Some of the most common questions we hear at Native PTAC are variations of “How do I work with the Tribes?” As there are currently 567 federally recognized domestic sovereign nations within the United States, there is no one-size fits all direct answer. Each Nation is unique and each Nation works differently. That being said, there is one guideline that all businesses should embrace: Successful businesses take the time to learn about the market and clients they want to do business with.
We are please to share the following article from the Swinomish Indian Tribal Community. The Swinomish adhere to strong Tribal Employment Rights Ordinances (TERO) in their hiring and contracting practices. This article is both an overview on common general TERO practices contractors may encounter in Indian Country, and details on TERO specific to the Swinomish. Our thanks go to Brian Porter, Swinomish Indian Senate Vice Chairman and TERO Officer, and Therese Norton, Swinomish Grants Manager.
“We’re a crabbing & fishing village but what do we do when the crabbing and fishing is gone? Even now, crabbing & fishing is a supplemental source of income. It is not a main source of income. I love exercising my treaty rights but we also need to bring members off the boat and help them make a livable wage.”
– Brian Porter, Swinomish Indian Senate Vice Chairman and TERO Officer.
Basic FAQs about TERO
What is TERO?[1]
TERO stands for Tribal Employment Rights Ordinance or Office. TERO Ordinances require that all employers who are engaged in operating a business on reservations give preference to qualified Indians in all aspects of employment, contracting and other business activities. TERO Offices were established and empowered to monitor and enforce the requirements of the tribal employment rights ordinance. The Swinomish Indian Tribal Community TERO ordinance is Title 14, Chapter 1.
What is the purpose of the TERO program?
The primary purpose of the TERO program is to enforce tribally enacted Indian Preference law to ensure that Indian/Alaska Native people gain their rightful share to employment, training, contracting, subcontracting, and business opportunities on and near reservations and native villages. Swinomish enacted a TERO code:
- To address the high rate of poverty, unemployment and underemployment that exists among native people living on reservations.
- To eliminate discriminatory and other historical barriers tribal members face while seeking employment and business opportunities on or near reservations.
- To ensure that tribal members receive their rightful entitlements as intended and required under the Tribal and federal Indian preference employment law.
What is the legal basis for TERO?
A Tribe’s authority to enact and enforce an Indian/Native employment preference law is grounded in its inherent sovereign status. This legal doctrine is the most basic principle of Indian law and is supported by a host of Supreme Court decisions. Inherent sovereign powers derive from the principle that certain powers do not necessarily come from delegated powers granted by express acts of Congress, but are inherent powers of a limited sovereign that have never been taken away. Tribes have a basic relationship with the federal government as sovereign powers. This is recognized in both treaties and federal statutes. The sovereignty of tribes has been limited from time to time by treaties and federal legislation; however, what has not been expressly limited remains within tribal sovereignty.
What does the TERO Ordinance do?
- SETS CONDITIONS: Mandates the tribal requirements for Indian preference that all covered employers must comply with in order to be eligible to perform work on reservations.
- ESTABLISHES AUTHORITY: Empowers the TERO Commission and Staff with sufficient authority to fully enforce all provisions of TERO ordinance.
- ASSIGNS RESPONSIBILITY: Defines and describes the duties and responsibilities of TERO staff and commission.
- DELINEATES PENALTIES FOR VIOLATIONS: Clearly spells out penalties employers may face for violations of tribal law.
- PROVIDES DUE PROCESS: It provides principles of legal fairness to all parties involved in compliance or violation dispute issue.
Preference in Employment and Contracting
What is Indian preference?
Indian preference is a unique legal right that tribal members have that entitles them to first consideration to all employment to which they are qualified, training, contracting and subcontracting and business opportunities that exist on and in some cases near reservations. Under Swinomish law, all employers are required to give preference in employment as follows[2]:
| Type of Employer | Employment Preference |
| Non-Tribal Employers | Qualified Indians residing on or near the Swinomish Indian Reservation over non-Indians |
| Tribe and Tribal Enterprises Acting as Employers | 1st Preference: Qualified Swinomish tribal members
2nd Preference: Qualified Spouses (both Indian and non-Indian of Swinomish tribal members 3rd Preference: Qualified Other Indian over non-Indians |
What is the extent of TERO jurisdiction?
TERO has jurisdiction over all employers operating within the exterior boundaries of the reservation as legally defined by treaty or legislation including ceded lands, territories, and lands where jurisdiction has not been extinguished.
What is the enforcement approach to TERO?
Most of today’s TERO programs utilize a pro-active approach to enforcement. TERO officers attempt to use education and synergistic partnering principles in order to prevent violations of tribal law and generally try to create mutually beneficial relationships with reservation employers.
