Macy's Inc. (M) takes a double shot of bad labor news

California strike vote followed by NLRB loss

CINCINNATI - About 1,200 Macy’s Inc. employees in San Francisco have authorized a strike against the Cincinnati-based retailer, after voting 88 percent against the company’s latest contract offer.

Meanwhile, in Massachusetts, 41 employees in the cosmetics and fragrance departments at a Macy’s store in Saugus have won the right to bargain as a so-called “micro-union,” after a ruling Thursday by the U.S. Labor Relations Board.

Both events are part of a trend toward more labor activity at retail companies nationwide, said Ken Margolies, senior associate for The Worker Institute at Cornell University's School for Industrial and Labor Relations.

"We’re starting to see more labor action because the economy is improving," Margolies said. "Historically, labor action happens when expectations rise and people also are less fearful. When the economy is in total dumps, you’re afraid of taking action that will cost you a job. Now, there is pent-up demand. People have been living without raises for a long time and they see light at the end of the tunnel."

The California labor dispute is confined to two Macy’s stores at Union Square and Stonestown shopping center, where employees are represented by the United Food and Commercial Workers Union .

The union said 1,000 members voted July 17 on a Macy's contract proposal, with 880 voting against a deal. No strike has been called. A two-day bargaining session is scheduled to begin Aug. 11. The union has been working on a day-to-day contract extension since last month. The extension allows either side to terminate the contract within 72 hours.

Among the contested issues is a Macy’s plan to cap sales commissions for existing employees and scrap them for new associates.

“The company’s proposal is to take a sales person’s three highest years and average them and keep them at that rate. It really doesn’t give the sales person any incentive to sell more because you’re capped no matter what you do,” said Mike Henneberry, spokesman for United Food and Commercial Workers Union Local 5.

Employee scheduling is another unresolved issue. The union is fighting for work rules that allow Macy’s to call in or call off workers “at a moment’s notice,” Henneberry said. “It’s very disruptive.”

Macy’s declined to comment on contract specifics, but calls its latest offer “fair and equitable.” Spokesman Jim Sluzewski said the company “prides itself on being a good employer in all locations with competitive pay and benefits in an engaged and service-oriented work environment.”

The NLRB ruling is the latest in a series of decisions to allow the formation of smaller bargaining units within the work forces of larger companies. The trend follows a 2011 ruling which a group of nursing assistants at Specialty Healthcare were permitted to pursue unionization at a long-term care facility.

Labor groups have applauded this developing case law, as it makes it easier to organize unions. Companies have complained that it will lead to a fractured work force that will prove cumbersome and costly to manage.

The Macy’s ruling involves non-supervisory beauty advisors, counter managers and on-call employees who work on a “base-plus-commission basis” at Macy’s cosmetics and fragrance counters. Sluzewski said the company is disappointed by the decision and may appeal.

"Organizing a selected portion of a store's selling associates into multiple collective bargaining units is impractical and an impediment to providing a consistent level of customer service,” he said.

Cornell's labor expert, Margolies, said the UFCW has been aggressively targeting large retailers like Walmart and Target as part of a larger defensive strategy to protect wage rates at union-shop grocery chains like the Kroger Co.

"It's more difficult for them to maintain the wage rates they bargained for over the years if there is competition not paying those rates," Margolies said. Even if their organizing campaigns aren't successful, "the pressure keeps Walmart raising their wages and benefits."

Margolies thinks Macy's may be a UFCW target because it's a national chain with a recognizable name. But he doubts the activity will be much of a game changer for the company.

Macy’s annual report estimates that about 10 percent of its 172,500 employees are union members. The percentage hasn’t changed in the last five years but the number of employees has grown by 5,500, or 3 percent.