Bet Tzedek, a nonprofit that provides free legal services for poor people, is locked in a dispute with the union that represents most of its workers, the American Federation of State, County and Municipal Employees (or AFSCME). At issue is the amount of money employees contribute toward the cost of health care for themselves and their families. Bet Tzedek currently pays for nearly 99 percent of those costs — costs they say have tripled in the last five years.
“That is not sustainable,” Bet Tzedek president Sandy Samuels said. “We’re trying to have a more realistic arrangement with our employees.”
The union has made counteroffers on a new one-year contract, but none of them addresses the health care issue. Although both sides say they are determined to resolve the impasse, AFSCME has already staged two protests outside the Wilshire Boulevard offices of Bet Tzedek.
The disagreement has left some wondering: What exactly is a public-employee union, known for representing municipal workers, doing representing workers at a Jewish non-profit?
AFSCME is among the most powerful unions in the country. In the 2012 election cycle, it spent $64.7 million on political campaigns — more than any other union, corporation or individual, according to the Center for Responsive Politics.
AFSCME’s Southern California locals, organized under AFSCME Council 36, represent, almost exclusively, public sector employees. The apparent outliers are Jewish nonprofit professionals, including both Bet Tzedek and workers at The Jewish Federation of Greater Los Angeles, represented by Locals 946 and 800, respectively.
The Council’s spokesperson, Erica Zeitlin, called this “coincidental.”
“There was nothing deliberate about the fact that we represent these Jewish nonprofits,” she said. “But there’s no reason why we shouldn’t.”
Of course, it is any union’s role, at times, to challenge an employer trying to balance the needs and costs of its employees with the level of service its donors and clients expect.
“It’s challenging to have a union in a nonprofit organization,” said Jay Sanderson, president of the Federation, who said that most nonprofits are not unionized. “Unions were created to take care of employees, like those in the garment industry, where the hours were inhumane and pay was low, and management took advantage. That’s not the case in the nonprofit community.”
He added: “Oftentimes, it becomes an adversarial relationship.”
Judaism has long been a champion of organized labor. The Talmud takes care to place protections on laborers (even as it condones slavery), and commands collective bargaining, binding mediation and even strikes.
So it’s hardly a surprise that Jews have played an important role in union organizing in the United States.
“In the early part of the 20th century, you’d find Jews active in forming unions,” said Steven F. Windmueller, Rabbi Alfred Gottschalk Emeritus Professor of Jewish Communal Service at Hebrew Union College-Jewish Institute of Religion in Los Angeles. Later in the century, and especially in Los Angeles, “You had a unionization of the Jewish professional community.”
Federation’s employees, for example, became organized in the 1960s.
“I’m sure when it started, it started with good intentions,” Sanderson said.
But some at Federation suggested that work rules set up by union-negotiated contracts have, perhaps inadvertently, made for an environment where excellence cannot be rewarded, because, as one employee who asked to remain unnamed claimed, “There’s no separate pot of money for merit increases, or increasing efficiency or effectiveness. It’s a matter of checking off what you’re supposed to do.”
AFSCME Local 800 also represents seven other Jewish nonprofits, including Jewish Big Brothers Big Sisters, the Silver Lake JCC and Jewish Vocational Services (JVS), whose CEO, Vivian Seigel, said her organization has a good relationship with its union.
“JVS has always been a partner with labor,” Seigel said. “We want what’s best for our employees.” Although, she added, “It does make it a challenge, because our dollars are limited.”
Bet Tzedek’s employees were represented by AFSCME Local 800 until the 1990s, when they voted to break away and form their own independent union. In November 2012, they voted to rejoin AFSCME and its international federation, the AFL-CIO.
“After 20 years, we wanted to be part of the mainstream labor movement,” said Marc Bender, a lawyer for Bet Tzedek who serves as president of AFSCME Local 946. “We wanted to come in from the cold and get institutional support and solidarity from a big union.” Bender’s wife, Leslie Simon, was, at the time, the organizational director of AFSCME Council 36 (she’s since moved over to the entertainment union IATSE). Bender denies that his wife’s involvement has anything to do with the Bet Tzedek independent union’s return to the AFSCME fold.
