Special Report

Labor’s Desperate Measures

While preying on business, a prominent New York nonprofit plays fast and loose with the law.

By 6.29.06

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The Restaurant Opportunity Center of New York, otherwise known as ROC-NY, has come to represent a curious new strategic model for labor organizers -- one that all small and medium-sized business owners would do well to heed.

With financial and organizational support from Hotel Employees and Restaurant Employees Local 100, ROC-NY was initially formed to help find employment for the surviving employees of Windows on the World, destroyed when the World Trade Center was attacked. To date, the group continues to emphasize its role as a September 11-based organization when soliciting donations. In fact, nothing could be further from the truth.

ROC-NY is a nonprofit organization sanctioned by traditional labor while clearly operating on the fringes of traditional labor laws. It has set out to aggressively attempt to remake the labor landscape by using the protections afforded to a nonprofit organization, publicly funded law firms, and old fashioned intimidation to shake down its targets. ROC-NY was formed with help from HERE Local 100 to increase union enrollment in the restaurant industry in New York where, surprisingly, only 1 percent of the 150,000 workers are unionized. In 2002, HERE 100 turned to two of its key organizers, Fekkak Mandouh and Saru Jayaraman, to run ROC-NY. With funding and salaries provided by HERE 100 to the two organizers, ROC-NY essentially became a subsidiary of the union.

BUT ROC-NY'S APPARENT union organizing efforts would represent a huge legal problem for a nonprofit entity. As a nonprofit corporation, ROC-NY is entitled to special tax treatment (i.e., it pays no taxes) and enjoys the benefits of tax-deductible contributions.

Simply put, ROC-NY is abusing the favorable tax treatment it receives and what's worse, it is using donations that are tax deductible to the contributor to then go out and attack businesses throughout New York.

Jayaraman, who hangs a sign on her office door that reads "Capitalism is not healthy for children and other living things," is not bashful about describing the true intent of her nonprofit. She has referred to ROC-NY's "minority unionism" efforts in stating that "one difference between us and a union is that in a union you have to get a majority of a shop. In our case we just get a group of workers, but not necessarily the majority."

An experienced union operative, Jayaraman should know that it is in violation of labor law to organize a minority union, and employers are equally prohibited to bargain with a minority union.

The public record clearly discloses that ROC-NY is more than just a labor organization disguised as a nonprofit corporation. In another twist to the traditional role of a nonprofit, ROC-NY, in collaboration with an Italian-based food cooperative, has opened a restaurant, Colors, in New York City. The ownership of this cooperative restaurant is particularly curious in view of ROC-NY's labor organizing activities.

What's more, employees of Colors are encouraged to picket other restaurants on a regular basis. At the same time that ROC-NY is in the business of unionizing restaurants in New York, the organization is using funds -- available through its nonprofit status -- to compete as a business against their targets. These funds come from some of the world's largest charitable organizations, including the Robert Wood Johnson Foundation, the American Red Cross, and others. The Nonprofit Finance Fund arranged over $2.2 million in financing for Colors alone.

TO FULFILL THE MISSION of threatening the competition, ROC-NY has engaged in a campaign of questionable tactics against several large restaurant companies in New York to advance its goal of organizing the industry. The modus operandi of ROC-NY is to collaborate with a nonprofit law firm or some publicly funded legal service organization such as Main Street Legal Services Inc. (a project of the CUNY law school). These lawyers, acting at the direction of ROC-NY, typically initiate the attack on a restaurant by sending a demand letter to the target claiming to represent individual employees of the restaurant.

When the restaurant company responds to the demand letter, it learns that ROC-NY is actually attempting to negotiate on behalf of all the employees. Even if the restaurant wishes to settle the individual employee grievances, it can't achieve an agreement unless it gives in to the broader demands of ROC-NY. Once it is clear that a settlement is not achievable, ROC-NY resorts to picketing the targeted establishment. Because ROC-NY claims that it is not a labor organization, and enjoys the benefit of nonprofit laws, it claims that the picketing isn't really picketing but just an "informational gathering" in front of the targeted company's restaurants.

In a recent assault, ROC-NY has employed similar tactics but with an additional twist. After agreeing to suspend demonstrations while claims were brought before the NLRB, ROC-NY apparently enlisted students and professors from the Union Theological Seminary, affiliated with Columbia University, to conduct "prayer" sessions in front of the targeted restaurants. These "religious demonstrations" allow ROC-NY to maintain that it has ceased its picketing while the seminarians act on their behalf and at ROC-NY's direction.

There is nothing wrong or illegal with attempting to organize workers in the restaurant industry by way of lawful tactics and legitimate union representation. What is wrong is the manner in which ROC-NY appears to illegally organize minority unions and abuses its nonprofit status. Seems to me that labor regulators, the IRS, and even the foundation charitable contributors to ROC-NY might want to start asking Jayaraman and company some tough questions.

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