Massive Wage Fraud Discovered in Oakland Garbage Sweatshop
by David Bacon
OAKLAND, CA (11/4/98) -- When seventy workers walked out of a west Oakland recycling facility August 21, they simply wanted a raise. But the increasingly-bitter East Bay strike uncovered, not just abusive working conditions and poverty wages, but defacto municipal sanction of a garbage-sorting sweatshop, operated for years in violation of its own city contract.
As the strike ground on, investigation revealed that workers were cheated on wages for years, while city councilmembers received thousands of dollars in campaign contributions. To make matters worse, David Duong, owner of the struck California Waste Solutions, hired strikebreakers and attempted to resume operations, while city officials made excuses or turned away in a city where labor boasts of its political clout.
Finally, after five weeks, the strike was resolved when workers were able to embarrass outgoing Mayor Elihu Harris and other city councilmembers into intervening to put pressure on Duong. But the conflict left unresolved the question of why, in a city which has just adopted a living wage ordinance, a similar contract provision could go unenforced and unmonitored for seven years.
CWS operates from a huge concrete building stretching for a city block along Pine Street in West Oakland, from 10th to 11th Streets. Fifty-six workers sort recycled trash at the facility. In addition the company runs a dozen trucks through Oakland picking up discarded plastic, paper, metal and glass.
The upheaval at California Waste Solutions began this spring, when its workers, almost entirely immigrants from Mexico, decided to organize a union. "We were very unhappy about the wages," explains Santos Valladares, a leader among the sorters. "Almost everyone here makes $6 an hour. Just a handful are paid a little more."
Workers also complained about conditions on the garbage line. There is no adequate eye protection against dust and grit from the recycled materials, they say, or ventilation to remove the stink of the refuse. Although the company provides gloves, workers still get cut. On the picketline, Francisco Hernandez showed a deep gash in one of his fingers. "When a glass bottle got stuck on the line, it cut right through my glove when I tried to get it loose," he said. Other workers showed similar cuts, abrasions and eye inflammations they said were due to their job.
Early in 1998, Santos and his coworkers signed union cards with Local 6 of the International Longshore and Warehouse Union, and petitioned for a representation election. According to Valladares and other workers, however, Duong promised that the company would raise wages if they voted against the union. Local 6 organizer Alfredo Flotte adds that rumors of an immigration raid were spread as well.
David Duong refused to be interviewed and calls to the company office were not returned.
When the election was held in May, the union lost. Afterwards, says union member Ruben Antonio Rivas, Duong took workers to lunch at a local restaurant as a reward.
CWS workers wanted more than a free lunch, however. They began to pressure Duong to fulfill his promises of a wage increase. Then Oakland passed the living wage ordinance this summer, requiring city contractors to pay their employees $8.00/hour, in addition to funding health benefits. "We went to him again. He said it didn't apply to us," Rivas recalled. In frustration, workers finally walked out on strike on August 21.
What workers didn't know at the time, however, was that Duong had signed a contract with the city in 1992, which obligated him to not only pay $8.00/hour for all work performed for the city, but to provide medical and other benefits as well.
Not only that, but the city had basically set Duong up in business, giving him a loan of $350,000 "for the express purpose of purchasing vehicles ... to be utilized in the exclusive performance of this agreement." Oakland's curbside recycling program, set up in 1992 just before he was given his contract, gave Duong a third of Oakland as a territory for collecting trash and sorting it for recycling.
Duong took the loan, bought the trucks, began collecting recycled trash, and started what became a thriving and growing concern. But he never implemented the wage and benefit guarantees for CWS workers.
Once the strike started, it drew immediate attention from city officials, and City Councilmember Larry Reid and Mayor Elihu Harris quickly volunteered to mediate a solution. In a meeting in Reid's City Hall office on August 26, Duong agreed to recognize the union, based on assurances from Reid and the Mayor that a majority of his employees had signed union cards.
Negotiations began on a contract and strike settlement. After a couple of days, however, they stalled over wages and benefits. The union wanted a substantial wage increase for the workers, and the company offered only a 50¢ increase, to $6.50/hour.
While bargaining ground to a standstill, the company began hiring strikebreakers to drive its trucks. "We were very upset when we saw Duong hiring almost entirely African-American workers to break the strike. He hardly hired anyone from the African-American community before that," said Local 6 business agent Roberto Flotte. "To us, that's racial politics."
Strikers countered by picketing three huge shipping containers in the Port of Oakland, filled with plastic trash, as they were about to be loaded on a container-ship bound for Asia. When dockworkers, who also belong to the ILWU, threatened to walk off the ship, port authorities told Duong to take his containers elsewhere.
Union negotiators were floored when they finally received a copy of the CWS contract with the city, and discovered that it required CWS to "pay each person employed for the performance of work pursuant to the contract" according to a set schedule of salaries and benefits. That schedule specifies a wage of $8.00 for sorters, and further mandates $2.60/hour for medical benefits, from 5¢ t0 41¢/hour for pensions, five holidays, five sickdays, from two to four weeks of vacation a year, and overtime rates after eight hours in a day or 40 hours in a week.
