Unions Are on the Rise Again

union vote violated federal law. Joining me is Kate Andreas, a professor at Columbia Law School. Amazon has fired two employees with ties to the successful union effort, but it claims that there's no connection. Explain the issues here. So the National Labor Relations Back prohibits employers from coursing employees when they try to organize the union or from retaliating a of them, And so the employees in this case and the National Labor Relations Board believes that Amazon is

actually firing them as retaliation for their union activity. So it becomes a question of motives. Was the reason for the firing something else like poor work performance or did their union activity play of motivating role in the termination. I'm surprised that Amazon would fire them so quickly. On its face, it looks bad, yes, um, But unfortunately employers routinely violate the law and retaliate against workers for organizing union.

So if you look kind of at employer behavior and union organizing campaigns over time, that isn't actually all that surprising. What isn't some ways more surprising is how effectively and aggressively the National Labor Relations Board is pursuing the charges, and that I think complain an important role perhaps in the future in disputing employers from engaging in this kind of activity. What can the Labor Board do if it

finds that it was an unfair labor practice. So in many cases in the past what has happened is that it takes a long time to litigate the case, and ultimately if the Labor Board is successful improving that the terminations were because of union activity or in part because of union activity, then the workers are reinstated with back pay.

That can take a long time, though, and so what the Labor Board has begun to do more frequently is something that is long than within its power, which to seek a temporary injunction and try to get the workers reinstated in the meantime while the case is ending, but ultimately the remedy is for the workers to be reinstated with back pay. I want to talk about, you know, the dues and don't of union campaigns. What the employer

can or can't do. Amazon allegedly violated the National Labor Relations Act by holding mandatory anti union meetings and threatening workers during those gatherings. Are these so called captive audience meetings allowed and what's the line? So Under the current interpretation of the law, employer can hold mandatory meetings during which they can campaign against the union, excepts in the

twenty four hours prior to an election. What they can't do, however, is coerce employees who are trying to organize the union. During those meetings, they can't make threats or promises. The current General Council has made clear that she thinks that the very act of holding mandatory meetings basically telling workers who have to be here on work time and if you don't come and listen to a campaign against the union, you'll lose your job, that that is actually coercive and

therefore they should be understood to violate the law. Currently under the doctrine that isn't the case. Employers can hold the mandatory meetings, but the General Council of the n l RB is seeking to change the interpretation of the law. Can employers hold one on one meetings with employees a supervisor meeting with an employee about unions? Again under the existing interpretation of the law, which has you know, it is varied over time. But under the existing interpretation employers

have been able to hold such meetings. But what they can't do again as coerce employees during the course of those meetings, or make threats or promises in order to try to commence workers not to organized unions. But again, the very act of holding one on one meetings that are mandatory their condition of unemployment. You can see how

that is inherently coercive. And that is a position at times in the past support has taken, and one that the General Council is again suggesting as the correct interpretation of the law. Petitions for union representation in the first half of two are up nearly sixty from last year, and public approval of unions is at its highest level since nineteen sixty five. How do you account for that change because unions have been out of favor for so long.

I think there's a number of things going on. I mean, one thing is that the conditions under many workers are working are really atrocious. Low wages, lack of dignity on

the job, unsafe working conditions. Meanwhile, employers like Amazon are making record profits extraordinary like billions of dollars for just dases, So that's growing inequality and the really terrible conditions that many workers are forced to work under is one factor that explains the rives and interest in organizing unions, which is really the most effective way of changing those underlying conditions. A second factor I think is the tight labor market.

