SpaceX faces hearing on engineers fired after criticizing Elon Musk over sexism
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Contract workers on Google’s YouTube Music Content Operations Team were laid off while trying to bargain with the company, the Alphabet Workers Union reported Feb. 29. The workers heard about their lost jobs while presenting before the Austin, Texas, City Council. However, their employer, Cognizant Technology Solutions Corp. (NASDAQ: CTSH), says that was not the case.
Those affected were working through Google’s Austin offices and responsible for ensuring music content is available and approved for YouTube Music’s subscribers, according to the union, which seeks to represent both directly employed and contingent workers.
Workers’ representatives said they learned about the change during the City Council meeting, during which they were seeking a city resolution asking Google to bargain with the workers, KVUE television in Austin reported. The video shows the workers receiving the news during their presentation.
The incident follows a strike. The Verge reported that 40 team members went on strike last year to demand a change to Google’s return-to-office policy.
Workers won their union election back on April 26, 2023, according to the union. This was after an unfair labor practice strike in February 2023 over a return-to-office mandate. Dozens of local workers returned to the office, but several out-of-state workers continued striking, the union said.
“Workers joined the strike because their only other option was ‘voluntary termination’ for being unable to physically show up at the office. Many workers either live across state lines or are not paid enough to afford the associated expenses with in-person work, like gas and childcare costs,” according to the union. It noted some workers received $19 per hour in pay.
However, Google said the contracts simply came to a natural end.
“As we’ve shared before, these are not Google employees,” a Google spokesperson said in a comment emailed to SIA. “Cognizant is responsible for these workers' employment terms, including staffing. As is the case here, contracts with our suppliers across the company routinely end on their natural expiry date, which was agreed to with Cognizant.”
Cognizant in an email to SIA said the employees weren’t laid off.
“To clarify, nobody was laid off. A contract expired and the Austin-based employees are still Cognizant employees,” the company said. “As a professional services company, ramp-downs and ramp-ups of projects are a normal part of Cognizant’s business operations. This contract ended at its planned expiration date.”
The company continued, “Cognizant has an established process for connecting associates with new opportunities across our global organization when these changes arise. These associates will become part of Cognizant’s deployable talent pool, better known as our ‘bench,’ where they are given seven weeks of dedicated, paid time to explore other roles within the organization and build new skills through our training ecosystem.”
Cognizant also said it will continue to support its associates as they find their next project.
A U.S. labor board judge on Tuesday held a hearing in a case accusing rocket maker SpaceX of illegally firing eight engineers for criticizing CEO Elon Musk and accusing him of sexist conduct in a letter to company executives.
The case before National Labor Relations Board Administrative Law Judge Sharon Steckler in Los Angeles prompted SpaceX to file a lawsuit in January seeking to block it from going forward by claiming the board's in-house enforcement proceedings violate the U.S. Constitution.
Starbucks (SBUX.O), opens new tab, Amazon.com (AMZN.O), opens new tab, and Trader Joe's, all of which are facing nationwide union organizing campaigns, have raised similar arguments in pending board cases. If any of the companies are successful, it could severely limit the agency's ability to hear cases involving allegations of illegal labor practices.
The NLRB's general counsel, which acts as a prosecutor, claims SpaceX violated U.S. labor law by firing the engineers in 2022 after they circulated a letter accusing Musk of sexist conduct and claiming the company tolerated discrimination against women. SpaceX is accused of violating the National Labor Relations Act, which protects workers' rights to band together and advocate for better working conditions.
The engineers have separately filed complaints with a California civil rights agency accusing SpaceX of tolerating sex discrimination and retaliating against workers who complained.
SpaceX has denied wrongdoing while attacking the labor board's core functions in the lawsuit, which it filed in federal court in Texas. A judge last month transferred the case to California, and the 5th U.S. Circuit Court of Appeals on Tuesday rejected the company's challenge to that decision.
Harry Johnson, a lawyer for SpaceX and former labor board member, said during Tuesday's 20-minute hearing at the NLRB that the company is considering its options regarding the 5th Circuit's decision. That could include asking the full appeals court to reconsider the ruling, he said.
Federal courts in Texas have become a favored destination for legal challenges to government regulations and enforcement powers, with its high concentration of conservative judges and the fact that they are within the 5th Circuit, which is considered by many to be the most conservative U.S. appeals court.
Tuesday's hearing was procedural, focusing on challenges by the board and SpaceX to subpoenas issued by each side. Steckler did not hear testimony or opening statements.
The judge said she planned to hold further hearings in the case in May, and that she expected them to last one week.
If SpaceX loses, it could be ordered to reinstate the workers and compensate them for lost pay and benefits. Steckler's decision in the case can be appealed to the five-member board and then a federal appeals court.
SpaceX did not respond to a request for comment. The company is represented by lawyers from the law firm Morgan Lewis & Bockius, including Johnson and John Ring, who was the chairman of the NLRB during the Trump administration.
SpaceX had asked to put off the hearing pending the company's bid in the Texas court to block the labor board case from moving forward. An NLRB regional director last month denied that motion and the five-member board, which has one vacancy, upheld that decision in a single-page ruling.
In its lawsuit, the company claims the labor board's administrative process for hearing cases involving illegal labor practices violates its constitutional right to a jury trial. SpaceX also says limits on the president's ability to remove administrative judges and board members are unconstitutional.
The labor board has said in court filings that removal protections similar to those for board judges and members have been upheld by the U.S. Supreme Court, and that the right to a jury trial does not extend to cases brought under federal labor law.
Morgan Stanley (MS.N), opens new tab has laid off about 9% of its staff at its asset management business unit in China, two people with direct knowledge of the matter said, as the country's spiraling stock market dampens prospects for its $3.8 trillion fund sector.
