REGIONAL LABOR REVIEW Fall 2002
Confronting Contingent Work Abuse in High-Tech and Low-Tech Jobs
by Catherine Ruckelshaus, Bruce Goldstein
and the Subcontracted Worker Initiative
REGIONAL LABOR REVIEW, vol.5, no. 1 (Fall 2002): 18-30. © 2002 Center for the Study of Labor and Democracy, Hofstra University.
RESEARCH REPORT
Confronting Contingent Work Abuse In High-Tech and Low-Tech Jobs By Catherine Ruckelshaus, Bruce Goldstein and the Subcontracted Worker Initiative
abor subcontracting today affects a growing number press the garments, the most labor-intensive phase of pro- of workers in a wide range of jobs. From computer ducing clothing.1 Similarly, farm owners long have utilized programming to health care, hotels to garment man- farm labor contractors, or crewleaders, to “handle” the L labor force needed to harvest the crops. Many employers ufacturing, taxi driving to farming, “contingent” or “non- standard” work arrangements encompass many categories have used these mechanisms in an effort to avoid liabilities of work, including: (1) contracting-out, including out- imposed on employers by state and federal labor laws, and sourcing the production of goods or the acquisition of ser- to suppress union organizing. vices; (2) use of labor contractors, temporary help agen- cies, employee leasing companies or other intermediaries Current examples of subcontracting abound.2 The to provide or supervise labor; and (3) misclassification of strike by the United Parcel Service (UPS) workers in 1997 workers as “independent contractors” rather than employ- centered on their status as “permanent” temporary employ- ees. These and other forms of reconfiguring the workforce ees. A landmark lawsuit against Microsoft under federal have allowed firms to enjoy short-term competitive advan- pension law won the right to retirement program participa- tages at the expense of workers’ wages, benefits, and work- tion for misclassified “independent contractors” and “tem- ing conditions. porary” computer programmers in 1999. In addition, Washington State fined Labor Ready, one of the largest day Although subcontracting affects workers at all labor firms in the country, $734,000 for consistently mis- socioeconomic levels, the most harmful impact tends to be classifying workers in order to reduce its workers’ compen- on low-wage employees. Labor subcontracting often is sation contributions. Grocery delivery workers in New used in an effort to reduce labor costs by using a subcon- York City, who were told they were independent contrac- tractor who will pay workers less than the larger company tors and made less than $2 an hour, have sued their work- would have paid. In many cases, the subcontractors are not site employers as well as the contracting companies who paid enough to comply with their legal obligations toward recruited them, for minimum wage and overtime viola- workers or to pay a court judgment. Subcontracting also tions, settling with one employer for $3 million dollars. impedes worker organizing, which is an effective method for workers to achieve economic and political bargaining The increase in subcontracting across industries power. Many employers engaged in subcontracting seek to raises important policy issues. As the U.S. Commission on avoid minimum wage, overtime, and other legal responsi- the Future of Worker-Management Relations (the Dunlop bilities applicable to “employers,” by characterizing the Commission) appropriately concluded: subcontractor as the sole “employer.” The reality in many “[C]ontingent [work] arrangements may be introduced cases is that the subcontracting company retains substan- simply to reduce the amount of compensation paid by the firm for the same amount and value of work, which tial control over the work performed by subcontracted raises serious social questions. This is particularly true workers because it will not take the financial risk of because contingent workers are drawn disproportion- entrusting its business plans to labor contractors. ately from the most vulnerable sectors of the workforce. . . . The expansion of contingent work has contributed What Subcontracting Means Today to the increasing gap between high and low-wage work- ers and to the increasing sense of insecurity among 3 Contracting-out core functions of a business is not workers. . .” a new phenomenon.. Before the turn of the last century, clothing manufacturers supplemented their factory pro- Labor subcontracting has increased in volume and duction by using nominally separate entities to sew and has expanded to new industries and to new functions with-
18 in industries. While not a new phenomenon, the tempo- notion of a temporary clerical worker who fills in while a rary help industry has grown in the last decade. Many more permanent employee is out sick or on vacation, or performs entry-level jobs, such as poultry processing, janitorial and a special, short-term project that temporarily increases hotel jobs, are being subcontracted out.4 Not only is sub- labor needs. The chicken processing, hotel, computer pro- contracting prevalent among low-wage and immigrant gramming, home care, and public sectors all reported use laborers, but it has also infiltrated higher-paying, U.S. citi- of temp firms to recruit and hire labor. Reasons given by zen-dominated industries, such as computer programming employers for this externalization of a basic personnel and the public sector. Across sectors, many subcontracted function varied. Some companies claim that the temp workers experience inequality, reduced job security, and agencies provide needed “flexibility” in the size of its labor fewer benefits overall than their permanent, non-contin- force. Often, however, the customer-company wishes to gent counterparts. Thus, nonstandard employment has create a probationary period during which the company spread beyond the recent immigrants that historically have treats the worker as an easy-to-discharge employee of the been subjected to sweatshop practices. temp agency, not as an employee of the customer-company. In some instances, such as meat packing and poultry pro- There are numerous commonalities in the structure cessing plants located in rural areas, employer practices of subcontracted industries and the subsequent impact on lead to very high employee-turnover rates, which can pro- workers. For example, UNITE Counsel Max Zimny and duce a voracious demand for new recruits supplied through Brent Garren note that “[f]ashion renders apparel a