Because of low unemployment rate, workers are under less threat and the sense of losing jobs and not having somewhere else to go. And then a third factor, I think it's just the success that workers have had. So as more and more workers organized and there's media attention to those victories, more workers learn about their rights and decide to exercise them, and that, combined with the fact that the labor world is actually effectively enforcing the law, encouraged

as more workers to organize. Kate, you had that first successful union vote at the Amazon warehouse in Staten Island, it got so much attention, and then another union vote right in the vicinity another warehouse failed. Is there any

explanation for that? So I don't know enough about the particular details on the ground, but what I can say is that in some ways the second election, the one that the workers didn't want, is much more typical of recent years because the employers have such extraordinary course of authority over workers and the law allows them so much ability to campaign against union. So it's not at all a typical even when workers want to organize the union,

for them to ultimately lose an election. So I think there's probably a couple of things that we're going on. One is, the first warehouse had extremely effective workers leaders from within the within the work site who built a very strong organization. So it seems likely that there might have been less strength of organization among the existing workers. And my understanding it's that there are a lot of

part time workers. Is that the second facility, and frequently when you have a lot of part time workers and their connection to one another and to the work site is less strong, so it makes it harder to build an organization. And it's also possible that Amazon stepped up at anti union campaigning and did even more to try to dissuade workers or coerce them into not organizing. But it's not surprising, and in fact, we saw the prior election in Alabama where the workers also there was a

lot of interest in organizing very pro working conditions. But the first election at least was unsuccessful. Amazon committed enough un fair labor practices that the National Relations Board ordered to rerun, and we still don't know the outcome of the second election, but it often takes multiple attempts before workers are successful given the kind of anti unique campaigning that employers engage in. This may be a naive question, but besides threats, what is the anti union message? What's

the bad that will come from a union for these words? Yeah, so the threats are pretty considerable, and they can range from threats either explicit or implicit that if you do this, you might lose your job, that you might actually your conditions, that work might get worse in one way or another,

that we might actually close down. Much of that is illegal to say explicitly, but um, it's possible to rephrase those kinds of threats of backs or opinions and evade the law, or its possible to just violate the law because the penalties are so low. So threats and being required at work to listen to threats, being campaigns at by your supervisor or someone who's blown in from headquarters

can be quite effective. Another thing that often happens during the course of organizing campaigns is for employers to make promises like we didn't realize how bad it was, We're going to make things better. If you vote against the union will fix everything. If you don't, you won't, or at least to imply that, and that can also be really effective because people want to improve their work place and they know that the employer does have with the

authority to do so. So threats and promises um sometimes actually just making changes. So we saw recently that Starbucks raised the wages of workers who didn't organize the union, So that's an implicit um, Well, if you don't organize the union, good things happen, and if you do, bad things happen. So not just threaten promises, but actually unilateral changes and work to try to persuade workers not to organize the union is that legal to raise the pay

of some who are non union. No, not if it's done as a way to try to display the workers from organizing the union, or if it has that effect. But again, because the penalties are so low, and because historically the labor board hasn't been terribly effective and enforcing the law is often to employers advantage to violate the law or its edges because what they ultimately don't want is for there to be an organization that they have to deal with in the long term, so it's more

cost effective to try to knof it out in the beginning. Now, of course, not all employers behave that way. Many are respect a law, and many have good working relationships with their unions and their workers. But employers like Amazon and Starbucks that have engaged in such wide bread unfairly p practices often make the calculation that is better to do so than to risk organization. Our labor organizers doing something different.

Are they using different tactics? Well, one thing that's exciting is a lot of the energy is coming from workers themselves and from new organizations that they are building, including, for examples, that Amazon Labor Union, which was started by

workers at the warehouses Staaten Island. We also see a lot of less traditional worker organizations like those organizing taxi workers for example, and then more established unions are also engaging in new cerally new organizing, but kind of returning to basics and engaging workers and building real organizations again, whether that's at Starbucks or at Apple, and really engaging in the work of helping workers build their own organizations so that they have a voice at work to play

devil's advocate for a moment. Are we making too much of this wave of unionizing, because if you look at Amazon, that was one win out of eight hundred Amazon warehouse facilities and none of the company's nine thousand corporate stores. So I just wonder if these small union victories are being amplified. Yeah, I think that it's certainly possible that this will turn out to be more of a blip

than any major turning point. We don't know. It's too early to know, but what we do know is that the underlying conditions facing workers are really difficult and are ones that workers want to change. We also know that workers want to build unions, and we've definitely see an upsurge and activity both among workers who are already organized and then kind of across the range of workplaces from journalists to graduate students to athletes to Starbucks workers and

