Regulatory Updates

TERO and the Regulation of Tribal Employment

Bruce Baird
Bruce Baird

by Bruce Baird, Principal
BRB Associates

The Tribal Employment Rights Ordinance (TERO) was added to Title VII of the Civil Rights Act in response to high unemployment rates on tribal reservations. The intent was to require any employer who wishes to do business within the reservation boundaries to hire tribal members.

TERO legislation was aimed directly at outside employers who wished to bid on construction projects within the reservation boundaries and to government agencies that put out bids for those construction projects.

Construction is defined as any new construction, repair, modification, or enhancement of any property or building on or near the reservation boundaries. This includes road and bridge construction.

Tribes were allowed to develop their own TERO ordinances and those that have developed ordinances have also developed TERO commissions and staff to enforce compliance. The commissions write the regulations under which their reservation will operate and the staff ensures that employers covered under the ordinances follow the regulations.

Under most TERO ordinances a prospective bidder of a construction project must submit a bid and a list of anticipated labor classifications. Each bidder can submit a list of core (essential) employees, all of whom must have been in the employ of the company for at least one year. Employers cannot enlist construction workers from a union hall and bring them on the project.

The TERO staff will submit a list of tribal members with specific trade skills and contractors will draw from that list as many workers as needed for the project. If the tribe cannot supply all the needed workers, especially in skilled positions, the contractor may go back to the union hall to fill out his staff requirements. In many cases if the tribe cannot supply the skilled labor, the contractor might have to supply training in those areas.

All construction projects have a prime contractor who is responsible for the entire project and who, in turn, hires sub-contractors to oversee various parts of the project. TERO certifies Indian-owned firms located both within and outside the reservation and prime contractors must give preference to certified Indian-owned firms over non-Indian owned firms.

In addition, contractors pay a fee for doing business on the reservation. These fees are used to operate the TERO offices and provide training programs for tribal members in the construction trades. Fees are usually 1.5 - 2.5% of total project costs. Many tribes require reservation programs that have construction projects to use TERO. Most do not because they already have in place Indian preference in hiring and contracting. If a tribe decided to construct a casino/resort complex it would do so through its TERO program, but it would not staff the casino/resort through TERO - it would do so through its human resources department.

Tribes already had Indian preference policies established in their hiring and personnel policies prior to the establishment of the TERO provisions in the Civil Rights Act. However, some tribes are now using TERO as their HR Department. TERO was never intended to protect tribal members from their own tribes. It was intended to protect the working rights of tribal members from off reservation businesses doing construction projects on or near the reservation.

For casinos thinking about using TERO as an HR Department it poses a number of problems. First, tribes use no federal dollars in their casino operations and are not subject to federal labor regulations (not withstanding the recent Ninth Circuit Court ruling on unions in California). You may be limiting your sovereignty by submitting to unnecessary federal TERO regulations. Second, you remove your
manager's ability to make decisions and that's what managers are hired to do. They become dependent upon the regulations. Finally, you will lose the trust of your staff when they begin to feel you are unable to regulate yourself.

Tribes should have confidence in their ability to regulate employment on their reservations in their own programs through their own personnel policies and not have to turn to a policy that was designed to protect their working rights from outside employers. However, under the definition of covered employer in TERO, an outside management company operating a tribal casino for a tribe may be subject to TERO provisions, would be subject to Indian preference and training, and be required to only bring a core staff on site.

Bruce Baird is the owner of BRB Associates. He can be reached by calling (218) 246-2082 or email brbassociates@hotmail.com