perish- labor contractors. able commodity.”5 This observation makes an important connection with the work of subcontracted farmworkers When the workers are undocumented immigrant who harvest fruits and vegetables. The necessity for “just- workers, such as is the case for a significant portion of tim- in-time” sewing of garments and rapid-response harvesting ber, garment, agricultural, janitorial and day laborers, they of crops in these labor-intensive industries may explain are even more likely to be underpaid with no benefits and some of the evident similarities in the way labor contrac- are unlikely to come forward to complain of unfair work- tors are used. Workers in both industries report especially ing conditions. Employers in these and other sectors, low wages and unsafe and unhealthy working conditions, including meat processing and home care, seek out undoc- coupled with a difficulty recovering unpaid wages against umented workers from particularly vulnerable communi- their employers. ties to ensure that their workforce is compliant. When organizers begin to make headway, employers in the agri- Labor subcontracting often entails an outsourcing cultural industry in California simply recruit workers from of personnel and other human resource functions. a different ethnic group, including Mixtecos and other Recruitment, payroll, discipline, transportation, and other indigenous workers of Mexico, who do not speak Spanish functions are not performed in-house, but by a person or and who have little in common with their Spanish-speak- firm characterized as an independent contractor. For jobs ing compatriots working in the United States.When ques- that require specialized training, subcontracting can be tions arise as to compliance with immigration law, these linked to a shift away from employer-provided, on-the-job businesses usually claim that the labor intermediaries are training and toward requiring workers to finance their own responsible for verifying that employees are authorized to training. Some employers utilize labor contractors to search work. the world labor market for workers who possess the neces- sary training or otherwise are able or willing to absorb costs The misclassification of workers as “independent that employers seek to shed. Similarly, the dissemination of contractors” also finds parallels in a wide-ranging group of important health and safety information to workers is often occupations. These examples are a far cry from the situa- delegated to a labor contractor who has few resources and tion of a consultant with a college education or profession- little economic incentive to train workers in how to prevent al degree who possesses the skills and resources to provide injuries and illness. businesses with specialized, problem-solving services. For example, The use of temp agencies has moved far beyond the
19 • “Independent contractor” janitors in Los Angeles pay hired on temporary visas. Many newly arrived foreign larger contractors for the privilege of cleaning certain nationals lack the education, knowledge of the English lan- floors in buildings managed by yet another corporate guage, and familiarity with American labor laws to feel interest on behalf of the building owner and in some comfortable demanding improved job terms or labor law cases, even subcontract out sections of floors to other enforcement. In many circumstances, the jobs with the family members or individual workers. worst conditions are those that have been subcontracted out and the workers with the least bargaining power accept • In the California strawberry fields, some farmworkers such jobs. Even when they possess significant skills and are characterized as independent business people education and perform middle-class jobs, many foreign investing in growing a crop on their own plot of land. nationals working in the United States—especially the sev- The reality is that they are sharecroppers. They tend a eral million who lack authorized immigration status and small portion of a corporate farmer’s land, having vir- the tens of thousands who work on temporary visas as tually no opportunity for real profit (despite much guest workers—justifiably believe that they must accept downside risk), and virtually no autonomy to exercise poorer job terms than citizens and long-standing immi- independent judgment because that might jeopardize grants. the marketability of the farmer’s crop. The guest workers, including temporary foreign • In the home healthcare industry in Los Angeles, prior agricultural workers on H-2A visas and computer pro- to a successful union-organizing drive, healthcare grammers on H-1B visas, are the ultimate contingent labor workers were treated as independent business people force. The employer—often through trade associations or with no “employer,” despite the economic powerless- contractors called “body shops”—arranges the temporary ness of their position and the obvious fact that they visa, which lasts only as long as the temporary job with worked for someone else. which it is associated. Generally, when the job ends, the worker must go home. In many instances, the workers have Problems Facing Subcontracted Workers paid large sums of money to contractor-recruiters to obtain these jobs. In these circumstances, employees are often too fearful of losing their jobs and being deported to challenge Subcontracted work arrangements frequently pro- unfair or illegal employment practices. For seasonal jobs, duce substantial, negative consequences for the working the worker must hope that the employer decides to arrange conditions and economic status of workers regardless of for his or her visa in the following year. Many H-1B visa the socioeconomic level or particular nature of the job in holders hope that as the six-year limit on their temporary question. Some statistics may be helpful: while 75% of stan- visa expires, their employer will apply on their behalf for a dard full-time workers have employer-sponsored health permanent labor certification that would result in actual insurance, only 9% of temps do. The U.S. Department of immigration status. Few guest workers want to jeopardize Labor’s Bureau of Labor Statistics found that upwards of their chance at U.S. citizenship by seeming disloyal to the 53% of temporary workers would prefer to be permanent employer that must sponsor their immigration applica- hires.6 There is strong public support for getting parity and tion.8 equal job conditions for nonstandard workers; a recent poll found that 68% surveyed said that it was unfair that part- Some individuals enjoy the flexibility afforded time, temporary and contract workers receive unequal under certain nonstandard work arrangements and possess treatment on the job, and 60% would vote for the skills and knowledge to bargain with their clients for Congressional candidates who support workplace reforms reasonable salaries and benefits, and to establish associa- to provide nonstandard workers with equal pay and bene- tions to supply group health insurance, training opportuni- fits.7 ties and other needs. Generally, however, subcontracted workers would prefer to be noncontingent workers either The most exploited subcontracted workers are because they would prefer to be full-time, permanent recent immigrants and nonimmigrant “guest workers” employees or because they lack the bargaining power to