Amazon workers. Whether or not that energy, the desire, the change will be enough to give in the kind of back crowned legal regime and the background kind of conditions in our economy, whether it will be enough to be a kind of deep resurgence in the labor movement, I think is an open question. Are the odds against the

unions and for the employers in most situations of organizing. Yes, in the sense that the legal regime remains stacked against employees in many ways, despite the fact that it formally protects the right to organize. It is the obstacles to successfully organizing and then successfully winning a contract are significant that said workers in the past, at various times in our history, have been able to overcome those obstacles and really transform conditions that work. So, yes, the odds or

in favor of employers, but they're not insurmountable odds. The Amazon union in Staten Island do are they negotiating with Amazon at this point? So Amazon now does have a duty to bargain in good faith with those workers but um, Amazon is challenging the results of the election, And so frequently when employers challenged the results of the election, they refused to bargain, and they wait and they continue to refuse to bargain until the litigation is resolved. So they

do have a duty to bargain. How quickly they will do so, I think will depend on what happens in the cases, how much public pressure is brought to there on Amazon, and probably also whether there's additional successful organizing. Let's say it's found that Amazon did violate federal law with the anti union meetings prior to the vote. What are the possible penalties. Well, there are a range of

possible punishments. One the most common one is essentially in order not to do it again and for there to be a notice posted at the work site where it makes clear that Amazon violated the law and makes a commitment not to do so again. But there are additional remedies that the board might explore and might pursue, ranging from having you know, even the head of Amazon read a statement admitting or dating that the company has been found to be in violation of potentially offering equal time

to the union. The future elections to make sure that both the union and the workers who want to organize the union are getting to express their views as well. But unfortunately, existing law does not have punitive damages or the kinds of penalties that many other laws have, and so the remedies aren't tend to be more kind of

prospective than financial. But then there's all sorts of potential challenges if the board does pursue some of those moreographive remedies and if those cases end up at the Supreme Court.

This court has not been sympathetic to union causes. To put it mildly, last term, the Court rejected the right of unions to organize farm workers by getting access to the farms, and a few years ago the Court overturned a thirty year precedent in the Janice case, rejecting agency fees for employees who don't join the union but who still benefit from the deals it makes. So has this

court basically undermine unions? The Supreme Court, in a string of cases has held against unions and against workers, and an injustice leader in particular action we've been hearing a lot about in Resons weeks has repeatedly overruled path precedents in ways that weekend unions, and so I think if we do see an upsurge in union activity and more favorable interpretations of the law by the nationally, relations for some of those cases are likely to wind up in

the courts of appeal, the maybe eventually in the Supreme Court. Union laws haven't been significantly updated since n is that what's really needed a change in the laws to make

a better balance between union and employer. Yes, I think that labor law reform as essential and although ultimately as important as are the efforts of workers themselves to build unions, unless they are doing so against a fair process and against the fair kind of legal regime, it's very very hard to win, and reforming federal labor law is extremely important.

There's a bill that's pending in Congress that has passed the House called the Proact, which would make several really important reforms to labor law, and if that were to pass, it would make it a lot easier for workers to organized unions and to win contracts. Thanks for your insights, Kate. That's Kate Andreas, a professor at Columbia Law School, a former no more a senior bond trader, was found not liable for defrauding the bank's clients by lying to them

about the prices of commercial mortgage backed securities. James m who led the firm CMBs desk from two thousand nine until two thousand and fourteen, was accused by the Securities and ex Range Commission of Securities fraud. The jury verdict is another blow to the government's attempts to raining in

questionable practices by bond traders. Joining me is James Park, a professor at u c l A law school, dart by telling us what were the charges or the allegations against James M. So, James Inn was a trader of bond traders who worked for the bank Nomura, and the basic allegation is that he lied while facilitating a market for trading in bonds backed by mortgages and his case,