Morgan Stanley Investment Management China started reducing headcount in December and the move has impacted about 15 employees, the people said on condition of anonymity as they were not authorized to speak to the media.
This would be the first time Morgan Stanley has cut staff at the China fund unit since it bought out its local partner's 36% stake in the loss-making business for about $54 million in 2023. It rebranded the unit as a wholly owned subsidiary in June.
Morgan Stanley declined to comment.
The downsizing underscores the challenges that global financial firms, including JPMorgan (JPM.N), opens new tab and BlackRock (BLK.N), opens new tab, face in the world's second-biggest economy as a protracted economic malaise batter markets there.
China's blue-chip CSI300 index (.CSI300), opens new tab sank to five-year lows last month, after having lost 11% in 2023, pummelled by an unprecedented debt crisis in the property sector and a lack of large-scale government stimulus.
The weakening of the Chinese market has hit local investors' appetite, resulting in massive redemptions from actively managed equities funds.
The job cuts by Morgan Stanley in the China fund unit adds to the dour outlook for other China-focused jobs in the financial sector including investment banking.
China's onshore fund market saw a muted 6% growth in assets last year after a 1% rise in 2022, slowing down from a staggering annual jump of more than 27% in both 2020 and 2021.
'PLAY DEFENSIVE'
Shenzhen-based Morgan Stanley IM China saw its assets under management decline every quarter after reaching a peak in June 2021, with assets in its funds plunging 53% from the peak to 19.8 billion yuan ($2.75 billion) at end-2023, according to company disclosures.
The unit recorded an operating loss of 48.5 million yuan in 2022 and 23.2 million yuan in the first half of 2023, earnings results of its former joint venture partner Huaxin Securities showed.
The U.S. firm for the first time hired a chief investment officer at Morgan Stanley IM China, Alex Zhou, to steer the investment business. Zhou has previously worked at AIA, where he was head of equity.
The headcount reduction and hiring of Zhou are part of Morgan Stanley IM China's ongoing initiatives to recalibrate the business after taking full ownership last year, a third source with knowledge of the matter said.
One of the first two sources said that "playing defensive" amid weaker fundraising prospects was also a key reason for the cuts.
Peter Alexander, founder and managing director of China consultancy Z-Ben Advisors, however, said foreign firms might just be rolling out overhauls or cuts in China units out of "policies of inertia".
"It is more about pressure from the headquarters to reduce expenses anywhere and everywhere," he said.
A coalition of labor unions said on Tuesday it is ending its boardroom fight at Starbucks (SBUX.O), opens new tab after the coffee chain last week agreed to work toward reaching labor agreements.
The Strategic Organizing Center (SOC), a coalition of North American labor unions, is withdrawing its three director candidates for the coffee chain's 11-member board one week before Starbucks investors were slated to elect directors to oversee corporate strategy at the company's March 13 annual meeting.
The union confirmed what Reuters had reported earlier.
Many large investors told the coalition, which includes the parent of Workers United, which represents Starbucks workers, that they are optimistic Starbucks is committed to changes and plans to repair its relationship with employees, the sources said.
"Investor concern with the board and management response to ongoing unionization efforts at Starbucks has been loud and clear, but last week's joint announcement from the company and Workers United of a settlement framework was welcome news that we hope means a fundamental change in direction," New York City Comptroller Brad Lander told Reuters.
Starbucks on Tuesday said it appreciates the coalition's decision and added that its board is focused on "driving long-term value for all stakeholders, including partners, shareholders, customers, and farmers."
"Starbucks has always been committed to doing the right thing – importantly, for our partners who are the heart of our business," the company said in a statement.
The fight was closely watched on Wall Street because it marked the first time a labor union used tools traditionally employed by hedge funds to push for board seats at a corporation.
The union coalition argued Starbucks' resistance to unionizing that began in 2021 tarnished the brand and hurt shareholders by weighing on the share price.
The coalition hired lawyers, a proxy solicitor, and a communications firm that usually works with large activist hedge funds on big campaigns. It nominated three candidates with White House, National Labor Relations Board, and economic policy expertise and was pushing ahead in trying to convince shareholders, including big index funds, that Starbucks needs better oversight as it works to repair labor relations.
"SOC Investment Group led an effective campaign with qualified candidates committed to preserving fundamental workers' rights and increasing long-term value, and the announced suspension of a contentious proxy fight is a win for workers and shareholders," Lander added.
He said Starbucks' investors now expect the company "to continue investing in their workforce, and we will continue to be engaged." The city-owned $157 million worth, or 1.64 million shares, of Starbucks at the end of December.
While only about 370 U.S. Starbucks stores are unionized, the movement, as well as the proxy fight launched in November, tapped into growing support for organized labor after unions last year won concessions for Hollywood writers and autoworkers.
Now the coalition, which did not obtain any concessions from the company, is pinning its hopes on last week's news that Starbucks and the union that represents its workers will work to create a "foundational framework" that could lead to collective bargaining agreements and the resolution of lawsuits.
With this news now public, the coalition may claim victory, said Lawrence Elbaum, co-head of law firm Vinson & Elkins' shareholder activism defense practice. "With the group having achieved some of the changes it was pushing for, it may be a moment that will inspire others to mount copycat campaigns."
The coalition's decision, follows last week's recommendations by the two main proxy advisory firms Institutional Shareholder Services (ISS) and Glass Lewis that urged Starbucks shareholders to back all 11 company directors, arguing the coalition had not sufficiently made its case to win seats.
But ISS wrote that the coalition, "has achieved at least a portion of what it ostensibly set out to accomplish."
