Most Frequently Asked Questions about TERO

What is TERO?
What is the purpose of the TERO program?
Why was the TERO Ordinance enacted?
What is the legal basis for TERO?
What does the TERO Ordinance do?
What are the characteristics of TERO?
What is Indian preference?
Are Indian preference and TERO new concepts?
Is Indian preference a violation of federal law?
Is Tribal preference legal?
What is the extent of TERO jurisdiction?
What is the enforcement approach to TERO?
What are the basic TERO requirements?
Are there exemptions to TERO requirements?
What are the sanctions for violation of TERO?
Can TERO requirements be waived?
Are non-Indian employers protected against unfair charges?
Can sanctions imposed by the TERO Commission be appealed?
Are TERO fees/taxes imposed on covered employers?
Are TERO and other Tribal fees/taxes legal?
Are all TERO requirements and fees/taxes the same?
Will TERO taxes/fees increase cost of projects?
Will TERO interrupt the daily operations of employers?
What other legal tools are used by TERO programs?


What is TERO?

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.


What is the purpose of the TERO program?

The primary purpose of the TERO program is to enforce tribally enacted Indian Preference law to insure that Indian/Alaska Native people gain their rightful share to employment, training, contracting, subcontracting, and business opportunities on and near reservations and native villages.


Why was the TERO Ordinance enacted?

  • To address the deplorable 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 statues. 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.


What are the characteristics of TERO?

The core characteristics of the program provide additional and valuable insights into why the law and enforcement program are needed and applied. The following are three vital characteristics of TERO.
1. TERO is a true act of self-determination. The decision to enact a Tribal employment rights ordinance is based on each individual tribe’s needs and priorities.
2. TERO programs are action orientated. TERO offices are a no-nonsense, hands-on, result-orientated and process driven compliance programs.
3. TEROs are systematically structured programs. Key elements of the structure include:

  • LEGAL FRAMEWORK: TERO utilizes a sound and comprehensive framework that encompasses the use of Tribal, Federal, contract and, where applicable, State employment law.
  • ADMINISTRATIVE STRUCTURE: TERO programs have a well developed administrative structure which utilizes a thorough enforcement process.
  • SYNERGISTIC PARTNERING: TERO programs apply synergistic partnering principles in relationships with employers in an effort to develop relationships that benefit both parties.


What is Indian preference?

Indian preference is a unique legal right that tribal members have that entitles them to first consideration to all employment, training, contracting and subcontracting and business opportunities that exist on and in some cases near reservations.


Are Indian preference and TERO new concepts?

The answer to this question is no. Indian preference first appeared in Federal regulations in 1834. Since then most new laws and regulations related to tribes and Indian people include preference provisions. Tribal Employment Rights Ordinances (TEROs) were initially enacted by tribes in late 1976 and early 1977. Today there are almost 300 Tribes and Alaska Native Villages which are covered by TERO ordinances.


Is Indian preference a violation of federal law?

The answer to this question is no. There are no federal laws which prohibit Indian Preference. Tribes are exempt from Title VII of the Civil Rights Act and several other employment laws. Numerous court cases have upheld this exemption (see Morton v. Mancari in appendix section on applicability of federal law page #4 of that section). Additionally, court rulings have held that Indian preference is a political preference and not a racial preference and as such do not violate the dictates of federal employment law.


Is Tribal preference legal?

Yes and no. Tribal preference is not allowed on federal/state contracts or in cases where private employer is operating on or near reservations. Many tribes have tribal/village provisions in their TERO ordinances which are not consistent federal law and are therefore not allowed on any federally funded or assisted contracts. Tribes can however, apply tribal preference on all their own businesses and construction projects. Tribal preference is also allowed on tribal P.L. 93-638 contracts.


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. TERO jurisdiction covering employers working on fee land projects has been greatly reduced by the Montana v. U.S. A. case.


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. Note: TERO compliance plans are closely fashioned after those used by OFCCP for affirmative action compliance.
  • 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.


Are there exemptions to TERO requirements?

Yes. There are several exemptions. Most TERO ordinances exempt direct employment by the Tribe, Federal, State or other governments and their subdivisions, non-profit corporations, churches, schools etc. However, all contractors regardless of the source of funding are covered by the TERO requirements. At the individual level, the only exemption allowed Is for the employers “core crew or key person” which is defined as:

“…a member of a contractor’s or subcontractor’s crew who is a regular, permanent employee and is a supervisor or other key position such that the employer would face a serious financial loss if that position were filled by a person who had not previously worked for the contractor.”


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 $5000. 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. Wavier of preference requirements or fees can seriously effect 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 use 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.


Are TERO fees/taxes imposed on covered employers?

Most tribes impose a TERO fee on all employers doing business on reservations. 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. It is not clear if Native Village governments can impose a fee on employers, but many federal agencies have negotiated special contracts with a tribal TERO for the services listed above. The average TERO fee is 2.5%.


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.


Are all TERO requirements and fees/taxes the same?

No. There are over 550 (federally recognized) independent tribal nations throughout the United States. While there is much in common between tribes, each is diverse in its own community culture, needs, values, and priorities. Each tribe therefore makes its own legislative decisions to meet their own set of wants and needs.


Will TERO taxes/fees increase cost of projects?

No. TERO fees range from 1% to 4% with a national average of about 2.5%. 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.


Will TERO interrupt the daily operations of employers?

No. Since TERO programs practice proactive enforcement, the compliance plans signed by the TERO and employer prior to the commencement of work generally prevents disputes. Most TERO ordinances provide for compliance and enforcement visits to work-sites during normal business hours but not to the detriment of operations. A TERO Commission’s sanction of an employer for violations of the law could cause delay or shut-down of an employers operation. With this in mind, note that TERO commissions would apply sanctions after all efforts to resolve the case have failed and the most severe circumstances and only in strict accordance with the process of Tribal law.


What other legal tools are used by TERO programs?

TERO programs use a variety of legal tools to ensure that Indian/Native people receive their rightful share of employment and other economic opportunities both on and near reservations and villages. The two illustrations that follow show the various legal tools used by TERO officers. The circle illustration lists laws that range from tribal Indian preference to federal laws which protect against unlawful discrimination. The second chart illustration gives the basic federal laws which permit Indian preference and include special initiatives between the TERO and the federal enforcement agency. See page 19 for graphic on legal TERO framework.