For the last 20 years or so, Bet Tzedek employees, though working for reduced wages as compared to for-profit law-office workers, have received a notably generous benefits package that includes coverage for dental, vision, a pension and life insurance, as well as an HMO health care plan that covers the employees’ entire family for which they have paid nothing, or very little.
Bet Tzedek’s total bill for that health care, according to its president, Samuels, has tripled over the last five years, and now the nonprofit pays almost $900,000 annually for its employees’ medical care — a very large bill for an organization whose overall annual budget is between $7 million and $8 million.
Bet Tzedek management said its revenue has failed to keep up with inflation as well as the skyrocketing health care costs, in large part due to the recession in recent years.
Low interest rates have also hit Bet Tzedek’s bank account. Every state in the United States has what’s called an Interest on Lawyer Trust Account (or IOLTA). Lawyers are required to temporarily keep money from settlements in these trust accounts. The interest on the accounts is then collected by the state bar and distributed to various nonprofits, including Legal Aid and Bet Tzedek, which receives one of the highest allocations in California. Low interest rates in recent years have decimated the IOLTA fund — whereas in 2007 it doled out about $22 million, distributions have fallen to less than $5 million in 2013. That has cost Bet Tzedek hundreds of thousands of dollars a year.
Bender, however, puts the blame on Bet Tzedek’s management for its financial woes.
“I don’t think Bet Tzedek has done a very good job managing all these grants coming in,” he said. “They continue to expand without being able to maintain decent salary and health benefits for staff.”
On Oct. 1, the much-anticipated health insurance exchanges created by the Affordable Care Act (ACA, also known as Obamacare) are set to begin enrollment. One of the intended purposes of the law is to slow the precipitous rise in health care costs in this country, and to require health insurance for all Americans, or make them pay a penalty for not being covered, thereby increasing the number of healthy insured and lowering the overall cost to consumers. It’s unclear what effect the ACA will have on small businesses like Bet Tzedek that already provide health care plans for employees.
But given the recent rise in health care costs and uncertainty about the future, Bet Tzedek’s union is reluctant even to talk about giving up members’ virtually free coverage.
“We’re still hopeful that we can get them to save money in other ways that do not involve these prohibitive health care raises,” Bender said.
According to Bender, Bet Tzedek’s initial offer was to raise health care contributions for an individual from zero to $208 a month; for an employee with one dependent, the proposed increase was from $20 to $486 a month; and for entire families, the proposed increase was from $30 to $635 a month. If that had been agreed upon, employees with families would have paid an added $7,260 per year for coverage.
“I want Bet Tzedek to be a strong agency, an agency that does a lot of good in the world,” said Rabbi Jonathan Klein, executive director of CLUE-LA (Clergy and Laity United for Economic Justice), who took part in the protests. “But in order for it to do good outside, it has to treat its own house well.”
Bet Tzedek has come back with three subsequent proposals, the most recent of which, according to Bender, amounts to $128 per month for an individual, $318 per month for an employee plus one dependent, and $468 per month for an employee and his or her family. (Bet Tzedek’s General Counsel, Elissa Barrett, said the offer was more complex than Bender made it out to be).
“They have made some movement, and we appreciate that,” Bender said. His union has made a counteroffer: Cut worker salaries by 1 to 2 percent, and cut management salaries by 3 to 5 percent. But for Bet Tzedek, this doesn’t deal with the crux of the issue: skyrocketing health care costs.
It’s a showdown not dissimilar to ones faced by AFSCME’s other members — public employees all over the country: What happens when powerful unions make demands that employers say they simply cannot afford?
Barrett put it this way: “The union leadership has told us that they would rather Bet Tzedek cut services than address the health care issue.”