Bosses and Workers
“A maid works at the San Francisco Marriott on Fisherman’s Wharf. The hotel property is owned by Host Hotels and Resorts, Inc., a lodging real estate company. The maid, however, is evaluated and supervised daily and her hours and payroll managed by Crestline Hotels and Resorts, Inc., a national third-party hotel management company. Yet she follows daily procedures (and risks losing her job for failure to accomplish them) regarding cleaning, room set-up, overall pace, and quality standards established by Marriott, whose name the property bears.”
“A cable installer in Dayton, Ohio, works as an independent contractor (in essence a self-employed business provider), paid on a job-by-job basis by Cascom Inc., a cable installation company. Cascom’s primary client is the international media giant Time Warner, which owns cable systems across the United States. The cable installer is paid solely on the basis of the job completed and is entitled to no protections normally afforded employees. Yet all installation contracts are supplied solely by Cascom, which also sets the price for jobs and collects payment for them. The installer must wear a shirt with the Cascom logo and can be removed as a contractor at will for not meeting minimum quotas or quality standards, or at the will of the company.”
These are two vignettes from the modern workplace as described by David Weil in his new book, The Fissured Workplace, Why Work Became So Bad For So Many And What Can be Done to Improve It.
Weil, who was a Professor of Economics and distinguished faculty scholar at the Boston University School of Management and Co-Director of the Transparency Policy Project at Harvard’s John F. Kennedy School of Government, recently became Administrator of the Wage and Hour Division of the U.S. Department of Labor.
Among other things, Weil’s book examines the changing nature of employment, as functions that were once managed internally within companies are increasingly being outsourced. What all this outsourcing means for workers is a topic that is being discussed and debated by economists, labor researchers, worker advocates and others, as well as workers themselves.
In his new position, Weil will deal with some of the consequences of the new reality for workers as they try to recover wages and overtime pay from bosses who are unknown and perhaps unknowable and, when they are directly employed, try to establish that they are not misclassified as independent contractors, among other shortcuts used by many employers.
While outsourcing and subcontracting work are not new, there is general agreement that the numbers are growing – although exact numbers are hard to pin down.
The consequences, however, are pretty evident. Weil traces in his book the proliferation of franchising in the U.S. hotel/motel industry – from only two percent in 1962 to more than 80 percent today. One result was the 2009 firing of housekeepers who had been longtime employees of Hyatt hotels in the Boston area – making $14 to $16 an hour with health and other benefits – and their replacement by workers for Hospitality Staffing Solutions who were paid $8 an hour with no benefits.
Other researchers are trying to quantify how many workers are considered temporary workers, contract employees, and other workers who are not tied directly to companies. In 2013, about 18.6 million workers were employed in professional and business services (largely contract companies), according to Annette Bernhardt, a visiting professor in the sociology department at the University of California, Berkeley. She estimates from firm surveys that, “anywhere from 35 to 93 percent of firms contract out some function, depending on what you are asking about.”
While companies can achieve efficiencies through outsourcing and improve the bottom line of profitability, the outsourcing or subcontracting model is not necessarily good for workers. Many worker advocates emphasize that the growth in contracted work deprives too many low-wage workers of essential protections that they will be paid, work in safe environments and can organize to gain better pay and working conditions collectively rather than struggle to make improvements individually.
The National Employment Law Project (NELP), a Public Welfare Foundation grantee that conducts research and advocates for policies to help low-wage workers has examined some of the consequences in the new employer-employee relationships. In a report released in May, 2014, called Who’s the Boss: Restoring Accountability for Labor Standards in Outsourced Work, NELP authors noted three of the most familiar forms of outsourcing:
- using middlemen entities, sometimes creating multi-tiered supply chains with complex structures — common among big-box retailers, such as Walmart;
- using temporary, staffing, or leasing firms to “payroll” existing staff, who then become the “employees” of that staffing firm – common among warehousing and light manufacturing companies;
- creating nominal businesses by requiring workers to be independent contractors, limited liability corporations (LLC), and even individual franchisees as a condition of getting a job – common among janitorial, delivery, construction and port trucking companies.
And contracting – along with high rates of wage violations – are also prevalent in the fast food, food service, home care and agricultural industries.
“Classic definitions of employment under applicable workplace protection laws do not capture enough of these often-convoluted structures,” the report notes, “and allow companies to evade responsibility for workers who historically were considered to be in the businesses’ domain. Outsourced workers can lose out on protections under core wage and hour, discrimination, and health and safety laws. They may have no safey-net compensation for on-the-job injuries or layoffs. They may lose access to career ladders, health care coverage, and retirement benefits available to direct employees. Many of the workers in these jobs are immigrants who are afraid to come forward to complain of unfair treatment. And unfortunately, there is a close correlation between contracted occupations and those with the highest numbers of workplace violations.
“These arrangements can mean that workers and our economy lose out on the growth and opportunity that come from better jobs. And law-abiding employers cannot compete with companies that use these structures to evade responsibility for the jobs in their overall businesses.”
While recognizing that outsourcing is not all bad, NELP and other worker advocates seek to target the bad actors who try to evade responsibility through reforms such as, more accountability and transparency from employers; stronger legal recognition of joint employers and their responsibility to protect workers; and enhanced state and local laws that give temporary workers more rights to know and confront their employers about wage and other workplace violations.
In a recent story about temporary workers in agriculture, Capital & Main, a news website (based in California) that focuses on improving the economy, wrote approvingly of proposed legislation in California that would give workers some protections. The proposed bill would make companies that rely on labor contractors who hire temporary workers responsible for what happens to those workers when they are on the job – not just for wages, but for keeping new and inexperienced workers safe from harm.
This proposed legislation, called the Temp Worker Protection Bill, is similar to legislation that Massachusetts passed in 2012, supported by Public Welfare Foundation grantee Massachusetts Coalition for Occupational Safety and Health (MassCOSH). The Massachusetts law requires temp agencies to provide written notice of key details of job assignments, such as rate of pay, transportation costs, and who is paying for workers’ compensation insurance.
An Oregon law passed in 2013 requires labor brokers in the construction industry to obtain a license and it creates joint liability in wage theft cases for construction businesses that intentionally use unlicensed brokers. That law was supported by Public Welfare Foundation grantee Northwest Education and Employment Defense Fund (NEED Fund), which is part of a statewide coalition to stop wage theft in complex chains of contracting and subcontracting work arrangements.
Through the Fair Food Agreements, which have been pushed by longtime Foundation grantee Coalition of Immokalee Workers, participating tomato growers cannot use labor contractors to hire tomato pickers. Instead, the agreements require them to hire workers directly and offer them access to other jobs in the operation, including management positions.
And media attention to a temp worker’s death in Chicago and other health and safety abuses of temp and contingent workers, through Foundation grantees Center for Public Integrity and the Center for Progressive Reform, helped persuade the federal Occupational Safety and Health Administration (OSHA) to pay closer attention to workplaces that use a lot of temps. In September, 2013, OSHA announced a new code in the information systems of field inspectors that will allow better tracking of safety incidents involving temp workers.
Outsourcing, subcontracting and other disconnected employer-employee relationships are not likely to go away. But with increased awareness of the problems, more legislation as well as private agreements that aim to protect workers, better enforcement, and other measures, the abuses and harms to workers might decrease.
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