How the pandemic brought an REI store to a union vote

Recreational Equipment, Inc. (REI), the Seattle-based retail chain for outdoor gear and apparel, may have their first unionized store this week as over one hundred employees at the New York City flagship are set to vote this Wednesday, March 2 on whether or not they will join the Retail, Wholesale and Department Store Union (RWDSU). The SoHo neighborhood’s store workers, who filed for the union election in January, have since accused the notably progressive company of union-busting activities ahead of the vote.

What the Workers are Saying

Reports are that employees are looking to negotiate a higher wage appropriate to the cost of living in New York City, address short notice scheduling changes, and receive full-time status and health insurance sooner for new hires. REI has also had some transparency issues related to pandemic safety protocols that were called out in a 2020 petition posted to coworker.org—particularly about the company not notifying store employees if they were exposed to a Covid-positive colleague. That particular petition did not cite any New York City locations specifically.

The SoHo store has set up their own petition on the Action Network to halt or at least raise awareness about REI’s alleged union-busting. It states that employees have experienced various forms of pressure and dissuasion via one-on-one and captive audience meetings with executives about why unionizing isn’t appropriate, anti-union flyers and frequent misinformation. The employees note that management put a hold on opportunities for promotion. The CEO, Eric Artz, is also featured in a podcast discussion with the company’s Chief Diversity and Social Impact Officer about how a union would get in the way of solving problems. REI also declined to voluntarily recognize the union.

The Position and Actions of REI

REI created a separate website dedicated to the union campaign stating a purpose of presenting facts so that employees can make an informed decision about union representation. Descriptions about what a union is and what it can or cannot do as well as election information and an overview of employee benefits currently offered are posted along with the controversial podcast. In the podcast discussion, CEO Artz says that he does not believe a union would serve employees’ best interests even though he goes on to say that his own father was in a teachers union. “Specifically, I believe the presence of union representation will impact our ability to communicate and work directly with our employees and resolve concerns at the speed the world is moving,” he explains. “If the union vote prevails, we will then by law begin a negotiating process with the union, a representative for those employees, and follow the laws that govern those discussions, however long that takes. If the union vote does not prevail, we will then be able to re-engage directly with each employee and the SoHo team and then begin the process to fully understand what led us here.”

Under US labor laws, employees who support a union must not be threatened with termination or other consequences, surveilled, interrogated, or promised anything in exchange for voting no—a possible reason why any promotions or raises might be put on hold. But a Cornell University blog post on employment law notes that the First Amendment of the US Constitution does protect employers’ right to share factual information about union organizing, express opposition as long as it is not done in a threatening manner, and share examples of existing union contracts and negotiations. The Nation reported this week that a document about contract amendments between RWSDU and Macy’s was posted in the SoHo store break room.

While not illegal, discussing unions as a third-party interference, as Artz did, is a common narrative used by many companies to generate anxiety around the decision and can be part of intimidation campaigns. Another scare tactic is mentioning high union dues and that contract negotiations could force the workplace to close, either temporarily or permanently. Union-busting is a reason why the national union membership rate among wage and salary workers is only at 10.3 percent, according to a report from the Bureau of Labor Statistics released in January. The private sector unionization rate is only at 6.1 percent. The literal lack of representation and bargaining power may explain why so many employees feel disenchanted and without a voice at work, as the REI employees have stated about themselves.

The Pandemic Financial Realities

The pandemic weighs heavy on this workplace as it does so many others. Artz goes on to describe the company’s financial situation in the podcast, “In 2020 we lost 50 million dollars. I think we have to remember businesses that persistently lose money will not be able to invest in employees, have the capital to invest in winning strategies, and frankly won't be around for long. We were willing to risk it all when we did not have the data and the facts to know that we could keep our employees safe and we've continued to invest significantly in keeping our employees safe.” He also mentions that REI paid employees for the first thirty days the store was shut down and that benefits were also covered during the furlough. “When we reopened we brought back more than 95 percent of our retail teams from furlough.”

A union organizer cast doubt on that assertion in a text to the New York Times and said that some long-tenured employees were not brought back and the coworker.org petition states that some workers throughout the company felt pressured to resign. Those that remained did not feel that the safety policies were adequate or transparent. The petition was created around the time before the Delta variant when the Centers for Disease Control and Prevention (CDC) relaxed mask guidelines while the population was still working on getting vaccinated. Artz admits, “When we came back, it wasn't easy for any of us and some of the protocols and safety procedures were not working for you, we heard you. The national and local protocols have been crazy for us all, but we've constantly worked together to improve—sometimes moving too slow, sometimes moving too fast—but always with your safety at the center.”

The Conversation around the Cooperative Business Model

Artz has leaned into the fact that REI is a co-op and therefore more beneficial than a union. In that same podcast, which lasted just over 25 minutes, he said, “A big part of what unions exist to do is to speak for employees where and when they don't have a voice. The very essence of a co-op is actually contrary to that because in a co-op we turn towards one another. That does not mean we agree on everything, that means we come together based on shared beliefs, our common expectations and we work together to solve problems.”

REI’s business model is that of a consumer co-op, not a worker cooperative as Mother Jones points out, stating: “REI probably knows the phrase has an appealing ring for outdoorsy, left-leaning consumers. In a worker co-op, the workers own the business, typically sharing profits in ways the worker-owners have reached consensus on.” Through the consumer co-op business model, REI creates a dedicated community by offering dividends of around 10 percent back annually on eligible purchases for a lifetime membership fee of 20 dollars. Members can access exclusive sales, buy and trade in used gear, rent equipment for lower fees, and have the ability to vote for their board of directors. While this is inclusive, it does not guarantee worker protections.

REI does offer an incentive plan and profit-sharing contributions, including giving every eligible employee an automatic 5 percent company retirement contribution into their 401(k) and up to an additional 10 percent profit-sharing contribution based on profitability.

The company ended up with a revenue of 2.75 billion dollars in 2020, the most difficult year of the pandemic, but reported no profits. Reported in REI’s financial statement released on their website, the company ended up selling its newly completed headquarters campus to Facebook, and invested in customer-facing innovations like virtual outfitting and curbside pickup, carbon reduction goals, and retail pay. Eric Artz forfeited one hundred percent of his base salary for six months that year, which in 2019 was 823,473 dollars and all of his incentive eligibility for 2020. The board of directors forfeited their board fees also for six months and senior leadership took a 20 percent base salary reduction for that time, although were retroactively repaid. The quarterly Summit Incentive Plan—a cash bonus executives receive based on annual results—was replaced by a flat-rate bonus for hourly and field employees for that year and the company went into 2021 without debt.

Artz concludes, “Again, I want to be very respectful. A union may be what our employees ultimately decide they want and that is their legal right. We don't always get it right, but I do believe we try.”