The union’s efforts met fierce oppo­si­tion from Gui­tar Cen­ter man­age­ment, which insists that its work­ers would be bet­ter off with­out the involve­ment of labor groups. The union also accused Bain Cap­i­tal of deploy­ing exces­sive aggres­sion, even ille­gal tac­tics, in its past efforts to thwart union orga­niz­ing. In one suc­cess­ful Chica­go union dri­ve employ­ees accused Gui­tar Cen­ter man­age­ment of threat­en­ing to shut­ter their entire store if the union won, an poten­tial vio­la­tion of fed­er­al labor law. Gui­tar Cen­ter reject­ed the claim, and inti­mat­ed that the union had dis­abled one of its sup­port­ers’ vehi­cles on the day of the union vote.

After Bain Cap­i­tal acquired Gui­tar Cen­ter in 2007, work­ers began com­plain­ing of declin­ing stan­dards, includ­ing low­er com­mis­sions from one year to the next. Since last May, employ­ees at three Gui­tar Cen­ter stores around the coun­try vot­ed in favor of union rep­re­sen­ta­tion with RWDSU.

The Retail, Whole­sale and Depart­ment Store Union (RWD­SU) calls the pol­i­cy shift a major vic­to­ry for its orga­niz­ing effort, focus­ing on Gui­tar Cen­ter stores. The union believes that the com­pa­ny is seek­ing to appease frus­trat­ed work­ers in order to keep more of its stores away from union organizers.

After a year of fierce oppo­si­tion to a union cam­paign seek­ing a fair­er pay struc­ture for work­ers, In These Times has learned that the pri­vate equi­ty-owned retail­er Gui­tar Cen­ter plans to imple­ment a rad­i­cal shift in the way it com­pen­sates its work­ers: It will replace its much-reviled sales com­mis­sion sys­tem with a far more straight­for­ward pro­to­col of hourly pay. Gui­tar Cen­ter, the country’s largest retail­er of musi­cal instru­ments, says that the shift will not only clar­i­fy pay­ment for its more than five thou­sand sales asso­ciates, but also includes a com­mit­ment that every sin­gle Gui­tar Cen­ter employ­ee will earn above min­i­mum wage begin­ning this September.

Along with its new pay­ment pack­age, Gui­tar Cen­ter is promis­ing that not a sin­gle of its employ­ees will earn ​“one pen­ny” less this year than they did last year. As for its promise that work­ers would earn above min­i­mum wage, Gui­tar Cen­ter, cit­ing issues relat­ed to com­pe­ti­tion, would not say exact­ly how much in addi­tion to the fed­er­al min­i­mum this base­line wage would be. Gui­tar Cen­ter says that a tiny frac­tion of its top sell­ers can stay on com­mis­sioned pay on a pure­ly vol­un­tary basis.

Gui­tar Cen­ter bris­tles at any notion that labor orga­niz­ing forced the change.“The RWD­SU should be care­ful in try­ing to take cred­it for changes that had noth­ing to do with them,” says Christo­pher Ian Ben­nett, Gui­tar Cen­ter’s vice pres­i­dent of com­mu­ni­ca­tions and cor­po­rate affairs. It’s impor­tant to tell the truth about these things, and I don’t think they’re being hon­est to their mem­ber­ship when they say things like that. The real­i­ty is that they’ve lost more than half of their attempts to union­ize and Gui­tar Cen­ter is sim­ply fol­low­ing through on a com­mit­ment of change for our asso­ciates that was already under­way long before the first men­tion of unions even occurred more than a year ago.”

​“There are def­i­nite­ly some optics there that make it look like we’re chang­ing things because of the union,” adds Gui­tar Cen­ter Senior Vice Pres­i­dent of Stores Kevin Kazubows­ki. ​“But we’re real­ly chang­ing things because Mike Pratt [Gui­tar Center’s CEO] is pro­gres­sive and he’s look­ing at our com­pa­ny and say­ing, ​‘Let’s fix all the stuff that’s messed up and let’s run an awe­some company.’”

