This story was originally published by InsideSources.
It’s been quite a year for T-Mobile, the relative newcomer in the American telecom market. Not only has T-Mobile gone far to distinguish itself as the hip, consumer-friendly “un-carrier,” but it has rocketed past Sprint to capture the No. 3 spot in the U.S. mobile phone market, with 63 million customers. What’s more, Consumer Reports recently rated T-Mobile as the nation’s best mobile phone carrier, above Verizon and AT&T.
But at the same time, T-Mobile has been hit by the kind of bad news that an image-conscious company can ill afford: government charges that it has illegally mistreated workers and sought to silence them. Indeed, a judge ruled in August that T-Mobile had illegally barred a female call center employee in Maine from talking with co-workers about a sexual harassment complaint she had brought against her supervisor. And that came after the National Labor Relations Board accused T-Mobile of illegally firing several pro-union workers and after an N.L.R.B. judge ruled last March that T-Mobile unlawfully prohibited employees from talking with one another or the news media about wages, workplace investigations and other workplace concerns.
T-Mobile faces a second barrage of allegations undermining its brand image as the big wireless carrier that doesn’t treat customers the way big carriers do. The New York State Attorney General recently launched an investigation into allegations of deceptive advertising by T-Mobile, that its “no-contract-required” sales pitch -- the cornerstone of its being the cool “un-carrier” -- is misleading. And several consumer and labor groups are urging the Consumer Financial Protection Bureau to investigate allegations that some T-Mobile customers were placed in aggressive debt collection with little or no notice. And if that were not enough, the Federal Trade Commission reached a $90 million settlement with T-Mobile 14 months ago, having accused the company of charging hundreds of millions of dollars in improper fees for premium texts such as horoscopes and flirting tips that customers hadn’t signed up for.
Now, T-Mobile’s problems – especially on the labor front – threaten to become fodder for the larger debate over the plight of American workers, as a tide of populist anger rises in both political parties against what critics say is a culture of unbridled corporate excess in the nation.
Senator Bernie Sanders of Vermont, whose presidential campaign is predicated on the idea of reining in corporate power, recently decried the situation at T-Mobile. “T-Mobile’s repeated labor law violations and anti-union activities are particularly troubling given the long history of its parent company in Germany of respecting worker rights,” he told InsideSources. “In my view, we have got to make it easier, not harder, for workers at T-Mobile to form a union and collectively bargain for better wages and benefits.”
Mr. Sanders’ echoed the sentiment of 25 members of Congress who took the unusual step of writing to German Chancellor Angela Merkel in November to urge her and the German government – which owns 30 percent of T-Mobile’s dominant shareholder, Deutsche Telekom -- to ensure that T-Mobile stops muzzling workers and ends its ban on discussing sexual harassment and discrimination complaints with co-workers.
Even T-Mobile’s partners have expressed alarm. Investors in Deutsche Telekom, the German telecommunications giant that owns two-thirds of T-Mobile US, voiced concerns that the carrier may not be respecting its workers in the United States, in sharp contrast to the situation in Germany, where Deutsche Telekom cooperates closely with its unions and is careful to acknowledge worker rights. Deutsche Telekom told InsideSources that it “takes its responsibility with regard to the working conditions of our employees very seriously.” It added that it believes “national regulations must be complied with” and that it is the free right of employees to decide for or against union representation.
In its own defense, T-Mobile blames many of its problems on an aggressive campaign to damage the company’s image that the Communications Workers of America has undertaken as it seeks to organize T-Mobile’s employees. The company says the attack campaign has enlisted numerous consumer and women’s groups to apply pressure to T-Mobile, even as the union has managed to unionize only 25 of the company’s 45,000 employees.
Addressing specific labor allegations, Annie Garrigan, a T-Mobile spokeswoman, said that after last year’s N.L.R.B. rulings, the company rescinded its rules barring employees from discussing wages and internal investigations. And Deutsche Telekom said all accusations of poor working conditions and “supposed violations of U.S. labor law,” have been “closely scrutinized” and “there are no indications to suggest that TMUS (T-Mobile US) managers would prohibit union activities.”
As for the New York State Attorney General’s claim that the company’s “no-contract-required” sales pitch is misleading, T-Mobile strongly suggested it was without merit, noting that no regulatory body has accused the company of misleading advertising.
Yet for all of T-Mobile’s efforts to contain the business, legal and political fallout over its practices, the company continues to face sharp questions, particularly from its workers and their supporters in the labor movement.
Consider Amber Diaz, who was repeatedly rated in the top 10 percent of customer service representatives at T-Mobile’s call center in Albuquerque. She said her job was enormously stressful, with workers pressured to meet sales targets and cut the average length of calls. She said some supervisors even prohibited call customer service representatives from sitting down at their computers until they had gotten at least one subscriber to extend their contract that day. “Sometimes people didn't get to sit until after lunch,” Diaz said.
Soon after Diaz openly backed a unionization drive by the Communications Workers of America – her photo was placed on the union’s website with a pro-union quote – she was fired. She said the company said she was being dismissed because her doctor was two days’ late in sending a note to excuse her absence from a stress-related illness.