20 secure wages and benefits that compensate for the costs business plans to labor contractors. In reality, such com- associated with the contingent nature of their employment. panies often protect their investment and reputation by retaining and exercising substantial control over the work performed by subcontracted workers. In the apparel indus- Welfare-to-Work try, retailers and major manufacturers engage subcontrac- Those who claim that welfare-to-work programs are a tors to produce garments and disclaim responsibility for smashing success fail to mention that a significant the mistreatment of the workers who produce those goods, number of participants who are hired find themselves yet frequently they send inspectors to the contractors’ in temporary positions. Because they are “employed,” shops and factories to ensure quality control.10 At they are usually denied any cash assistance – even Microsoft, “permatemps,” who do not receive the benefits though the assignments they receive may not cover accorded to “employees,” work alongside permanent full weeks or months. They simply go without income employees and are subject to the same supervision to during those lag times. In reality, many women wound assure quality control.11 Such companies want the benefits up on welfare because they couldn’t find permanent of ensuring the quality of the workers’ performance to max- work and low-wage temp jobs left them without need- imize their own profits but want to claim that labor con- ed income or benefits, or both. tractors are solely responsible for ensuring the quality of Whether or not they’ve been on assistance, temp the workers’ treatment on the job. workers often earn too little to pay for health benefits or to qualify for unemployment. They also face prob- lems related to lack of information about the rights Many companies seek to shift all employment- they have and lack of protection by some employment related responsibility to labor contractors and force work- laws. ers and government agencies to expend scarce resources to Solutions require changes both in enforcement of vindicate basic workers’ rights against entities that fre- existing laws and new protections for temp and other quently cannot afford to pay. When workers are fired contract workers. Minimum standards are needed to unjustly or fail to receive the pay they are owed, the com- ensure temps are not charged exorbitant fees for trans- panies often claim that they do not employ the workers and portation and safety equipment and that they receive that only the labor contractor is responsible because it is accurate job descriptions and fair treatment. Temp the workers’ sole “employer.” In many cases, the labor con- agencies can take these steps voluntarily by signing tractor accepts this scheme as the price of becoming the the National Alliance for Fair Employment (NAFFE) middleman. Similar efforts to shift blame occur when Code of Conduct.9 work-related accidents happen. In agriculture, many work- The law must ensure that temp workers receive equal ers are killed and injured while being transported to work- pay for the same work as permanent employees. sites in vans or buses that violate safety codes; the farmers Welfare-to-work programs need to ensure that partic- usually claim that a labor contractor had sole responsibili- ipants will receive steady, full-time work or be eligible ty for the transportation system. for cash assistance to round out their income without counting against a “welfare clock.” Various state and federal laws have required labor — Ellen Bravo, 9 to 5, National Assoc. of Working Women contractors to obtain a license, demonstrate solvency, maintain insurance and comply with basic labor standards. The argument that labor subcontracting provides Compliance by labor contractors, however, often is the needed flexibility in reacting to the exigencies of a global, exception, not the rule. Government agencies are denied high-technology economy often is belied by the evidence the resources needed to police the many contractors. that business owners are simply trying to have it both ways. Workers frequently cannot even locate their contractors to Many companies claim that they must delegate responsibil- serve them with a summons for a lawsuit. If caught violat- ities for production and compliance with labor laws to sub- ing the law, the contractors’ punishment is negligible. It contractors. Upon closer inspection, however, one finds sometimes takes years for prosecutors to bring criminal that many of these companies do not risk the loss of prof- charges against contractors, even when it is for violence or itability that would arise from entrusting their carefully laid debt peonage. If barred from receiving a license after
