Thinking About Forming A Union? Surprise! Here's A Big Raise.

A recent case at pharmacy chain CVS reveals how employers scramble to make workers happy when they're signing union cards.

Workers at a CVS store in Orange County, California, were trying to form a union last year when they got a surprise from their employer. The pharmacy chain had decided to give them substantial raises, boosting their pay as much as 37%.

CVS was doing “market” pay adjustments at many of its stores. But the company earmarked certain locations in California ― an area where the United Food and Commercial Workers union was running an organizing campaign ― for juicier pay bumps than the formula called for, according to hearing transcripts and CVS documents obtained through a public records request.

Workers at Store 9119 in Orange County were among them. They were in the midst of signing union cards to join UFCW Local 324. Unlike most other nonunion workers, they ended up with the higher pay rates that already-unionized stores in the area were receiving, only they got them without having to join the union and pay dues.

“I thought it was a very weird coincidence that it was the exact same number,” one CVS worker recently said of her raise matching the union pay rate. The worker was testifying in a hearing before the National Labor Relations Board, the federal agency that referees disputes between unions and employers.

Suddenly raising pay or benefits is a tried-and-true way for employers to tamp down union support, since it makes some workers believe a union is no longer necessary. With pandemic-weary U.S. workers requesting union elections at a rate not seen in years, some are watching their employers scramble to improve the workplace for fear they’ll end up across from their employees at the bargaining table.

“The message was unmistakable. Why go to the trouble of organizing when we’ll just gift you the union rate for free?”

- Ryan Spillers, attorney for the union

Employers need to be careful when changing pay or benefits where workers are considering unionizing, lest it come off as coercive and disrupt the “laboratory conditions” under which workers are supposed to vote in an election. They can hike workers’ pay as part of a standard review process, but it’s against the law to do so expressly to undermine a union campaign.

At Store 9119, workers cast their ballots less than three weeks after learning of their new raises. Eight workers voted in favor of joining the UFCW. Nine voted against.

Ryan Spillers, a union-side attorney who represented the UFCW at the labor board, said the company tried to hide the higher-than-market raises for certain workers by rolling them into its nationwide raise announcement.

“The message was unmistakable,” Spillers said. “Why go to the trouble of organizing when we’ll just gift you the union rate for free?”

The UFCW maintained that CVS’ pay raises at Store 9119 were designed to weaken union support. An administrative law judge recently agreed, ordering that the election results be thrown out. CVS has appealed the judge’s decision to the five-member board in Washington for review.

CVS declined to comment for this story. The company maintains in board filings that the pay hikes in Orange County were legal because they were part of a nationwide compensation plan. The company also claims it was unaware of the union campaign at Store 9119 when it developed the plan for the increases.

From a worker’s labor board testimony:

A CVS worker in Orange County said she was surprised to see her wage being raised exactly to the union rate, even though her store was not unionized.
A CVS worker in Orange County said she was surprised to see her wage being raised exactly to the union rate, even though her store was not unionized.
NLRB testimony

Starbucks has rolled out a host of new and improved perks at its coffee shops while battling a nationwide union effort since last year, applying them to the majority of stores that have not yet unionized. Trader Joe’s recently announced a new $10-per-hour pay premium for working on Sundays and holidays, just as workers were launching a soon-to-be-successful union campaign that has spread to other stores.

Companies typically deny that they made any improvements in direct response to labor organizing campaigns. What sets the CVS case apart is how internal emails and spreadsheets ― brought to light by a subpoena from the NLRB ― shed light on the company’s decision-making process.

“They were definitely masking what they were trying to do here,” Joe Hernandez, the organizing director for UFCW Local 324, told HuffPost.

The UFCW already represents thousands of pharmacy chain workers around the country. Hernandez said the union organized many CVS stores in California following a 2013 agreement between the union and the company that made it easier for workers to hold elections. Store 9119 did not unionize while that agreement was in effect, so the union’s organizers took another crack at it last year. They went into the store and passed out cards showing the top rates workers would earn if they were unionized like other pharmacies.

By the summer of 2021, the workers felt stretched thin due to lean staffing and the COVID-19 vaccination campaign that boosted foot traffic in pharmacies, Hernandez said.

“Safety measures weren’t in place. People were getting COVID. They were rolling out the vaccines,” he said. “People were overworked and stressed. Staffing was a big issue. Some stores went automatically and said, ‘Yeah, we want a union.’”

An administrative law judge recently ruled that CVS's raises at an Orange County store were illegal because they seemed designed to undermine the union campaign.
An administrative law judge recently ruled that CVS's raises at an Orange County store were illegal because they seemed designed to undermine the union campaign.
Mario Tama via Getty Images

Three CVS stores in Southern California filed for union elections last July, while workers at Store 9119 were signing union cards in hopes of holding their own. Days after the three petitions were filed, CVS’ senior director of compensation emailed the company’s vice president of labor relations, with the subject line “Retail California Non-Union Pay Rates.” He listed 49 job codes and wrote “we will need to know how to handle EACH ONE of them.”

The labor relations department sent back a breakdown of union pay rates in California. The compensation team responded: “We will begin working on the analysis, applying the Union rates provided to Non-Union colleagues” in certain job roles. Documents CVS provided under subpoena suggest that out of around 9,000 workers slated for raises, a subset of only 1,100 would end up getting the higher, union pay rates.

Two weeks later, CVS blasted out a press release celebrating a new investment in its workforce, saying it would raise its minimum wage in retail stores to $15 by July 2022.

Before workers at Store 9119 cast their ballots, they received visits at the store from CVS human-resources representatives, who discussed the new raises and asked how the company could be a better employer, according to labor board testimony.

One pharmacy technician testified how taken aback they were by the size of the pay bumps. “Wow, I can’t believe how much money this is,” she recalled a co-worker saying.

“I made the comment that I wonder if it’s probably because we just filed with the Union, you know, the prior day,” the worker recounted. “And she said to me, ‘That doesn’t make a difference. … I’m still voting yes.’”

Another worker testified that just two weeks earlier she had requested a raise and been told she would need to apply for a higher position if she wanted one. With the new pay scale, her pay went from $19.69 to $23.40 per hour. She rescinded her application for the better-paying job.

The judge in the case, Dickie Montemayor, wrote that it was reasonable to conclude that the “manner, timing, and size of the wage increases was to dissuade and diminish support for the union in the upcoming election.” He also found that CVS broke the law on election day, when the company’s election observer spoke to an intern who was headed into the voting booth.

Montemayor recommended that a new vote be scheduled. The board in Washington has not yet ruled on CVS’s appeal.

Hernandez said he has no doubts that the pay increases swayed the election. “People got [big] raises,” he said. “Good for them. But it played into why they voted ‘no’ in the end.”

He added that the union’s supporters are eager to get their next ballots.

“Now that they know what CVS did, they’re looking forward to the second election,” he said.

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