The N.L.R.B. brought a complaint on Diaz’s behalf, asserting that T-Mobile had fired her in November 2013 for an illegal reason -- that she was supporting a union. Before her case went to trial, T-Mobile reached a settlement, agreeing to pay Diaz $30,000 without admitting wrongdoing.
“It was very stressful, to get fired like that a week before Thanksgiving,” Diaz said. “Looking back, I’m so grateful that it happened. I no longer have to take anti-anxiety medicine to deal with my job. I don’t have to worry about losing hair anymore. I’m a much healthier person.”
Julia Crouse, a former customer service representative at a T-Mobile call center in Chattanooga, said her job was so stressful that she often had panic attacks, sometimes vomiting before reporting to work. She said her manager often ordered employees who had the worst sales numbers or longest average call times to wear a dunce cap.
There is no question that T-Mobile has risen further and more rapidly than ever anticipated since John Legere became its C.E.O. in September 2012. It did that through a culture known for being fiercely competitive and for being aggressive about holding down costs.
On February 17, Legere pleased investors with a strong earnings report -- fourth-quarter earnings were $297 million, nearly triple the level a year earlier. T-Mobile said it added 1.3 million new branded postpaid customers in the fourth quarter, the most lucrative kind, and expects to add 2.4 million to 3.4 million more this year.
Legere has earned himself a reputation on Twitter for panache and putdowns. Last summer when T-Mobile sprinted ahead of Sprint, Legere tweeted: “They’re really making moves over there at Sprint. Like the move from 3rd to 4th.
To capture more market share – and overtake Sprint – Legere eliminated mandatory two-year contracts, while offering data rollover, texting while on planes and unlimited music streaming. As another lure, T-Mobile’s “Simple Choice” plan also offers talk, text and data use from Canada and Mexico without extra charges.
Even as T-Mobile floods the airwaves with cute, magenta-dominated advertisements about being the innovative “un-carrier,” a coalition of labor, women’s and consumer groups has thrown T-Mobile onto the defensive, maintaining that its aggressive behavior to increase market share and cut costs often went over the line.
The National Consumers League and several African-American, Latino and Asian-American groups have written to the Consumer Financial Protection Bureau to urge it to investigate T-Mobile’s marketing and debt collection practices. They were echoing a call from the Change to Win labor coalition, which issued a report saying that T-Mobile’s marketing claim of not having contracts is deceptive. Change to Win asserts that while T-Mobile might not have month-to-month or two-year service contracts, the great majority of its customers have two-year equipment financing plans or contracts that often still call for financial penalties for early termination, much like regular cell phone contracts.
“T-Mobile has a pattern of deception at virtually every stage of its un-carrier promotion,” said Nell Geiser, a research director at Change to Win. “T-Mobile gets credit for changing the mobile industry, but should not get a free pass when it deceives and cheats consumers.”
The criticism has come on other fronts as well. In December, the National Women’s Law Center, the A.F.L.-C.I.O. and the communications workers union delivered a petition with 15,000 signatures to the German Embassy in Washington, urging the German government to use its power as a Deutsche Telekom shareholder to get T-Mobile to stop prohibiting employees from discussing their sexual harassment or discrimination complaints with their coworkers. “U.S. workers have a basic right to speak out and challenge sexual harassment and discrimination in the workplace without fear of facing retaliation or losing their jobs,” said Emily Martin, General Counsel at the National Women’s Law Center. “By threatening employees who talk publicly about sexual harassment or other workplace abuses, T-Mobile’s gag order policy violates this right.”
In August, an N.L.R.B. judge ruled that T-Mobile had illegally prohibited Angela Agganis, a T-Mobile call center worker for eight years in Maine, from discussing her sexual harassment complaint with her coworkers.
In an interview, Agganis, 33, said her supervisor had put his hands on her shoulders and neck at work to massage her and had stood right in front of her several times with the crotch area of his pants right in her face. She had learned that he had lost his job as a psychiatrist in Wisconsin because he had sexual relations with a young patient.
Agganis said she was surprised by a form that a T-Mobile human resources official required her to sign when she filed her sexual harassment complaint – promising not to discuss the case with her coworkers. “When I realized what the paperwork was saying, I was appalled,” Agganis said. “I understood that it was to silence me.”
Other employees have complained of being similarly silenced.
At a T-Mobile call center in Wichita, Joshua Coleman had done so well as a customer service rep the company awarded him a trip to Puerto Rico, parading him around the center as model employee. But several weeks later, when the company discovered that Coleman was an outspoken union supporter, it suddenly canceled his Puerto Rico vacation. And it ultimately fired him in May 2013, prompting the N.L.R.B. to bring a case that accused T-Mobile of unlawfully dismissing Coleman. T-Mobile settled that case for $40,000 without admitting wrongdoing.
Coleman – now a paid organizer for the Communications Workers of America -- said unionizing T-Mobile’s workers is proving difficult because so many workers are scared.
“They won’t stop and talk to us in front of the building when we try to hand out leaflets,” Coleman said. “It’s difficult because of the culture of fear that impedes employees from exercising their federal rights.”
Even though only 25 T-Mobile workers are in a union – 10 workers at a retail store in East Harlem and 15 technicians in Connecticut – the union says 1,000 T-Mobile workers belong to a pro-union group, T-Mobile Workers United.