” No complaint was ever issued by the board.
Workers across the country have brought allegations against Pactiv. From the non-union Malverne, Arkansas, plant (where the unlawful handbook charge was filed), to the Stockton, California, plant that makes Starbucks cups (where the Association of Western Pulp and Paper Workers has charged that the company refused to bargain in good faith), Pactiv’s Human Resources department has vigorously fought any attempt on the part of its employees to act collectively in redressing grievances. It has been overwhelmingly successful, all while adhering to the NLRA.
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Pactiv’s aggressive labor relations policies have led a group of predominately female immigrant workers who live in New York City’s Chinatown to appeal to Costco for assistance in their campaign against the company. The women claim they were subjected to sweatshop conditions and mass retaliations after a union organizing campaign failed at their Kearny factory. Finding the NLRB election and negotiation procedures to be a dead end, workers from the facility hope that Costco will live up to its labor commitments by prevailing upon the company to improve its treatment of employees.
Ai Jin Shi, 46, had been working at Pactiv for four years before she began organizing for union representation at the Kearny plant, which produces plastic soup containers. She recalls worsening conditions during the summer of 2010 as the major impetus. “Workers had no drinking water, and they closed all the windows so it was very hot,” remembers Shi through a Fujianese translator. Shi claims management closed the windows to the plant because of dust from the street, and that they did not provide the workers with fans. “We all had to bring our own towels because of how hot it was, and we were not allowed to bring our own water because management said we might spill it on the product.”
In May 2010, due to the intense heat and lack of water, a worker named Ying Ying fainted on the job. “We all stopped working and went to the manager’s office to demand that they open the windows and bring in fans,” remembers Jing Hua Zhang, 44, who worked at the plant for six years. “The manager yelled at us to return to work,” she says, “He even told us that if we did not go back to work, the whole team would get fired.”
Then, two weeks later, Pactiv announced that it was no longer going to pay for half-hour lunch breaks, prompting the Kearny workers to seek outside assistance in protecting their working conditions. “We knew conditions were getting worse,” remembers Shu Rong Lin, 47, a five-year Pactiv employee. “But after somebody fainted, and they didn’t change anything, we started to feel like they did not see us even as people.” In June 2010 Shi visited the Chinese Staff and Workers Association (CWSA), a workers’ center located in New York’s Chinatown, the neighborhood where the workers boarded company busses to Kearny each day. CSWA helped the workers draft a petition to Pactiv management to improve conditions, and contacted organizers with the United Steelworkers.
As the workers began to discuss unionizing with United Steelworkers, Pactiv responded with a number of concessions including improved working conditions, reduced work loads and promised pay increases. Workers allege that the company also filled the plant with native Fujianese, Cantonese and Spanish-speaking human resources personnel, who discussed working conditions and the consequences of unionization—such as a potential plant closure—with individual employees. The human resources personnel handed out business cards, the workers allege, telling them to call to report any complaints they had.
The union-avoidance consulting industry not only relies on unlawful practices, but has developed innovative ways of making company appeals to workers. “The immigrant context is interesting,” says Michael C. Duff, a professor of labor law at the University of Wyoming and former trial lawyer and investigator at the NLRB for nine years. “It is so subtle, because not only will labor market consultants speak the language, but if the company is really sophisticated, they know how to approach the workers on a cultural level.”
“For example,” says Duff, “with certain Central American cultures they question workers’ manhood in a particular way, saying things like ‘real men don’t need intermediaries, you don’t need a union, if you were a real man you would just come and talk to me.’ But in other Central American cultures that would be the wrong approach.”
After the Steelworkers filed for an NLRB election in July, management began holding mandatory twice-weekly anti-union meetings with the workers, showing them English-language videos of failed strikes with an on-site translator. Fliers were handed out recounting union losses at other plants. “Employees at Pactiv’s Belvidere plant [represented by the International Association of Machinists] found out the hard way how the union couldn’t save their paid breaks,” read one flier.
Yvonne Brown, a lawyer representing a group of the fired Pactiv workers, says that the Steelworkers originally “had an overwhelming showing of support.” However, two months of one-on-one meetings, captive-audience presentations, alleged threats and promised improvements convinced a majority of workers by mid-September to vote against union representation. After the election, workers received their promised raises and enjoyed their improved working conditions, but only for five months, after which management began gradually raising production quotas.
By February 2011 the speedup had become so burdensome that many began to call the phone numbers given to them the previous autumn. “Where those people work, what they do,” says Brown about to the outside personnel, “is an unknown.” Brown argues that phone numbers were used in targeting potentially pro-union workers, adding that “the company claims they don’t know who those people are.” Joe Sangregorio, the current vice president of human resources at Pactiv, did not respond to calls for comment.
The higher work quotas in Kearny came with new work rules, which further degraded conditions. “The speed-up was so intense,” remembers Shi. “They did not give us time to walk across the factory [which spans two city blocks] to use the bathrooms. During the night shift if we had to go we had to open the doors and go in the street.”
