Tesla and Elon Musk Have a Big Union Problem

Electric-vehicle leader Tesla reportedly reviewed employees’ organizing activity on social media.

The increasing popularity of unionized workforces has been rattling C-suites across corporate America.

One after another, major business behemoths like Amazon  (AMZN) – Get Amazon.com Inc. Report, Starbucks  (SBUX) – Get Starbucks Corporation Report and Trader Joe’s have been facing employees either forming officials unions or creating union drives to bring collective bargaining to their workplaces.

The effects that unionization might have on these companies bottom lines is a very real concern for investors and analysts alike.

A recent study from corporate consulting firm Projections added some hard numbers to the anti-union calculus.

“For a company, the cost of unionization is more in line with a 30% increase in operating expenses,” it said. 

“And the cost of a union to a community – in lost jobs, loss of competitiveness and productivity, strikes, and consumer confidence – can be staggering.”

Other anti-union researchers have echoed that unions eventually cost companies money, including author Lloyd M. Field, who wrote “Unions Are Not Inevitable!,” a tome often cited by corporate leaders. 

“Field found that newly organized company’s operating costs increased by more than 25 percent of their gross payroll and benefits costs,” Projections said. 

“In his book, Field provides an example of a company with a total payroll of $18 million, for whom unionization would then result in $4.5 million in additional annual operating costs.”

Unions, of course, argue that whatever money it does cost a company to work with a union ultimately results in a better, safer and more communicative workforce.

After all, unions did bring America the weekend, the five-day work week and things we now take for granted, like guaranteed time off and maternity leave.

That, however, is no longer a conversation that needs to have a union involved, some business leaders have argued.

Many major businesses are fighting off these union drives. One of the most high-profile of them is electric-vehicle leader Tesla  (TSLA) – Get Tesla Inc. Report, led by Chief Executive Elon Musk. 

Musk has said that if his workers need anything, they can talk directly to the company to address their concerns and improve their working conditions. 

He has been overtly contemptuous of unions. And a new report shows that Tesla had also kept a close, and controversial, eye on potential union organizing at the Austin company.

Tesla Hires PR Firm to Monitor Its Employees

Tesla  (TSLA) – Get Tesla Inc. Report has faced a series of attempts to unionize its workforce. The unionization push by both auto unions and internal employee groups was particularly sharp prepandemic.

The push by both auto unions and internal employee groups to bring unions to the company reached a fever pitch pre-pandemic.

From 2017 to 2018, workers and unions were focused on unionizing Tesla’s then-only plan in Fremont, Calif., a Bay Area enclave known for its industrial union roots.

Now, CNBC reports that the company had hired a public-relations consultancy to monitor the unionizing activity of employees on social media.

In particular, the New York consultant, MWW PR, monitored discussions about allegations of unfair labor practices and about a sexual-harassment lawsuit, CNBC reported, citing invoices and documents it reviewed.

“The records show that Tesla paid MWW PR to monitor a Tesla employee Facebook FB group, monitor Facebook more broadly for commentary on organizing efforts, and to conduct research specifically on organizers, going on to develop labor communication plans, media lists, and pitches based on their reconnaissance,” the website reported.

“The National Labor Relations Act prohibits employers from “spying” on employees’ union activity, which the National Labor Relations Board defines as ‘doing something out of the ordinary to observe the activity,’” the Washington Post reports.

“Observing open union activity in workplace areas frequented by supervisors would not constitute spying, according to the NLRB.”

MWW told CNBC that it was “common practice to review media coverage and public social conversation about a company to gain insights into issues and perceptions of stakeholders about the brand.”

The Washington Post reported that the National Labor Relations Act prohibits employers from “spying” on employees’ union activity, which the National Labor Relations Board defines as “doing something out of the ordinary to observe the activity.” 

Observing open union activity in workplace areas frequented by supervisors would not constitute spying, according to the NLRB.

MWW confirmed that it did work for Tesla but argued its efforts were neither nefarious nor illegal.

“MWW consulted with Tesla in 2017-2018 on a broad employee communications engagement during a period of rapid growth at the Company,” the company said in a statement. 

MWW told the Post that it would be “misleading and inaccurate” to “classify broad media monitoring and social media listening as surveillance.

“MWW did not, and would not, conduct activity of that kind,” an MWW spokesperson told the Post. “Social-media research was limited to open and public communications and did not include any invite-only groups or chats.”

Protecting Reputations, Obeying Labor Law

Experts noted that companies have an interest in protecting their reputations while they also must follow the laws protecting workers’ right to organize.

John Villasenor, a professor at UCLA and fellow at Brookings Institution, told CNBC that, for example, a company would want to know if an employee issued public statements that called the worker’s fitness as a staffer into question.

Jennifer M. Grygiel, a Syracuse University associate professor, told the website that “any organization can engage in ‘social listening,’ using publicly available social media data to gain insights for product development, or to understand voters, public and employee sentiment and more.”

But she also noted that “there are laws in the U.S. that protect the rights of people to organize.”

Tesla did not respond to a request from TheStreet for comment.

Tesla union activist Richard Ortiz was fired by the company in 2017, immediately drawing fire from federal watchdog the National Labor Relations Review Board.

The NLRB ordered Ortiz reinstated and required Musk to remove a 2018 tweet that it found violated national labor laws.

As on the afternoon of June 6, 2022, that tweet was still online.

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