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Why Unions Can’t Organize Retail Workers

October 31, 2013

Workers in Canadian coffee shops and retail stores have been joining unions.  Surveys tells us that young people, who tend to staff these workplaces, have a

Can Unions Make Inroads in Coffee Shops, Retail?

Can Unions Make Inroads in Coffee Shops, Retail?

more favourable view of collective bargaining than the population overall. A recent US study found that 61% of workers between 18-29 have a favourable view of unions, a similar result to that found in a 2002 study of Canadian workers (56.7% for workers 18-25).

This is beginning of a wave that will sweep collective bargaining into Canada’s largest sector, right?  Probably not.

If history tells us anything, unions won’t have much success in sustaining decent collective agreements in the retail sector. There’s a number of reasons why collective bargaining has not penetrated the retail sector, but an important one is labour law.

The labour law model we use was never intended to promote collective bargaining in small to medium sized outlets or franchises of large corporations. It was designed to allow men in heavy manufacturing and mining, working in large work sites with hundreds of workers, to unionize and bargain ‘family wages’ and benefits at a time when the single-male-income earner model dominated policy.

Coffee shops, retail stores, and hair solons were staffed by women, who were assumed to be working for ‘pin money’ or for the social benefits.  Minimum employment standards laws were designed to protect them, not collective bargaining laws.  That’s why Professor Judy Fudge famously called employment standards laws “labour law’s little sister’.

It should come as no surprise then that retail and the service sector more generally have always had low levels of unionization. In 2011, the unionization rate for retail workers in Canada was 12%, according to Statistics Canada (p. 7).  In Ontario, the unionization rate in Accommodation and Food Services is 6.8%.  There’s been occasional successes for unions in retail. The grocery industry is the main example, where unions were able to gain a foothold many years ago. Even there, however, unionized stores are under considerable pressure today under threat of new large American nonunion operations like Walmart. Despite efforts to organize Starbucks, McDonald’s, Walmarts, banks, and many other such operations, the labour movement has made few inroads despite decades of trying.

Anatomy of a Service Sector Organizing Campaign

Labour lawyers understand the problem well. When I practiced labour law, I regularly worked on cases involving union attempts to organize Tim Hortons, Canadian Tire, Walmart, and the like.  They all ended up the same way: no union.  That’s not because the workers didn’t want the union, not always at least.  sometimes the union won the organizing campaign and got certified.  However, then they face the biggest challenge, bargaining a decent first collective agreement within a system based on brute power and strength.

Follow along with what happened in a typical union campaign by workers of a typical service sector store, like a Tim Hortons.   I’m applying the Ontario law.  Tim Horton’s restaurants are usually franchises. Often the franchisee owns more than one store. Sometimes the union doesn’t know how many or which stores an individual corporate entity owns. The configuration often becomes important in deciding what is the appropriate bargaining unit. The Labour Board has been weary about certifying a single Tim Hortons store when the owner owns multiple locations (see the complex recounting of a Tim Horton’s organizing campaign for one location in Hamilton in this case)

Part One:  The Organizing Campaign

Our fictional store has around 40 employees, but only 15 are full-time.  The rest work

Unions Face Uphill Battle Organizing Coffee Shops

Unions Face Uphill Battle Organizing Coffee Shops

sporadic hours, a few hours here and there, overnight, weekends, after school–any time really.  The full-time employees don’t even know a lot of the part-time folks. Several of the employees call the union and express interest in organizing a union. They claim their pay is crap, they have no benefits, and the boss is abusive and gives out hours based on favouritism.

The union organizer arranges a meeting with the employees. He or she explains how the organizing process works.  The union needs to get at least 40% of the non-managerial employees to sign union cards in order to apply for certification.  This requires the union to figure out how many workers there are, which sometimes can be difficult, especially when there’s a large number of part-time and temporary workers.

This problem is worsened considerably when the owner owns multiple stores in a close geographic area.  There’s a good chance the Labour Board will find that one store is not an appropriate bargaining unit, especially if employees move from one store to another.  So the union may have to organize at least 40% of workers in all of the stores that the Board is likely to lump together into a bargaining unit.  It’s extremely hard to find all of the workers to speak to them if they work all different hours at different stores.  It’s way easier when there are regular shift times, so union organizers can stand outside the workplace at the beginning and end of shifts.

