Special Report

ACORN’s Labor Pains

Given how it treats its workers, the notorious group is a PR disaster waiting to happen.

By 8.7.09

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A mountain of paperwork detailing extensive, apparently credible allegations of wage and labor law violations against ACORN was received this week by investigators on the House Oversight and Government Reform Committee.

A source with intimate knowledge of the allegations who asked not to be identified said 200 documents were delivered to congressional investigators. 

Republican investigators on that committee found a fortnight ago that by "intentionally blurring the legal distinctions between 361 tax-exempt and non-exempt entities, ACORN diverts taxpayer and tax-exempt monies into partisan political activities." They recommended that ACORN be stripped of its jealously guarded tax-exempt status because it illegally spends taxpayer dollars on partisan activities, commits "systemic fraud," and violates racketeering and election laws.

ACORN is deeply involved in the labor movement.

Its far-flung empire of activism includes SEIU Locals 100 (Arkansas, Louisiana, Texas) and 880 (Illinois, Indiana), the Living Wage Resource Center (a website that tracks efforts by cities and states to raise the minimum wage above the federal standard), and various other groups concerned with labor-related issues. Organized labor is both a client and ally of ACORN. ACORN (including its affiliates) took in almost $3 million in 2007 from unions to assist unions with anti-corporate campaigns, provide strike support, and help with research and staffing, among other things. The group also had extensive ties to disgraced former Illinois Gov. Rod  Blagojevich, a Democrat who was thrown out of office this year by his state's legislature.

The congressional report from July also stated that ACORN submitted false filings to the Internal Revenue Service and the U.S. Department of Labor, in addition to violating the Fair Labor Standards Act (FLSA). Investigators found that ACORN failed to pay excise taxes and that "SEIU Local 100 -- under the direction of ACORN founder Wade Rathke -- filed bogus reports with the Labor Department in order to conceal embezzlement." The nearly million-dollar embezzlement in question was perpetrated by Rathke's brother around 2000 and covered up by Rathke and other ACORN leaders until last year. Wade Rathke remains chief organizer of SEIU Local 100 despite an ACORN national board resolution enacted last year that ordered him to sever all ties with the ACORN network.

The same report also found that "ACORN plundered employee benefits and violated fiduciary responsibilities" under the Employee Retirement Income Security Act of 1974 (ERISA). "ACORN conspired to conceal information concerning prohibited transactions from its board in violation of its corporate charter" and carried out "a cover-up at the expense of adherence to its own bylaws," it stated.

In unveiling the report, the ranking Republican on the committee, Rep. Darrell Issa (R-California), said, "It is outrageous that ACORN will be rewarded for its criminal acts by taxpayer money in the stimulus and is being asked to help with the U.S. census." 

The group supports raising the minimum wage and enacting so-called living wage policies, more funding for union-staffed urban public schools, and wants federal and state laws enacted that guarantee paid sick leave for all full-time workers. It claims to have "delivered approximately $15 billion in direct monetary benefits to our membership and constituency over the past 10 years." ACORN takes credit for spearheading community and labor coalitions that succeeded in enacting living wage laws in 41 cities by the end of the 1990s.

ACORN and its affiliates are also content to impose crippling Big Government laws, regulations, and taxes on Americans, but when called upon to obey those same rules, ACORN's network of scofflaws and deadbeats simply refuses to comply. The network owes millions of dollars in back taxes even though almost all ACORN affiliates are exempted from paying various taxes. The tax liens pending against it at the federal, state, and local level have been issued for non-payment of employees' payroll taxes. If so, this would be ironic because payroll taxes fund the social and wealth-distribution programs that ACORN so staunchly supports.

It's unclear at this early stage if the newly raised allegations will go anywhere. 

That's because the House Oversight and Government Reform Committee is chaired by ACORN ally Rep. Edolphus "Ed" Towns (D-New York). As ACORN began drowning in an ocean of bad publicity last fall, Towns signed onto a letter supporting ACORN that called the group an "impressive and vital organization." Earlier this year another ACORN ally, House Judiciary Committee chairman John Conyers (D-Michigan), first promised to probe ACORN but then mysteriously backed off, saying "the powers that be decided against it." 

ACORN, whose full name is the Association of Community Organizations for Reform Now, is indeed an impressive organization but not for the reasons cited in the Towns letter. With its members dressed in bright red shirts, ACORN organizes crude protests against businesspeople and public officials. Opposed to the profit motive and capitalism in general, it pushes for more government control over citizens and the economy. 