21 numerous violations, the contractor often has family mem- Worker organizing, an effective method for bers or friends who “front” for him or her and obtain a improving workers’ bargaining power, is also impeded by license to continue the business. Even when caught, bank- subcontracting. As the experience of the hotel and restau- ruptcy proceedings often provide the contractors with a rant industry points out, subcontracting often represents way out. Meanwhile, the larger businesses can profitably an effort to end collective bargaining and eliminate a escape sanction by using one abusive labor contractor after union’s presence.12 Changing the identity of the “employ- another. er” of the workers can disrupt a longstanding union shop. In many cases, the contractor’s lack of bargaining power Observers have noted for many decades that labor with the larger company means that it lacks the resources contractors can be both perpetrators and victims. In many to negotiate decent job terms. As suggested by Rachael settings, labor contractors need not acquire significant capi- Cobb in the paper on home healthcare workers, a business tal or skills to operate a business. Entry into the market is or a government entity that contracts out work to numer- not difficult. Of course, that means that competition among ous separate locations can substantially interfere with contractors for customers can be fierce. Such contractors worker-to-worker communication and union organizing.13 compete for business with low bids that depend on driving Subcontracted workers are also susceptible to threats by labor costs lower and worker productivity higher. Many con- their bosses of losing the subcontract with the larger com- tractors do not earn enough money to pay business expens- pany and their jobs if they unionize and demand higher es, take a profit and comply with minimum wage, overtime, wages. Indeed, nothing prevents a company from discrimi- workers’ compensation premiums, unemployment compen- nating against subcontractors that are unionized. sation, Social Security deductions, and other basic standards. Often the contractor ekes out a profit and ignores its other As Ruckelshaus, et. al. have pointed out, union financial obligations. The larger business benefits by keeping organizing has been hindered by some decisions under the labor costs low at the expense of workers. National Labor Relations Act (NLRA), which grants collec-
Temp Work in Silicon Valley In Silicon Valley, temporary workers constitute more of the workforce than in the nation as a whole. Workers who are not in a traditional, stable employment situation, known as contingent workers, comprise 40% of the Valley popula- tion. Temporary workers, the most vulnerable of contingent workers, number over 30,000 and almost half of them earn less than $10 an hour Working Partnerships USA (WPUSA), an offshoot of the Santa Clara County Central Labor Council, has developed a multipronged strategy to address the situation for temporary workers: 1: Research the nature of temporary work, its integral role in the new economy, and the negative effect on workers; 2: WPUSA devised a Membership Association that provides a space for workers to organize, to access training and affordable health benefits. Training is particularly important to temporary workers for two reasons. First, employers that offer access to training on-site would not make it available to temporary workers; second, training through the membership association provides a way to show that they have recognizable skills—when training results in a certifi- cate, workers can advocate for higher wages based on their increased skill set. 3: Devise and advocate for a Code of Conduct that provides standards for basic employment conditions such as a liv- ing wage and access to affordable and portable health benefits; this strategy grew from the context in which we recog- nized that temporary workers initially could not legally organize into a collective bargaining unit. WPUSA and its members presented the Code of Conduct to the Santa Clara County Board of Supervisors in December of 2001 to adopt and implement for county workers and the temporary agencies they contract with; 4: WPUSA developed its own professional staffing service, both to exemplify the capacity of a business model to suc- ceed taking the high road, and also to raise the bar and provide a competitor that could attract temporary workers and put pressure on other low-road agencies to improve conditions. — Bob Brownstein Working Partnerships USA
22 tive bargaining rights to nonsupervisory workers in non- sweatshop conditions. A century later, the federal Farm governmental, nonagricultural employment.14 In some Labor Contractor Registration Act of 1963 and its replace- instances, workers are characterized as “independent con- ment, the Migrant and Seasonal Agricultural Worker tractors” who are not “employees” and therefore are not Protection Act of 1983 [29 U.S.C. § 1800], extended a sim- entitled to NLRA protections. Where workers are “employ- ilar scheme to sweatshops in the fields. In recent years, ees,” the larger entity may claim, too often successfully, that states once again have sought to regulate garment contrac- it is not the “employer” and that the contractor is the sole tors with bonding and registration requirements. Other employer. Even when both the larger company and the state regulations include licensing, testing, disclosures to labor contractor (or temp agency) are considered to be workers, and civil and criminal penalties for labor contrac- employers of the workers, the National Labor Relations tors that violate the law. For the most part, such systems Board (NLRB) has not always made both entities legally have been recognized as inadequate and, at best, as only responsible for the illegal conduct. Recently, however, the one part of the solution. When one labor contractor is put NLRB has issued some decisions that may make it easier to out of business for mistreating workers, another contractor hold the worksite employer responsible.15 steps into its place and is subject to the same economic pressures from the contracting business that caused the Subcontracting can quickly become prevalent even problems in the first instance.16 when some employees would prefer to remain in standard employment relationships. When one business succeeds in One approach to the problem of imposing legal reducing its labor costs by using subcontracted labor, com- responsibility on the larger companies that use labor con- peting companies can feel pressured to do the same and tractors has been to utilize a broad definition of employ- workers at such companies can be negatively affected. ment relationships. A broad definition of who is an “employer” and who is an “employee” can help reduce mis- New Reform Strategies classification of workers as “independent contractors.” It also can help create “joint employer” status and joint lia- In attempting to improve subcontracted employees’ bility for the larger company and the labor contractor. wages and working conditions, a great deal can be learned Once the larger company perceives a risk of liability, it will from comparing strategies across industries and from earli- often encourage the labor contractors to comply with min- er efforts to reform “sweatshops.” In general, these