On July 15, 1997, Duong even signed a second, five-year agreement with the city which contained the same salary provisions for sorters. "But they've been paying almost all the sorters $6/hour," said Local 6 organizer Alfredo Flotte. "The company isn't paying $2.60/hour for its medical plan, and many workers say they've been required to work overtime at regular hourly rates."
For each worker employed under city contract at $6.00/hour, the $2/hour underpayment amounts to $4,000 per year considering wages alone -- a potential backpay liability of $28,000 per person since the original 1992 agreement was signed. Underpayment of medical insurance, overtime and other benefits would raise that bill much higher.
The city agency in charge of enforcing the contract, Oakland's Public Works Agency, seemed inexplicably unconcerned over the flagrant violation. Terry Roberts, the agency's director, was unable to describe the process used for enforcing it, or explain why no monitoring took place for seven years. "It didn't happen the way it should," he commented laconically.
Roberts told the city council that he had requested payroll information from Duong, and begun working with Mark Wald, a city attorney, to determine possible penalties for non-compliance. But in a council meeting called at the peak of the strike, strikers and their supporters in the audience sat agape as Roberts put forward a formula, not to enforce the contract and recover money owed to both the city and the workers, but to reduce it drastically.
Roberts proposed a formula for calculating Duong's backpay liability which would save the company hundreds of thousands of dollars. Inside the sorting facility, he claimed, trash from Oakland is mixed together with that collected in other local cities, including Sacramento, Alameda and Clayton. The workers sort all the trash together. While it might seem that all of them are therefore working on garbage collected under the city contract, Roberts suggested that since other trash is included, workers only need to be paid $8/hour for that proportion of the work done directly on city trash. If only 20% of the trash is from Oakland, he guessed, instead of $2/hour backpay owed to every worker, Duong's liability might be as little as 40¢.
Roberts' lackadaisical attitude toward enforcement and the collection of penalties was compounded by statements by the mayor. Mayor Elihu Harris also tried to minimize Duong's potential backpay liability. "I understand that it's only the equivalent of about 10 workers" who are working directly under the city contract, he stated in an interview.
In addition, both the mayor and councilmember Reid seemed unconcerned by the hiring of strikebreakers. "He's caught between a rock and a hard place," Harris said. "If he doesn't pick up the trash, he might lose the contract."
Reid declared that Duong "has a business he has to run." He accused the union of making unreasonable wage demands. California Waste Solutions, he said, "is just a small, family-owned business trying to survive in a competitive market."
Striking drivers said Mayor Harris even told them in a private meeting that the union's demands were unreasonable. "He said that if the company accepted what the union was proposing, they'd close within six months," recalled one driver, who was afraid to be publicly identified.
City solicitude on behalf of Duong became more understandable when it became public that he had been a conduit for substantial campaign contributions to the campaigns of city officials. Since 1994, David Duong and his family contributed over $25,000 to city election campaigns, with the Mayor (at $6050) and Councilmember Reid (at $5250) the largest beneficiaries.
City hall connections went beyond contributions. Reid revealed in an interview that he is godfather to one of Duong's children. Reid, the mayor and Duong all traveled together to Vietnam on a city trade mission. Furthermore, Greg Kos, an aide to former city councilmember Sheila Jordan (now newly elected County Superintendent of Schools), works at the CWS west Oakland site.
Speaking before a September 1 city council meeting, ILWU Organizing Director Peter Olney accused municipal officials of misplaced priorities. "The demands of these workers for a decent wage which can support their families are completely just," he told councilmembers. "They're only asking for what the city itself requires. Elected officials should have enforced the city's own contract years ago, rather than finding reasons today why the company shouldn't have to live up to its obligations."
Pressure mounted as city residents complained that trash wasn't being picked up, despite the company's effort to continue operations with strikebreakers, and neighbors complained about noise and pollution from the facility. Public embarrassment of the mayor and Reid eventually made it impossible for them to continue supporting Duong's hard-line effort to break the strike.
Finally, on September 29, the Oakland City Council told Duong he was in danger of losing his city contract entirely. Councilmember Ignacio De La Fuente then brokered a settlement, and Duong agreed to a contract including wage raises and better protection against the health and safety dangers involved in sorting through discarded trash.
"This is a big victory for the strikers," said Roberto Flotte, business agent for Local 6. He pointed to provisions in the new agreement which will give all CWS workers at least a $1/hour increase. The entry-level wage will rise immediately from below $6 to $7/hour, and then go up 30¢/hour every year for the next five years.
The strike at CWS marked the latest in a string of organizing successes for the union. Local 6 has established a community presence and reputation among immigrant workers in the San Francisco Bay Area, as a result of militant organizing drives and strikes based in the immigrant Mexican and Central American community. With the support of the union, workers have battled immigration raids, led workplace job actions over unsafe and unhealthy conditions, and won union recognition and contracts covering hundreds of new members.
The CWS strike was the second instance in which an immigrant workforce subjected to sweatshop conditions voted against union representation in an election administered by the National Labor Relations Board, and then spontaneously struck after conditions failed to improve afterwards.
"This strike was just the latest in a wave of job actions by immigrant workers," said Local 6 organizer Alfredo Flotte. "People are tired of sweatshop conditions, whether it's sorting garbage or working in factories."
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