The law gives the union organizer no right to come onto the employer’s property.  Unlike in both Britain and the USA, Canadian unions are provided with no employee contact information to facilitate communicate with the workers outside of work (UPDATE:  Bill 148 introduced a right of unions to request an employee list). Employer property rights mostly trump freedom of association in Canada, and the employer will certainly call the police if the organizer attempts to sign up workers at the workplace.  Therefore,  the Tim Horton’s employees themselves will have to do most of the organizing at work.

But that’s dangerous. If the employer learns that John and Jen are trying to organize a union at the workplace, they will at best tell them to stop, and a worst fire or discipline them.  It would be illegal for the employer to fire the employees for organizing a union, but that doesn’t stop some employers from doing so.  A US study found that 34% of employers dismiss union supporters, while 57% threatened to close the workplace and fire everyone if the union won.  The numbers aren’t quite as high in Canada, but illegal dismissals and threats are part of the Canadian landscape as well. (See discussion in my colleague Sara Slinn’s paper).  So the workers must be very quiet and secretive, and try not to speak to employes who might report the campaign to the employer.

It’s an odd model for promoting freedom of association.  It makes the process seem dirty and dangerous, and facilitates a pitched battle between employer and union and their respective supporters.  Workers are pitted against one another, creating tension and hostility that no one enjoys.  Although the store(s) involved are franchises, corporate Head Office of Tim Hortons has an interest in their stores remaining non-union.  If unionization spreads throughout the chain, the value of franchisees may fall.  Therefore, in my experience, it was not unusual to learn that the franchisee is receiving assistance from corporate Head Office in their campaign to resist unionization.

If the union can manage to get at least 40% of the workers in what is likely to be determined the appropriate bargaining unit to sign a card, it will be able to submit an application for certification to the Labour Board. At that point, if not before, the employer’s opposition campaign will begin in force.  Assuming the union has the 40% support,  a certification vote will be held the week after the application is submitted. Even if the employer stays within the law and doesn’t make threats or start firing people, it is allowed to hold ‘captive audience meetings‘, forcing employees to attend meetings to listen to all the reasons why they should not support a union.  Union supporters will be made to feel like traitors, and their resolve will be tested.  There’s likely to be extended hearings at the Labour Board to determine the appropriate bargaining unit, and whether the union had the requisite support for a vote.  Also, individual employees are likely to be challenged as ‘managerial’.  This will also require more litigation.  Legal fees are now mounting.

Part Two:  Bargaining a Collective Agreement

Assume now that despite all these challenges, the union wins the certification vote.  The first part of the battle is over for the workers.  A celebration ensues at the union offices.

Now the hard part begins.  By winning the certification, the union has won a ‘license to bargain’ with Tim Hortons.  This means that the employer must meet and ‘bargain in good faith” and “make reasonable efforts to conclude a collective agreement”.

The union will want to win new benefits for workers that they didn’t have before, otherwise what use was there in going through all that nastiness of an organizing campaign.  It meets with the employees or does a survey to find out what they want to ask for in bargaining.  Dates are set to meet the employer to begin bargaining.

Tim Hortons has probably retained high powered labour lawyers by this point to do the bargaining.  It too has a goal for bargaining: to ensure that the workers obtain nothing that would cause them to believe that unionizing was a good idea.  Tim Hortons Corporation knows that employees at other stores are watching this bargaining carefully.  It needs to make sure that those employees are given no motivation for unionizing themselves.  Also, any individual Tim Horton’s franchisee may be operating on a  small profit margin, since many of the business terms are set by the franchise agreement drafted by corporate Tim Hortons, so there is not a whole lot that can be offered that will raise labour costs.

Therefore, when the parties meet, the union puts down a proposal that includes wage increases, maybe some new benefits, job security in the form of ‘just cause’ language, and maybe some new rules to prevent favouritism in the distribution of hours.  The employer sits quietly and listens.  It then tells the union that while it is prepared to talk about these proposals, it has no intention of giving the union anything that will be perceived as a victory for the union, and it probably tells the union too that it has little financial room to incur more labour costs (which may or may not be true). It offers a collective agreement that provides little more than what nonunion workers receive. So bargaining continues.