strate- imum wage, overtime, and other legal requirements. Broad gies involve changing the law, improving enforcement of definitions of employment status also protect businesses the law, and organizing workers to improve conditions from unfair competition by companies that hope to cut beyond what the law requires. The effectiveness of each their labor costs by using labor contractors whose low bids strategy is maximized to the extent that both the primary are based on their substandard wages and working condi- employer and the subcontractor are held accountable for tions. wages and working conditions. With the spread of sub- contracting into more industries, there is an opportunity to Workers have a better chance to establish joint gain strength from multisector coalition-building. In addi- employer status under the Fair Labor Standards Act, tion, advocates and organizers must build strong public the Agricultural Worker Protection Act, the Family support for defending the rights of subcontracted workers. and Medical Leave Act, and the Equal Pay Act because they use a broad definition of employment in applying 1. Reviving Existing Laws these laws—the “suffer or permit to work” test. More than a century ago, policymakers and reform- ers sought to control the worst aspects of labor subcon- Examples of legislation taking a broad approach to tracting by regulating it. Garment contractors were employer status include the Fair Labor Standards Act, required to register for a license and comply with state pub- which establishes the minimum wage, overtime pay lic health and child labor laws. Manufacturers in some requirements, child labor restrictions, the Migrant and states were ordered to keep records of the contractors used Seasonal Agricultural Worker Protection Act, the Equal Pay and to cease using contractors that subjected workers to Act, the Family and Medical Leave Act, and state child
23 labor laws. Unfortunately, because courts in recent years Some states have passed legislation affording temp have not always recognized and clearly stated the striking workers the right to know the terms and conditions of their breadth of this standard (and because penalties for viola- assignments. A few states have resurrected decades-old tions are low), many employers choose to litigate these comprehensive legislation regulating the temp industry issues to the detriment of workers with few resources. that had been amended in response to the temp industry’s Some inroads have been made in enforcement actions in demand for exemption. George Gonos’s paper explains the the agriculture and garment industries, where workers history of the temp industry’s hugely successful campaign have successfully established that both the contracting to deregulate itself.21 A handful of state laws require that business and the labor intermediary are their employers specific contracting sectors (namely garment and agricul- and owe them wages and other workplace protections.17 ture) have joint responsibility for payment of wages to the workers under certain circumstances. Comprehensive day- Many state and federal laws use the traditional labor legislation has been passed in a number of states, reg- common-law standard to define an employment relation- ulating hiring halls and ensuring that workers who work ship, which is quite restrictive. Under the common law of on day jobs get pay and workplace protections.22 master and servant or agency, a business does not “employ” a worker unless it controls both the outcome of the work- There are other legislative mechanisms for impos- er’s performance and the manner in which the work is per- ing accountability on businesses that subcontract for labor. formed. When a labor contractor or temp agency pays the In California, UNITE and the United Farm Workers each worker and is claimed to have the power to hire and fire, have proposed legislation to make companies jointly liable courts often conclude that the contracting company does with contractors for labor law violations, in those specific not employ the worker. This narrow standard is applied industries, regardless of whether the manufacturer or grow- under the National Labor Relations Act, Title VII of the er can be characterized as the “employer” of the contrac- Civil Rights Act of 1964, the Employee Retirement Income tors’ workers.The resulting legislation regulating the gar- Security Act (ERISA), the Occupational Safety and Health ment industry did not go as far as the unions wanted, but Act, the Social Security Act, and other laws. There have it represents an important first step.23 been important victories even under this standard, includ- ing by “permatemps” who successfully litigated under The concept of a “living wage” is an old one that is ERISA for fringe benefits that Microsoft had granted only to being applied today. Workers performing jobs for business- permanent “employees.” In addition, some agencies, such es that have contracts with the federal government are enti- as the NLRB and OSHA, have used their administrative tled to the prevailing wage, usually the union wage scale, authority to incorporate a limited form of the “joint and other standards required by the Davis-Bacon Act, the employer” concept into their interpretation of the com- Service Contract Act, and other laws. Many “living wage” mon-law standard.18 ordinances are local versions of the same requirement. The government may engage a contractor and avoid employer 2. State and Local Legislation and Advocacy status itself, but the implications are that it will have to pay the contractor enough to ensure a “living” (if not a govern- At the state level, creative coalitions of grassroots ment-level) wage and that it will terminate the contract if organizations and labor unions have taken on the challenge the workers do not receive the proper wage and other pro- of changing the laws that fail to protect the subcontracted tections.24 workforce.19 Several states have established commissions to evaluate application of their laws to subcontracted work- Make sure that legislation has strong enforcement ers. Other states have proposed comprehensive legislation mechanisms, in particular, the right of workers them- that would afford equal pay and benefits to nonstandard selves to bring court cases to enforce the law. It is also workers.20 possible to simply state that independent contractors are covered under certain state laws so that they are eligible for workers’ compensation or other state remedies.
