"You should refund this overpayment of $105,240.00 within 30 days."
It’s not just a long-rumored threat, it’s a promise put in writing.
The employment agreement for managers at Menards, the home-improvement giant, imposes a substantial cut in pay should the workers under their supervision form a union.
A section of the employment agreement titled “Union Activity” sets forth: “The Manager’s income shall be automatically reduced by sixty percent (60%) of what it would have been if a union of any type is recognized within your particular operation during the term of this Agreement. If a union wins an election during this time, your income will automatically be reduced by sixty percent (60%).”
A copy of one such agreement signed in 2015 was obtained by The Progressive magazine. The clause calling on managers to be punished for union successes appears as Appendix J to the agreement. Newly hired managers are asked to initial every page. The agreement also specifies that managers “may be terminated at any time for any or no reason, with or without cause.”
The contract was provided by a management employee who asked not to be identified for fear of repercussions. The employee said the agreement is required for all management staff, adding that the threat was effective: “The mere mention of the word ‘union’ is a workplace taboo.”
Jeff Abbott, a spokesman for Menards, asked that questions about the agreement be submitted in writing, only to issue a terse response: “Employment agreements are confidential. Thank you.”
Menards, founded and headquartered in Eau Claire, Wisconsin, has more than 280 stores in fourteen states, according to its website. The company ranked 39th on Forbes’ 2015 list of “America’s Largest Private Companies,” with an estimated $8.7 billion in annual revenue and 42,000 employees.
Last March, investigative reporter Michael Isikoff reported that company owner John Menard Jr. secretly funneled more than $1.5 million to a political advocacy group working to support Wisconsin Governor Scott Walker. The article noted that Menards was subsequently awarded up to $1.8 million in special tax credits from the scandal-plagued Wisconsin Economic Development Corp., which Walker then chaired.
John Menard’s antipathy to unions is well-known. In a 2007 article in Milwaukee Magazine, a former store manager said he was made to attend “a one-and-one-half-day seminar in Eau Claire about fighting unions.” The article also quoted an ex-manager in Iowa saying that company policy included a 60 percent pay cut for managers should a store become unionized.
A 2003 Forbes article stated that a provision to this effect was part of a “contract” between Menards and a former manager who sued the chain for age discrimination. Other publications have referred to the 60 percent pay cut as a “threat.” The document obtained by The Progressive shows this language is included in employment agreements with management-level employees.
“Shame on Menards,” said Stephanie Bloomingdale, secretary-treasurer of the Wisconsin AFL-CIO, reacting to the employment agreement. “How are working people supposed to get ahead in this economy and work for a strong America when billionaires like John Menard are rigging the deck before working people even have a chance?”
Jessica Kahanek, a spokeswoman for the National Labor Relations Board, declined to comment on whether threatening managers with a pay cut if workers unionize constituted an unfair labor practice, saying “a case with a similar fact pattern could come before the Board at some time in the future.”
The National Labor Relations Act, to which Kahanek directed a reporter, makes it illegal to threaten “employees,” not managers, over union activity. But it would be illegal if a manager, in seeking to avoid a pay cut, employed threats or coercion against employees.
Carin Clauss, an emeritus professor of law at the University of Wisconsin-Madison who served as U.S. Solicitor of Labor from 1977 to 1981, believes the company might be vulnerable if a complaint were to be filed with the NLRB. The law, she notes, says an employer may not “interfere with, restrain, or coerce employees” in the exercise of their rights to form a union and, in her opinion, “you can interfere with employees by threatening a third party.”
Commenting without knowing the identity of the company, Clauss called the pay-cut threat “an outrageous practice” that she hoped would draw a complaint. “If I were the general counsel for NLRB, I would hope someone would file a charge so the board could take a position,” she said.
Clauss also suggested an agreement that threatened managers with consequences if they “don’t do something to interfere with employees’ organizing rights” could be deemed contrary to public policy and therefore void and unenforceable.
Harris Freeman, an expert in labor law at Western New England University's School of Law, said that even if threatening to cut the pay of managers is not an actionable violation, it is arguably “a pernicious practice” that could exacerbate workplace tensions. “What this encourages,” he said, “is for supervisors to not in any way identify with employees’ shared concerns.”
Bill Lueders is Associate Editor for The Progressive magazine.