At some point, the union realizes that the bargaining is getting no where.  It accuses the employer of stalling, and not seriously bargaining.  Maybe it files a bargaining in bad faith complaint with the Labour Board.  A hearing is held, but the Labour Board rules that the employer hasn’t broken the law, that it is only engaging in hard bargaining.  Hard bargaining occurs when the employer uses its superior bargaining power to insist on a deal that suits its own interests.  As long as the employer meets and engages in rational discussion of the union’s proposals, it is not breaking the law by refusing to agree to the union’s proposals.

What do the unionized workers do now?  Well, the legal model tells them to go on strike to try and pressure Tim Hortons to move from their stubborn position.  The threat of a strike is an effective one when it could impose great cost on the employer. Like at a giant car plant or mine.  However, this is one small Tim Horton’s outlet (or a few stores) among thousands in Canada.  Corporate Tim Horton’s wants to ensure that a work stoppage does not result in a win for the union, so it is watching carefully.

The workers take a strike vote, and they’re encouraged by the union to vote in favour of a strike to send a strong signal to the employer.  A good majority of workers vote to strike, but this threat doesn’t move the employer from its position.

Now maybe the workers strike, but the employer remains open.  Managers pour the coffee and make donuts. The employer hires replacement workers. Occasional nastiness occurs on the picket line, but the police come in to ensure that customers and workers can get past the picketers into the store.  The drive through continues to work.  When picketers block the line, the employer goes to court and gets an injunction to prevent obstruction of the roadway.  More legal costs for the union.  Business slows, but some customers keep coming. At the beginning, almost all of the 40 workers join the strike. However, after  a couple of weeks without pay, some of them tell the employer they want to come back to work.  Others get fed up and accept jobs elsewhere.  Quitting a minimum wage coffee shop job isn’t like giving up on a high paying unionized job at a General Motors.  The incentive to stick with the strike indefinitely is much lower at Tim Hortons.

By the third week of the strike, it becomes clear to the union and the workers that the employer has no plans on budging.  So, reluctantly, the union agrees to a weak agreement that provides little benefit to the workers.  By the end of that first agreement, most of the workers who initially supported the union have quit, replaced by new people who did not live through the initial campaign and strike. They have no ties to the union, and wonder why they are paying union dues.  In the ‘open period’ near the end of the collective agreement, an application to decertify is filed.  The union is dead.

That in a nutshell is the history of union organizing in the retail sector (with the occasional exception).

Should the Legal Model Be Changed?  If so, how?

Now, if we wanted to encourage more unionization in retail, the largest sector in Canada, a sector that is notoriously low paid, we could change the model in a number of ways to promote this result.

Can you think of ways to do that?  

I’ll talk about some in a follow up post in the days to come.


6 Responses to Why Unions Can’t Organize Retail Workers

  1. Jody Reply

    October 31, 2013 at 10:08 pm

    One thing unions could consider is trying to organize on a large-scale basis, instead of store-by-store. By targeting all of the stores in a region simultaneously, the ability of stores to run by porting in workers from other stores would be limited. Furthermore, unionization of all stores in a significant area (such as, say Toronto or even the GTA) would prevent the closure of a single unionized outlet. Timmy’s or Walmart might be willing to see a single franchise holder take a dive (or relocate) but they sure won’t be willing to hand over major markets to their competition!
    Unions might also need to work with current members to gain their support in offering fairly generous strike pay to workers who are picketing in the attempt to negotiate a first contract – at least for a short time – to avoid losing those minimum wage workers who ditch the jobs quickly out of desperation.

    If our government wasn’t working so hard to dis-empower labour in this province and country, we might also ask for legal change in these areas:
    - a ban on hiring for companies that do not have a current collective agreement (maybe only for the first one or maybe as an ongoing expectation)
    - limits on the amount of work normally done by striking employees that can be transferred to management
    - binding arbitration if the parties are unable to negotiate a first contract in a reasonable amount of time

  2. Fernando Reis Reply

    November 1, 2013 at 12:49 am

    I think that unimpeded access to first contract arbitration would be helpful. It worked for the UFCW during the Bill 40 days. Employees are given an option other than the strike to obtain a first collective agreement. Employers may be driven to reach a negotiated settlement rather than leaving it up to a third party arbitrator to impose the terms. There is access to first contract arbitration now in Ontario but, unlike Bill 40, it is not an automatic choice and an employer would have to committ some serious breeches before the labour Board would grant access to first contract arbitration. Also, under the Bill 40 model, there was the possibility of consolidating bargaining units. A union could organize an employer on a site by site basis and then apply to have the units consolidated under one baragaining unit. Again, the UFCW was successful with Zellers in the early 1990′s where about 12 stores were organized and certified one at a time and were then consolidated. Mike Harris, however, undid that with Bill 7 by declaring any such consolidations nul and void on a retroactive basis. So, I beleive there are valid options but the political will isn’t there.