24 workers to join the union at their worksite. Sturgis elimi- More resources are needed for public and private nated the requirement that temporary workers obtain the enforcement of existing legal obligations. In addition, law consent of both employers (the temp agency and its cus- reform is needed to promote greater accountability among tomer) in order to join a worksite bargaining unit. The businesses that use labor intermediaries. For some busi- decision means that temporary workers assigned to one nesses, accountability for labor standards will remove the company can now unite in the same bargaining unit with incentive to use labor contractors and will lead to treating permanent employees to fight for better pay and benefits, both the labor contractor and the workers as the firm’s provided that they can demonstrate that they share a “com- employees. Where contractors are used, the larger compa- munity of interest.” nies would be more likely to train contractors and monitor their labor practices and pay enough for the contractors to Another approach to improving working condi- comply with the law. These would be modest, but impor- tions for temp workers is to create a nonprofit temp agency tant, improvements for working people. Federal and state so that workers have an alternative to exploitative for-prof- departments of labor develop their own enforcement plans it agencies. Working Partnerships USA, an offshoot of the and interpretations of the legislation. Advocates need to Santa Clara County Central Labor Council, has pursued press government agencies to recognize the importance of this route. It provides health insurance and career training bringing cases that establish joint employers status and for the workers it places. This is in part a return to the “hir- responsibilities when labor law violations occur. When ing hall,” which was used so successfully by AFL craft government officials adopt interpretations that do not unions at the turn of the century and is still used by build- implement the legislative intent of the law, advocates may ing trades unions today. need to bring lawsuits against governments to force agen- cies to implement the law properly. Historically, voluntary codes of conduct have been used to push businesses to do the right thing. One hundred 3. Labor and Community Organizing years ago, the New York Consumers’ League allowed man- ufacturers to insert a special label in their garments if they What works in combating subcontracting in one complied with certain standards, one of which was that the industry will quite likely be effective in another. For garments were produced by the company’s employees in a instance, there is a history of multiparty collective bargain- factory, not by contracted sweat shops. Recently, campaigns ing in both agriculture and the garment industry. In the in the temporary help and garment industries have gener- temp and day labor industries, nonprofit intermediaries ated public awareness about the misuse of subcontracting. have been established to give workers an alternative to The North American Alliance for Fair Employment exploitative agencies. Industry-wide organizing has been (NAFFE) has developed a “Temporary Industry Code of extremely effective in organizing janitors and is now being Conduct,” based on codes that organizing groups around used in the poultry industry. Code-of-conduct campaigns the country have pressured temp agencies to sign. These are being used to raise standards in both the temp industry codes can create reasonable wage floors, provide for bene- and the garment industry. Across the board, advocates for fits, and commit agencies to taking a neutral stance in orga- subcontracted workers have used media campaigns to edu- nizing drives. The problem with these codes is that it can cate the public and enlist the support of a broad range of be difficult to enforce them. allies. And the AFL-CIO has joined with immigrant work- ers in demanding legalization for undocumented workers The Task Force on Temporary Work in New Jersey and an end to dysfunctional employer sanctions under has developed a variation on the code of conduct cam- immigration rules. paign. It issued a “Consumer Guide to ‘Best Practices’ Temp Agencies” based on agencies’ responses to a questionnaire Temporary Workers about their employment practices and verification that there are no unresolved complaints filed with government From 1990 until the NLRB’s decision in Sturgis in agencies. September 2000, it was nearly impossible for temporary
25 Day Laborers exploitative day labor firms. The workers center model is more prevalent in immigrant communities, while the non- Substantial efforts have been made to ameliorate profit model is more geared towards serving the needs of the serious problems faced by day laborers. The media has American-born homeless workers with multiple barriers to focused attention on the immigrant workers who gather at employment. Among other things, these groups have been a local 7-11 convenience store or a parking lot, waiting for successful in recovering unpaid wages and eliminating small housing contractors, landscapers, farm labor contrac- unreasonable deductions from workers’ paychecks for tors, or individual homeowners to drive up and hire them transportation and equipment. Obstacles for the day labor- for a few hours at a relatively low wage rate, with few ques- er projects include severe community pressure, often tions asked. The papers in our report, however, reveal a far expressed through zoning ordinance disputes and com- more complex system. plaints about the presence of undocumented workers in public places. In November 1999, a National Day Labor In many cases, day laborers are hired by established Organizing Network was established. contractors to perform construction, roofing, or other work that would ordinarily be expected to offer decent wages, Organized labor is taking on the fight against the safe conditions, and more steady employment. In