Workers see big raise after condo board hires unionized management firm

A shadow noncompete prevented some workers from joining the new company, however

By: - August 23, 2023 8:37 am

Workers at River Towers in downtown Minneapolis received big raises after the condo board switched from FirstService Residential to a new management company. Photo by Max Nesterak/Minnesota Reformer.

Condo workers at River Towers in Minneapolis recently won two things for which they’ve been fighting for over a year: a union and a big pay raise.

Desk attendant and union organizer Josh Musikantow saw his wages rise 30% overnight — from $18.50 to $24 per hour — after he was hired by American Security and Investigations to do the same job he has done for 10 years. Plus, he has better health insurance.

Meanwhile, the condo board doesn’t expect the higher wages and benefits to dramatically increase their management fees.

“It’s definitely a great success,” Musikantow said. “It was a weird and circuitous route that we took to get here that may have ended up a lot worse.”

Musikantow and more than half a dozen of his co-workers feared they would be out of jobs at the end of July when a new management company took over from FirstService Residential Minnesota, which has managed the River Towers condominium complex for decades.

Tucked into the contract between FirstService and the condo association was a provision that prohibited them from employing FirstService workers — either directly or indirectly — for two years.

The agreement functioned as a kind of shadow noncompete clause. FirstService Residential Minnesota recently dropped a similar arrangement 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.

The Minnesota Legislature later passed a law banning new noncompete agreements and nullifying no-poach agreements between franchise owners not to hire each other’s workers. Federal regulators are also considering a ban on noncompete agreements, which research shows suppress wages and reduce competition.

When FirstService dropped noncompete agreements for its workers, the company said the practice didn’t align with its values. But Executive Vice President Andy Gittleman told the River Towers condo association that they didn’t plan to make any exceptions to its contract banning the condo board from hiring FirstService workers, according to condo board president Dustin Sprouse.

Gittleman later relented and agreed not to sue the association if its new property management company, Sudler Property Management, hires workers who aren’t offered transfers to other properties managed by FirstService. That applied to nine of the building’s 19 management staff, although three quit before they knew they would be allowed to stay at the Towers, according to a SEIU Local 26 spokesperson.

“What’s unfortunate is not everyone had a choice,” Musikantow said. “All the engineers got transferred so they couldn’t stay. The Towers never even got the chance to try to out-bid FirstService.”

Musikantow gladly accepted a position with a Sudler subcontractor to continue working at River Towers. The company is already unionized with SEIU Local 26, the union Musikantow and some of his colleagues have been working with for more than a year. Only a small portion of the workers’ raises will go toward union dues, which are about 2% of wages or a maximum of $65 per month for full-time workers.

Workers have already staged two strikes in their push to pressure FirstService to agree to a process to hold a union election free from intimidation or interference. FirstService has never agreed to meet with workers, some of whom are continuing to try to unionize the dozens of other condo buildings managed by the company.

The dissatisfaction among its staff led the River Towers condo board to evaluate management companies with labor peace.

Sprouse, the condo board president, said the new management company’s bid was comparable to FirstService. While payroll costs will be higher, Sprouse said they believe they will be able to reduce other maintenance costs.

“We thought Sudler would be more conscientious about spending,” Sprouse said. “Having (a management firm) who cares about your finances … and shops for better prices is worth their weight in gold.”

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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.