The labor movement sent a powerful and potentially revolutionary signal to the tech industry this past week on September 24: contract employees of HCL Technologies, working under a renewable contract with Google, voted to unionize for better salaries, benefits, and working conditions. Nearly 80 contract HCL employees stationed in Google’s Pittsburgh office joined the United Steelworkers trade union, which represents more than 850,000 American employees across various industries. Significantly, this marked the first time contract tech workers have unionized in the United States in an industry that is almost entirely non-union.

The vote for union representation strikes at the heart of the business model used by companies like HCL, a multinational Indian IT services company. Although the HCL employees who have been contracted out to Pittsburgh work alongside Google employees in similar positions, they contend that they receive less favorable benefits and less compensation for their work than do those employed directly by Google. This is often the case for contract workers, who are heavily utilized in the technology industry thanks to the lower costs of employing them. But these same contract employees have historically been less inclined to unionize, fearing that their employers will respond by declining to renew their contracts when the time comes. Indeed, some HCL Technologies employees expressed this exact concern, recognizing the possibility that Google would decline to renew its contact with HCL as a result of Tuesday’s vote.

Other hurdles to unionization have traditionally existed with regards to employment in the technology sector. There has historically been an inclination to associate unions with blue-collar work; well-paid engineers may not think they would derive any additional benefits from joining a union. Similarly, in a world of tech startups, employees may not view management as strict authority figures against whom they should engage in the often adversarial process of negotiating for better pay, benefits and working conditions. All of these factors have formed a headwind against the unionization of tech, since tech companies unaccustomed to unionization efforts may not hesitate to show hostility towards, or even penalize, employees for trying to unionize.

But the direct unionization of HCL’s tech workers was perhaps not entirely unpredictable or without an overall context in which unions have gained footholds among tech giants. Despite a historical lack of interest in unionization, unions have taken aim at their employers, but just with other kinds of workers, even before Tuesday’s vote. Security guards and bus drivers employed by large tech companies like Google and Facebook are now unionized; employees at Amazon and Salesforce campaigned for changes in their working conditions. And Google employees staged a 20,000-person walkout in 2018 to protest unfavorable company policies. Each of these signals a new level of union activism in the technology sector, and each has helped pave the way for employees like those at HCL Technologies to advocate for better wages and working conditions.

Whether the HCL employees’ recent vote to bring in a union is an aberration or, rather, an indication of a real trend has yet to be seen. But multinational tech companies whose labor models are built on the low costs of contract workers should take note: nothing in federal labor law prevents employee unionization, as HCL learned.  Tech employers would do well to consider how attractive a target they may be for unionization and address employee concerns well before a petition for a union election is filed with the National Labor Relations Board.

Kelley Drye’s labor and employment group regularly counsels employers across industries and has deep experience in working within the tech industry. We would be pleased to provide more information about unionization issues.