these set- corporate day labor pools’ unscrupulous practices. Labor tings, the workers usually are paid “off the books,” with no Ready has repeatedly provided strike replacement workers, money set aside for Social Security or unemployment engaged in workers’ compensation fraud, and made work- insurance, and some are not paid what the law requires. ers pay unreasonable ATM fees in order to collect their Such informality can be disastrous when workers suffer daily wages. In response, the Building and Construction serious injuries on the job, causing income loss and med- Trades Department (BCTD) of the AFL-CIO has launched ical bills, but are not being covered by workers’ compensa- a nationwide corporate campaign. tion. Garment Workers While some day laborers are hired directly off street corners, more and more are hired through labor pools. The garment industry, which was featured in Jacob These labor pools range from small neighborhood opera- Riis’s exposé How the Other Half Lives (1890), gained early tions to multi-billion dollar corporations, such as Labor notoriety for abuses associated with the use of “the mid- Ready. In response, day laborer projects have established dleman, the sub-contractor,” also known as the “sweater” organized centers to provide workers with legal and other because he “sweated” his profit out of the workers. In many assistance. ways, we are engaged in the same struggles today as the garment workers of a century ago. These centers, which have been established in a number of cities and towns, can take two forms: workers The garment industry is exempt from the National centers or nonprofit day labor pools. Workers centers help Labor Relations Act’s ban on secondary boycotts. All day laborers defend their employment rights and, in some unions can negotiate with the employer over con- cases, provide a safe, harassment-free environment in tracting out work, but in the garment industry, it is which day laborers can find work so that they do not have also permissible to restrict outsourcing to only union- to wait on street corners. Workers centers that organize day ized firms. laborers include the Workplace Project in Hempstead, NY, the Day Labor Project of the Chicago Coalition for the Homeless, the Coalition for Humane Immigrant Rights of In the recent past, garment manufacturers have Los Angeles (CHIRLA), Casa de Maryland in suburban been held responsible for wages owed by their contractors. Washington, DC, and CASA Latina’s Day-Workers Center When Lucky Sewing, a contractor for Jessica McClintock, in Seattle.25 In contrast, nonprofit day labor pools, such as declared bankruptcy while owing 12 garment workers over Primavera Services in Tucson, serve as the employer of the $15,000 in back wages, Asian Immigrant Women day laborers, thereby providing a positive alternative to Advocates (AIWA) in Oakland, CA, decided to hold
26 McClintock, Inc. responsible. They launched the Garment prevent the building owners from replacing a recently orga- Workers Justice Campaign by writing a public letter to nized contractor with a less expensive, unorganized con- Jessica McClintock in September 1992, requesting that she tractor. The Justice for Janitors campaign has developed a pay the workers their back wages and give them a new, two- two-pronged solution: 1) raise wages across the industry all year contract to continue sewing for McClintock, Inc. at once, and 2) involve building owners and property man- AIWA also appealed directly to a middle-class constituency agers in the process. Abandoning an exclusive focus on through an advertising campaign. individual worksites, organizers sought out workers and supporters in neighborhoods, community organizations, After several years, McClintock agreed to AIWA’s churches, and soccer leagues. The outpouring of support demands. McClintock agreed to pay each worker $10,000, from working people, community and religious leaders, fund an organization and hotline to help garment workers, consumers, and small businesses was crucial to the success and use only fully bonded contractors. In addition, of the campaign. In addition, SEIU found ways to hold Alameda County, Berkeley, and Oakland unanimously building owners publicly accountable for their contractors’ passed resolutions supporting the campaign and set up task low wages and poor working conditions. While workers forces to investigate working conditions in the garment engaged in demonstrations, street theater, vigils, and industry. hunger strikes, SEIU contacted shareholders, tenants, boards of directors, and lenders to get them to encourage Anti-sweatshop campaigns across the country have building owners to hire responsible contractors. benefited greatly from student-led groups on many large campuses. Meanwhile, efforts by the Clinton White House In building coalitions, reach out beyond the usual sus- to encourage an international code of conduct in the gar- pects to organizations that have a common interest, ment industry generated controversy because the compro- but are not usually associated with workers’ rights. mises necessary to gain support of government agencies and private companies were too extreme for many labor High-Tech and White-Collar Workers and community groups. The American garment and textile workers union, UNITE, has recently begun to develop The problems confronting high-tech workers have bilateral relationships with garment unions in Southeast changed in recent years. Prior to the late 1970s, informa- Asia in an effort to deal more effectively with multination- tion workers could expect a permanent relationship with al garment corporations. Global consumer campaigns have their employer with union-negotiated benefits (or generous focused on exacting accountability for labor conditions in benefits paid to deter union organizing). When the infor- contracting shops from the manufacturers and retailers. mation industry first started contracting out, workers were The combination of union organizing