Once again workers were upset. But in July 2011 Pactiv fired forty-one employees, over half of the production staff, including Shi and Lin. Though the company claimed the lay-offs were for economic reasons, the workers dispute reduced production orders. “Those of us who did not get fired had to do the work of those who did,” remembers Li Ming Zheng, 48, a seven-year Pactiv employee. According to Zheng, quotas went from eighty boxes of plastic containers a day per person to over 180 after the first wave of firings. “They forced us to do overtime, and if we refused, they deducted a point. Too many points and you got fired.” A second round of firings occurred in October 2012, when the plant was shuttered due to damage from Hurricane Katrina. The work and machinery was moved to Secaucus, New Jersey. However, after speaking to Pactiv truck drivers in Chinatown, CSWA organizers were told packing operations at the Kearny facility are still underway.
Though many of the allegations about the company’s anti-union campaign—such as the threat of a plant closure—are what Duff calls “classic hallmark violations,” no charges were filed by workers until after the statue of limitations had expired. Pactiv maintained decent working conditions until the end of the statutory period, leading workers to believe the company’s approach had changed. When charges were filed, after the first mass lay-offs, the company claimed it did not know an organizing campaign had been underway when it gave concessions (if they did know, the firings would be unlawful inducements), and that the firings had been economic in nature, leading the board to dismiss the workers’ charges.
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The failed Kearny campaign is illustrative of the radical imbalance between employers and unions in the NLRB election process. The company had exclusive access to workers during their twelve-hour shifts, many of whom commuted from other parts of New York City, and so spent more time out of the community than would allow for union organizers to reach them off-premises. Chi Mei Rong, a Pactiv worker of five and a half years, says she would leave home at 5:30 pm for the night shift, clocking in at the plant at 7 pm. She would not return home until 8:30 the next morning, leaving just nine hours of the day for herself. “If you’re working all night, you have to come home and still do laundry and cook dinner,” says Zheng. “It’s really tough.” Both Zheng and Lin say they have since filed for workers compensation for injuries sustained during the speed-up campaign at the Kearny plant.
Speakers at the Costco picket line echoed these difficulties. “Women should not have to choose between being a worker, being a community member and being a mother,” said Sau-Fong Au, director of the Women’s Center at Brooklyn College and a CSWA member, to the crowd. “We have to have control over our time.” Behind the speakers curious shoppers surveyed the scene and stopped to read fliers.
The fate of the Kearny workers is a familiar one for American workers who attempt to rely on federal labor law to protect their collective action in employment disputes.
When the NLRB has not dismissed charges against Pactiv entirely, it has moved for barely enforceable settlement agreements, something Duff partially attributes to the Bush-era consolidations of the NLRB regions. “It’s an agency that’s been so strapped for so long that, in my view, they’re pressed to move cases. They never have enough resources.” But Duff also attributes the agency’s hesitance to issue complaints to institutional habit. “You have to have adequate evidence. But if you’re waiting for the perfect case, you’re going to be waiting for a long time. The Taft-Hartley Act of 1947 essentially required development of the habit to settle all but the easiest cases to win at trial. By the late 1990s that instinct was set in stone.”
When CSWA organizers wrote to Costco in September 2012 to enlist the company’s support of the Pactiv workers, they received a response from Vice President Art Jackson. “Costco has been in receipt of several letters regarding the labor abuse allegations made against Pactiv’s Kearny New Jersey facility,” Jackson wrote, noting that the allegations had been dismissed by the board. He told the organizers that “procedures [are] in place to address any reasonable suspicion that such expectations [of the Supplier Code of Conduct] have been breached in any way.” Jackson was away on vacation during the drafting of this story. Called for comment, Costco spokeswoman Sharon Ryan said that the company “was not obligated to respond” to workers’ complaints.
In it’s Supplier Code of Conduct, Costco lists a number of “Above and Beyond Goals,” which it defines as “programs and policies adopted and implemented by suppliers and facilities which exceed the local laws and seek to continuously improve the working conditions of employees.” The company “strongly encourages” suppliers to adopt “Above and Beyond Goals” standards, such as sanitary working conditions, ventilation, drinking water and treating employees with “respect and dignity.” Were it to enforce this Code of Conduct, conscious consumers might relish the idea of improving working conditions down the retail supply chain.
Yet it remains unclear whether Costco has ever audited a Pactiv facility, as it reserves the right to do, and whether “strong” encouragement has ever been issued beyond the existence of the Supplier Code of Conduct. Given Pactiv’s record of degraded working conditions, there seem few opportunities as ideal as this for Costco to prove its commitments. But even if it were to drop Reynolds Group products from its shelves, the supplier would maintain its lucrative business as a leading conglomerate of packaging manufacturers. From Walmart to your local bodega, chances are Reynolds Group products are being stocked. Without corporate responsibility or federal regulation to rely on for protection, and with traditional union organizing stifled, it would seem that the only defense Pactiv’s employees have is their own.