But the union believes it has scored a major win for thou­sands of the company’s employ­ees, although per­haps at the cost of its own ease of orga­niz­ing future Gui­tar Cen­ter stores. ​“In a way it’s a pyrrhic vic­to­ry,” says Phil Andrews, RWDSU’s direc­tor of retail orga­niz­ing. We’ve suc­ceed­ed in chang­ing the lives of thou­sands of Gui­tar Cen­ter work­ers while only achiev­ing a union con­tract in a hand­ful of stores. If we go away, it would be very easy for those stan­dards to drop back down.”

In inter­views arranged by RWD­SU over the past year, Gui­tar Cen­ter work­ers uni­form­ly expressed exas­per­a­tion over the company’s com­plex com­mis­sion struc­ture, known as the ​“fade” sys­tem. Under this plan, work­ers must essen­tial­ly earn the equiv­a­lent of their hourly wages in unpaid sales com­mis­sions before they see any actu­al com­mis­sion added to their base pay, which is often min­i­mum wage. Employ­ees unlucky enough to find them­selves asked to per­form non-sales duties would often lose the chance to earn any­thing above their base pay. In this sit­u­a­tion, low wages cou­pled with arbi­trary and unpre­dictable deci­sions of man­age­ment would affect work­ers’ abil­i­ty to earn a suf­fi­cient living.

The use of com­plex sales com­mis­sion struc­tures is a strat­e­gy used increas­ing­ly by large retail com­pa­nies seek­ing to wrest as much work as pos­si­ble out of work­ers, says Mike Sweeney, a labor lawyer who lit­i­gates cas­es involv­ing com­mis­sions. ​“Often the com­pen­sa­tion arrange­ments aren’t straight­for­ward — it’s called a com­mis­sion but there are a lot of bells and whis­tles and twists and turns that employ­ers use to beat work­ers out of pay,” he says. ​“It’s a way of squeez­ing pro­duc­tiv­i­ty out of work­ers, who bear exter­nal costs that the com­pa­ny does not have to absorb.”

The issues with Gui­tar Center’s out­go­ing ​“fade” sys­tem are akin to those in the restau­rant indus­try, where work­ers must make up the dif­fer­ence between the base hourly wage (which, for tipped employ­ees like wait­ers in many states is $2.13 an hour) and the fed­er­al min­i­mum wage of $7.25 an hour in tips before gain­ing any addi­tion­al income on top of that, accord­ing to Shan­non Liss-Rior­dan, a wage-and-hour lawyer.. ​“Restau­rants will usu­al­ly pay the low­er tipped rate even for non-tipped work,” Liss-Rior­dan says.

On April 3, Gui­tar Cen­ter announced that Ares Man­age­ment, anoth­er pri­vate equi­ty firm, would take a con­trol­ling stake in the com­pa­ny from Bain Cap­i­tal. The deal relieves $500 mil­lion of the retailer’s $1.6 bil­lion in debt that had result­ed from Bain’s 2007 lever­aged buy­out of the company.

Gui­tar Cen­ter says its nix­ing of com­mis­sions has noth­ing to do with the Ares deal, but is rather part of an ongo­ing effort to improve the com­pa­ny. In seek­ing to over­haul its pay struc­ture, Gui­tar Cen­ter enlist­ed the help of glob­al HR con­sult­ing firm Tow­ers Wat­son to sur­vey employ­ees and design a new method of com­pen­sa­tion. ​“What we got back from Tow­ers was that very few com­pa­nies our size pay com­mis­sions, it’s just not scal­able,” says Gui­tar Center’s Kevin Kazubows­ki. ​“It gets out of con­trol as your com­pa­ny con­tin­ues to grow, and that’s what hap­pened with our organization.”

RWD­SU says that nei­ther the new pay­ment struc­ture nor Gui­tar Cen­ter’s new own­er­ship will change its mis­sion. ​“We expect the orga­niz­ing efforts to con­tin­ue,” says Jan­na Pea, a spokesper­son for RWD­SU, ​“as work­ers con­tin­ue to reach out to us on a reg­u­lar basis.”

This piece has been updat­ed with an addi­tion­al quote from Gui­tar Center.