Even if the latest allegations don't lead to criminal charges, it's worth noting that the nation's largest community-based activist organization, which claims to defend the working class, has a record of profound, abiding hostility to the very same pro-labor laws it claims to support.

Although it supports the continued imposition of equal employment opportunity laws on the rest of America, it argued it shouldn't have to comply with those same laws. The Equal Employment Opportunity Commission had to sue ACORN in the 1990s to force it comply with Title VII of the Civil Rights Act of 1964, the crown jewel of the civil rights movement's legislative accomplishments.

And for a group that poses as a champion of workers' rights, ACORN doesn't treat its own workers well. What follow below are just a few select examples from ACORN's sordid history of employee abuse.

The Industrial Workers of the World complained that Rathke's SEIU Local 100 sabotaged a union drive by employing union-busting techniques used by corporate America. In 2003 the National Labor Relations Board determined ACORN had unlawfully blocked its workers from organizing.

Fed up with long hours and paltry pay, four ACORN organizers were canned by ACORN two days after they started a union certification drive against the group in Portland, Oregon. "We felt there was a lot of deceit in the organization," organizer Sarah Manowitz told Williamette Week. Employees reportedly worked 54 hours per week, including Saturdays, for annual pay of just $20,200. Two organizers said they were often paid late. 

In 1995, ACORN sued the state of California seeking an exemption from the law that requires that it pay its own employees a minimum wage. The group treated its workers as if they were mendicant friars, arguing that keeping its employees in poverty helps to boost their zeal to help the poor. ACORN lost.

In 2006, $250-a-week ACORN intern Sandra Stewart told Baltimore City Paper that the Baltimore chapter hadn't bothered to pay her for her work. Three other former ACORN workers told the paper that the group failed to pay them back wages.

A 2003 study of ACORN by the Employment Policies Institute found the group paid a wage of $5.67 per hour, which was "less than half the level demanded by many proposed 'living wage' ordinances that ACORN supports."

ACORN doesn't like paying its employees overtime. In 1996 the federal Department of Labor sued Citizens Consulting Inc. (CCI), a shadowy ACORN affiliate that traditionally took care of administrative matters for ACORN. The next year a federal court ordered CCI to cough up $10,000 in back wages.

ACORN has also been accused on flooding hospital emergency rooms with union goons demanding care in an effort to pressure hospitals to unionize.

Meanwhile, ACORN is pressing Congress on several issues.

ACORN is the lead player in Health Care for America Now (HCAN), which is pressing Congress to enact President Obama's ambitious health redistribution scheme.

ACORN is also listed as a "partner" in the Apollo Alliance, along with SEIU, and Center for American Progress president John Podesta. The "green jobs" group has significant pull in Congress and helped to write the February stimulus bill. It is a major player in the debate over economy-crippling cap-and-trade legislation.

The Apollo Alliance "is designed to bring together the elements of organized labor with the community organizers with the green groups, the environmental groups, and to access all of the big foundation money that's been supportive of those causes in the past," according to Phil Kerpen, director of policy for Americans for Prosperity.

ACORN also supports organized labor's top priority, the proposed "Employee Free Choice Act" (EFCA). Also known as "card check," the measure would take away the right of workers to cast secret ballots on whether to form a union.

The proposed law would open the door to harassing and intimidating workers that union organizers target for signatures indicating that they agree to be represented by a labor union. "Card check" is tantamount to having union officials follow you into the voting booth and stay with you until you vote the way they want.

ACORN president Maude Hurd joined Senate Labor Committee chairman Edward Kennedy (D-Mass.) and House Labor Committee chairman George Miller (D-Cal.) at a pro-EFCA rally outside the U.S. Senate in December 2006. She said, "ACORN members are low- and moderate-income workers and their families. We see with our own eyes how their lives improve when they are members of unions. When labor is weakened, we all are weakened and when labor is strong we all are strong." 

Unions say EFCA will make it easier for employees to join a union without corporate harassment, but former Sen. George McGovern (D-S.D.), says the measure would allow labor organizers to intimidate workers. "It's hard to believe that any politician would agree to a law denying millions of employees the right to a private vote," said McGovern, the Democrats' presidential nominee in 1972.

For reasons unknown, in April ACORN scrubbed its website of references to two of its key affiliates, SEIU Locals 100 and 880. One theory is that organized labor doesn't want to be associated right now with ACORN, which is pure PR poison, as it presses for EFCA.

It's a good theory.

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About the Author

Matthew Vadum is an award-winning investigative journalist at a conservative watchdog group in Washington, D.C. Vadum is also author of Subversion Inc: How Obama's ACORN Red Shirts are Still Terrorizing and Ripping Off American Taxpayers.