mortgages on commercial properties. And really there are four or five instances identified in the complaint where him would basically buy a bond for seventy dollars and then he would claim to someone else that he had paid seventy five dollars for it, and so he would then mark up the price of the bond based on the fall dollar pride as opposed to the lower seventy price and basically get a higher markup for himself and no Moura, and

the sec basically argued that this was security fraud. He took the stand in his own defense, and he admitted to lyne to clients, but he said that everyone did it. It is remarkable. It is remarkable that he did not deny that he was lying. And the thing that's interesting about the case and and the results here is that even if you lie about a security's transaction doesn't necessarily

mean you violated the securities laws. There's a requirement that the lie has to be about a material matter, something that's important to the investors decision making process. And I believe his argument was that because of the industry practice, the investors who bought the bond from him would have known not to believe him, and therefore those statements were

not material and could not constitute securities fraud. There are responses I think that one can make to that argument, but I think that's the gist of what he argued,

and the defense was successful. Tell me the responses. Because the prosecution has not been so successful in these cases, I think the best response is well, if it was not important to investors and investor decision making, why does the defendant have to lie in the first place, Why did they misrepresent the price that they bought the bond debt?

And you know what him and some others in these cases of argued is that these are sophisticated investors who rely upon valuation models to determine what the price of the bond should be, and that they're relying on the valuation models and if they don't want to buy the bonds, they can always walk away from the transaction that they think that the price is unfair. But you know, valuation models are very imprecise, and the best evidence the value of a bond at a particular point in time is

the last transaction at which that bond traded at. And to the extent that m live and UH and others did as well, then that to me is certainly arguably material. And you know, on the issue of the industry defense, it's it's very hard to know what the industry practice really was, and I you know, have some doubts about to what extent was this really pervasive among all bond traders and was it everyone or was it just a

few bad apples. Um, I'm skeptical that it was everyone who felt the need to make such specific lies about the price. But you know, in the end, I think the SEC may not have provided sufficient evidence on the industry practice. So I think there were responses to the defense, but they obviously failed in this particular case. Before this jury, the defense attorney equated what him did basically to a car salesman. Apparently that did catch the jury's imagination. But

I mean, is that a good comparison. I wouldn't want a car salesman that lied to me about the price that he or she bought the car for. And I think that car salesman, of course, will exaggerate, they'll embellish, they may use some puppery, they may use a little bit of a you know, pressure technique to get you to buy the car. But to me, I think it would be extremely problematic if the car salesman lied about

specific things about the car and it's condition. And I think that, you know, in my view, I would not want to do business with a bond trader who was made in specific wise. And I think there's a distinction between hard negotiations. Maybe a little bit of you know, embellishment, exaggeration, and lying about something that is very specific. Number agreed to repay customers million dollars to resolve claims that it

failed to supervise traders. It seems striking that the government in these cases has basically been unable to get convictions or convictions that stick true. I think that the defense might say a corporation like Nomura has incentive to settle cases with the SEC, which is regulating it in a lot of different areas, whereas individuals have more than incentive to fight charges. And you know, I think it's something that you know, the SEC is not always correct, and individuals,

of course have a right to make their arguments. Sometimes they succeed, sometimes they don't. Overall, I think it's a good thing when the SEC is challenged in litigation and occasionally has to bring cases to try it. So I think certainly defense attorneys are well, you know, within their

bounds in litigating these sorts of cases. And you know, there have been some losses, but there have also been a few wins to a lot of individuals have also pre bargained or settled cases by and large, and the Second Circuit did stay in one of those cases involving another trader at no mora that these lies could be materials. They could be material it's just an issue for the jury,

and so it's a legal matter. To me, this is a sound legal theory, and just because the SEC loss this case and maybe a few others, does not necessarily mean that it's a bad theory. The other interesting thing about some of the earlier cases is that they were criminal cases. Criminal cases largely brought by the U. S. Attorney's Office in Connecticut, and that's a higher standard of crew. And so one of the interesting things about the m quittle is that this is a civil case with a

