Some condo workers released from shadow noncompetes by FirstService Residential

By: - July 11, 2023 11:44 am

Photo by Max Nesterak/Minnesota Reformer.

Residents of the River Towers condominiums in Minneapolis like their building’s staff. The building’s staff like the residents — many have worked in the building for years.

But a provision in the contract between the condo association and the building’s property management company, FirstService Residential Minnesota, means neither the residents nor the workers have a say in who can continue working in the building next month when a new management firm takes over.

A contract prohibits the condo board from employing FirstService desk attendants, caretakers or other staff — either directly or indirectly — for two years.

The agreement functions as a kind of shadow noncompete agreement, which FirstService Residential Minnesota recently dropped with its workers after the Reformer reported the story of a caretaker who was fired and faced the prospect of being sued for taking a similar job with another company.

In announcing the change in February, FirstService Residential Minnesota told workers noncompete agreements don’t align with the company’s values.

But months later, FirstService Executive Vice President Andy Gittleman told the River Towers condo association that FirstService didn’t plan to make any exceptions to its contract, according to condo board president Dustin Sprouse.

Under pressure from residents and workers, however, Gittleman has since offered not to sue the association if its new property management company hires workers who aren’t offered transfers to other properties managed by FirstService, Sprouse said. That applies to nine of the building’s 19 management staff, according to Sprouse.

Gittleman did not respond to a request for comment.

The contract provision illustrates how companies can wield significant power over workers and restrict their freedom to change jobs — even through agreements they aren’t party to.

“What we wanted was irrelevant in the decision,” said Josh Musikantow, a desk attendant at River Towers who has worked for FirstService for 12 years.

Musikantow said workers were kept in the dark for weeks about their future employment. He even showed up at a meeting of Downtown Minneapolis Neighborhood Association, of which Gittleman is the president, to ask if he would have a job on Aug. 1. Musikantow said he was kicked off the virtual call without an answer.

Musikantow found out last week that he was not being offered a transfer and could apply to keep his job at River Towers when Sudler Property Management takes over the building.

For workers who were offered a transfer, Musikantow said the shadow noncompete agreement prevents them from negotiating for higher wages.

“Anyone would have been better off if they could have stayed (in their building),” Musikantow said. “They could have gotten their wages up by having FirstService and the (homeowners association) compete for them. No one benefits from the way they did it.”

The anti-competitive nature of noncompete agreements, which experts say suppress wages and stifle competition, was a driving force in the Minnesota Legislature voting this year to ban noncompete agreements and so-called no-poach agreements between owners of franchises to not hire each other’s workers.

The Federal Trade Commission has also proposed a ban on noncompete agreements, which the agency describes as “a widespread and often exploitative practice that suppresses wages, hampers innovation, and blocks entrepreneurs from starting new businesses.”

River Towers’ transition to a new management company comes amid a yearlong unionization effort among FirstService employees.

Some workers, including Musikantow, have gone on strike in an effort to pressure the company to meet with them and agree to a process for holding a union election free from interference. For over a year, FirstService has chosen not to meet with workers to discuss unionizing with SEIU Local 26, Musikantow said.

Workers have also demanded the company be transparent about its use of shadow noncompete agreements like that with River Towers. Dozens of workers across more than a dozen properties managed by FirstService signed a petition asking the company to tell them which workers are subject to such agreements, but the company has not responded.

Because of his role in the union effort, Musikantow is not surprised he was not offered a transfer. Neither were other union organizers.

The new management company, Sudler Property Management, plans to employ workers through a staffing agency called Marsden, according to Sprouse.

Reached for comment, a Sudler executive declined to comment on the phone and did not respond to questions in a follow-up email.

Sprouse says the companies are amenable to retaining the FirstService workers. Workers with Marsden are already unionized with SEIU Local 26.

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Max Nesterak
Max Nesterak

Max Nesterak is the deputy editor of the Reformer and reports on labor and housing. Previously, he was an associate producer for Minnesota Public Radio after a stint at NPR. He also co-founded the Behavioral Scientist and was a Fulbright Scholar to Berlin, Germany.