  3. Dennis Buchanan Reply

    November 13, 2013 at 8:27 pm

    It bears noting that some 99.5% of the Tim Hortons locations in Canada are franchised – it’s not really correct to suggest that a union organizing campaign in Tims is taking on a ‘huge corporation’. Few franchisees operate more than a small handful of locations.

    In one reported instance, the Steelworkers organized a Tim Hortons owned by a couple of ex-teachers (husband and wife) who only had the one location. Both parties were represented by lawyers from prominent off-Bay boutiques. (Incidentally, both lawyers are now OLRB vice-chairs.) It’s not exactly a case where the union was heavily outgunned.

    Even for Tims franchisees, who are relatively successful in general, it isn’t hugely lucrative – we’re not talking about owners flying around in private jets while the little people get minimum wage and no benefits.

    In the cases where unions have survived – such as Windsor Regional Hospital, where the Tims employees are CAW members making $20/hour in wages and $6/hour worth of benefits – the operation becomes a massive financial drain which would never be sustainable except for the fact that it’s ultimately taxpayer-funded.

    One might reasonably point out that corporate Tim Hortons is still making significant amounts of money. But even aside from the fact that the franchise structure ties management’s hands by devouring much of the franchise’s profitability, it’s still hard to justify a $26/hour remuneration package for pouring coffee. Indeed, even corporate Tims isn’t *that* profitable. If they returned ALL their profits to the franchisees, it would work out to something like $200,000 per restaurant per year, which is almost certainly less than the additional cost of paying $26/hour for labour.

  4. Doorey Reply

    November 14, 2013 at 2:52 pm

    Thanks Dennis, its true that many coffee shops are franchises with narrow profit margins, although some of that is due to the structure of the franchise agreement and not anything inherent in the business itself. I’m not sure where your $26 per hour number comes from. I doubt anyone thinks a union could bargain a raise from minimum wage to $26. As you know, people join unions for lots of reasons other than wage rate, including to get a predictable system for hour allocation and just cause protection. Hour allocation and perceived arbitrary management decisions is a major complaint of baristas and retail workers. Also, in my experience litigating certs at retail franchisees, the Head Office suddenly gets very interested in labour relations of its franchisees when an organizing campaign comes along, even taking control of the opposition campaign in some cases. A successful organizing campaign at one store raises serious alarm bells in the directing minds of of the corporate franchiser, and so head office orchestrates the labour relations strategy for the franchisee. In any event, your point does’t apply to the big targets–Walmart, Target, bank branches, etc–that unions are most interested in. These companies clearly could pay better wages and benefits, and yet our labour laws all but ensure that unions will be unable to bargain a decent collective agreement one location at a time. Thanks as always.

  5. Anonymous Reply

    April 28, 2014 at 5:27 pm

    I’m a retail worker. I work for Mark’s Workwear I have had my shifts cut down to 1 6 hour shift per week. I sit at home “on call” while they bring in a temp.worker to do my job.

    I’m told there are no laws to prevent them from doing this. So Labour laws most definitely need to change.

  6. Preston Holmes Reply

    November 7, 2015 at 2:25 am

    I don’t believe labour laws will change in our generation. The large corporations have very effective lobbyists who are able to influence the highest paid bureaucrats, Ministers and Premier – the threat of large corporations pulling out of Ontario is enough to keep the entire country bowing to the corporate interests. No question, if Walmart and a couple other large retail players were forced to treat retail staff fairly, even setting aside wages, the rest of the retail sector would have to follow suite. Because of the power these corporations have over the politicians, we won’t see retail sector workers treated fairly until we see labour action like those activities in the industrial revolution, or in the 1920′s. I don’t think the retail sector has the strength of character to take on employers on that scale; at least not in my lifetime; maybe never.

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