What are the basic TERO requirements?
All covered employers operating a business within tribal/village jurisdiction are required to provide Indian and Native preference in employment, training, contracting, sub-contracting and in all other aspects of employment. Below are several specific examples employers are required to comply with. Employers must:
Submit an acceptable compliance plan detailing the steps they will take to ensure compliance with the TERO requirements.
Utilize the TERO skills bank for all referrals and consider Indian/ Native applicants before interviewing or hiring non-Indian/ Natives.
Agree to hire no less than a specific number of Indians/ Natives in each job classification and cooperate (where feasible) with tribal training programs to hire a certain number of trainees.
Eliminate all extraneous job qualification criteria or personnel requirements which may act as barriers to Indian/ Native employment. EEOC guidelines on legal BFOQs are used by TEROs.
Agree to acknowledge and respect tribal religious beliefs and cultural differences and to cooperate with TERO to provide reasonable accommodations.
All contractors claiming preference must file for certification as Indian owned businesses.
What are the sanctions for violation of TERO?
Violation of TERO requirements may result in severe sanctions. If it is determined that employers have willfully violated TERO requirements, tribes have the power to:
- Deny such party the right to commence business within the reservation/village.
- Impose a civil fine on such party ranging from $500 to $10,000 per each violation.
- Terminate or suspend such party’s operation and deny them from doing further business within the reservation or village.
- Order the removal of unlawfully hired non-Natives and take action to ensure future compliance. It can also order the back payment of lost wages to aggrieved Natives.
Can TERO requirements be waived?
Yes, but it is not recommended. Some ordinances contain a provision for waivers to be granted by the Tribal Council in certain critical situations. Waivers of this type are made on a project specific basis by the tribal government. Neither the TERO Director nor the Commission can waive any provision of the TERO ordinance unless authorized by the Tribal Council. SITC‘s ordinance states that no TERO fee shall be waived without prior approval of the Senate.[3]
Waiver of preference requirements or fees can seriously affect the integrity of the TERO ordinance, the fee and the tribal government itself. Additionally, several federal agencies have policies that state that if a tribe does not apply the tax on all covered employers, they will not allow the fee to be charged on projects funded by them.
Are non-Indian employers protected against unfair charges?
Yes. Employers are entitled to due process of law. Their rights are protected by both provisions included in the TERO ordinance and by the enforcement process and procedures used by TERO officers to ensure employer compliance. Both TERO officers and commissions are well trained to investigate and utilize the facts and merits of a case before taking action against an employer. The TERO investigative process is designed to weed out frivolous and capricious charges brought on against employers.
Can sanctions imposed by the TERO Commission be appealed?
Yes. Sanctions imposed on employers by the Commission can be appealed in tribal court. Tribal court decisions can further be appealed to the federal court system.
TERO Fees
Are TERO fees/taxes imposed on covered employers?
Yes. SITC imposes a TERO fee on construction projects within the reservation. The fees collected by the TERO are used to finance operational costs and program services. Services include: recruiting, referrals, screening, job counseling, orientations, employee support services, compliance, charge processing, investigations and community awareness education sessions. Specifically, TERO fees fund Youth Job Fair, Youth Summer Workers, Christmas Workers; and SITC employee trainings like sexual harassment training.
Will TERO taxes/fees increase cost of projects?
No. TERO fees range from 1% to 5% depending on the total gross price or cost of the construction project.[4] The much lower Tribal taxes/fees preempt other taxes on tribal reservation projects and often result in a substantial savings to contractors; most states taxes for example are in the 6-10% range.
| Range of Total Gross Price or Cost | TERO Fee |
| $10,000 or less | 1% |
| $10,001 to $50,000 | 2% |
| $50,001 to $250,000 | 3% |
| $250,001 to $500,000 | 4% |
| $500,000 or more | 5% |
Are TERO and other Tribal fees/taxes legal?
Yes. Tribal authority to tax is equal to that of any other government. Taxation is a basic right of a sovereign government. The power of Indian tribes to tax has been confirmed by the U.S. Supreme Court in Merrion v. Jicarlla Apache Tribe, 455 U.S. 130 (1882). Taxation, licenses and other fees are a valuable source for financing tribal governmental operations. TERO programs have the unique ability to generate their own operating income as well as contribute to the general fund of the Tribe.
For more information and RFP postings, please visit the Tribal website at: http://www.swinomish-nsn.gov/
[1] http://www.councilfortribalemploymentrights.org/wp/tero-faq/#2
[2] STC 14-01.120
[3] STC 14-01.340(f)
[4] STC 14-01.330