lower standard of proof. I mean, so I could see why the SEC would bring these sorts of cases under that lower standard. And then I think it's a significant thing that, even under the lower standard, that the SEC lost this particular case. And so that is a significant loss for the SEC. But I still think that these are good cases that the government should have brought, even though they could be challenging to win each and every

one of them. Do you think it's a waste of money and resources for the SEC to keep bringing these cases. I don't think it's a waste of money. I think that UM, the SEC should take cases to trial when it has to UM. One of the criticisms of the SEC is that it just settles cases whether the defendants do not admit or deny ondoing, and they just pay a penalty. And I think that there should be cases where you go to court and go in front of

a jury. You might have to defend a decision in front of an appellate court, and you know, when a court weighs in on a legal theory, that provides valuable clarity to the SEC and the industry as to what the law is. And so I don't think it's a waste of money for the SEC. UM. I think that they should build up this experience, even though it does take a lot of time in terms of attorney resources.

The more you try complex cases in federal court, the better you'll get at and I think that's something that the SEC needs to continue to develop that expertise. But it is costly in terms of time and resources, but I think it's worth the cost because of this crackdown where there changes made in the industry. Are bond traders

not engaging in this now? The main change, which is evidence from some of the papers I read in the case is that banks like Nomura now have fearer policies about lying in transactions like this, and I suspect that that is something that is very clear. But in this very case, even after Nomura has the policy which I think was after the lip back case which you referred to, this defendant continue to lie and so that's troubling. That's troubling to me that you have this sort of this

conduct potentially continuing. I hope that it is an aberration, and I do believe that, um, the vast majority of folks who work on Wall Street are are ethical, honest people, UM, and especially when there's a clear policy on an issue, they will understand that there are certain lines that cannot

be crossed. So I don't know if this market has changed, but I'm certain that the banks are more aware of the issue, and I hope that they are taking measures to ensure UM that this sort of misconduct does not continue. On a scale of one to tend, how damaging would you say this verdict is to the government's attempts to reign in questionable practices by bond traders, I would rate it about a six. I think that it is one case.

On the other hand, it does raise some problems in the SEC's theory on materiality and what is material um. It also raises issues about from the protection of sophisticated investors, and it's plausible that the jury thought, you know, these are sophisticated investors who should protect themselves and they should not just rely upon these statements. There's also the challenge of bringing cases with respect to conduct that might be

sanctioned by industry norm. It can be very difficult to challenge that sort of conduct as being illegal when it is the industry norm. I do think the SEC should try, and I think it was right for them to do it in this particular case. And so I think, you know, the occasional loss it's gonna happen when you are bringing cases like this, and to me, it's it's a loss and it's significant, but it's not a terrible blow to

the SEC's work. You know. It's interesting to think about how the prosecutors and enforcement attorneys in the Bill Hawan cases we talked about a week or two ago might view this decision. And I sat that they're a little

bit nervous about this result. It's the Manhattan jury. It was a case brought with a lower standard of proof, and you know, the jury found that these were lies, but they were not material because they were directed at sophisticated party and that to some extent described some of the misconduct in the Bill Fong case with respect to lies about the positions Wong Fund was taking and the amount of leverage that it had, because you know, these

are sophisticated banks. On the other hand, I think we can differentiate this case because you know this it's not a case that you know, the m case is not one that shook the stock market or the bond market. These are lies that enabled Nomura and its traders to earn a little bit more in commissions and it didn't have really a huge impact on third parties, whereas the Wan case is one where the lies allegedly facilitated manipulation

that literally shook the entire stock market. Thanks James. That's Professor James Park of u c l A Law School, And that's it for this edition of the Bloomberg Law Show. Remember you can always get the latest legal news on our Bloomberg Law Podcast. You can find them on Apple Podcasts, Spotify, and at www Dot Bloomberg dot com, slash podcast Slash Law, and remember to tune into The Bloomberg Law Show every week night at ten BM Wall Street Time. I'm June Grosso and you're listening to Bloomberg