and consumer pres- often hired as independent contractors. While this entailed sure recently led to the organizing success of a group of the loss of health care, pension coverage, and the employ- Mexican workers, where university administrators and stu- er’s share of payroll taxes, the worker usually gained a dents prevailed upon Nike to persuade its contractor to higher hourly wage and additional tax deductions. rehire workers who had been fired for protesting spoiled cafeteria food. As a result, the workers were able to form an In the 1990s, the IRS started to more aggressively independent union with a new collective bargaining agree- investigate the misclassification of workers as independent ment. contractors. The United States Department of Labor’s law- suit against Time Warner is one example.26 The industry Janitorial responded by compelling those who had previously been independent contractors to work through third-party “pay- In its sixteen-year history, the SEIU’s Justice for roll” agencies. This time, the impact on the workers was Janitors campaign has organized tens of thousands of far worse. These subcontracted workers lost the ability to office-cleaners in major cities throughout the country, negotiate their wages directly with the primary employer. using an industry-wide, community-based strategy. The Moreover, their hourly wage, after subtracting the payroll challenge in organizing contract janitors is to find a way to company’s “markup,” was reduced below that of regular
27 employees. In general, subcontracted high-tech workers To better inform organizers, strategic research do not have any healthcare or pension coverage, and they should be conducted to assist specific organizing cam- no longer have the tax advantages of independent contrac- paigns, including cataloguing the successes and failures of tors. This is the world of “permatemps.” groups organizing for change. In addition to organizers needing education, subcontracted workers themselves While high-tech workers are better off than most need to know that they have options. Frequently, they feel other temp workers, most high-tech subcontracted workers isolated and lack information about their rights on the job, earn significantly less than permanent employees doing the resources to enforce those rights, and information about same work. Microsoft permatemps struck a blow against efforts by other contingent workers to improve conditions. this disparate treatment in a class action lawsuit in which Researchers can evaluate situations and propose specific Donna Vizcaino was the named plaintiff. In its third review solutions. of the facts, the 9th Circuit Court of Appeals ruled that Microsoft could be considered a joint employer of workers 5. International Work hired through contracting agencies.27 This ruling has opened the door for permatemps to recover the pension The increasingly global nature of the economy has benefits they have been denied. several effects. Some manufacturers claim that they must subcontract in the United States to remain competitive In 1998, a group of Microsoft permatemps formed with goods produced more cheaply in developing nations. WashTech/CWA to organize high-tech workers in new and Some companies argue that if they do not subcontract in innovative ways. While WashTech has devoted much of its the U.S., they will have to subcontract with factories attention to Microsoft permatemps, it is also organizing at abroad. In addition, many subcontracted workers are other Seattle-based, high-tech companies, and its member- recent immigrants, both documented and undocumented, ship includes independent contractors and full-time regu- or guest workers. Many employers now rely on labor con- tractors to conduct international recruitment and trans- lar employees.28 portation networks to supply them with a constant flow of 4. Research and Education new job applicants.29
More research is needed for a variety of reasons. Business operations at the global level necessitate Worker advocates cannot be helpful if they do not under- international labor organizing and coalition-building, stand both the industry practices and workers’ problems. meaningful international labor standards, and effective Research helps to identify subcontracting abuses and enforcement using both private and governmental mecha- potential solutions. Research can also help provide impor- nisms. Although weak and limited, such international tant data to buttress worker claims that contingent jobs are efforts and standards do exist. RUGMARK, consumer boy- not on a par with regular, full-time, permanent jobs. The cotts, maquiladora organizing (i.e. focusing on treatment of Department of Labor (DOL) recently has collected data on workers known to be producing goods to be sold in the minimum wage and overtime compliance in the poultry United States), cross-border organizing, and international and garment industries as well as minimum wage compli- solidarity efforts among labor unions are just some of the ance in some fruit and vegetable industries (where over- examples of international organizing and cooperation by time is not applicable). The findings of high levels of non- worker advocates. compliance and recidivism among violators, especially where labor contractors are present, show that extensive Use of international law to protect workers inside efforts by DOL to educate employers about their obliga- the United States is challenging, but it is growing and tions are not enough. Such studies also can help to blunt should be expanded. Human Rights Watch recently issued political attacks by politicians who might oppose appropri- an important report that could serve as a major precedent, ating more resources for labor law enforcement as heavy- “Unfair Advantage: Workers’ Freedom of Association in the handed government interference with private enterprise. United States under International Human Rights Standards” (2000).30 An international group of advocates
28 seeking to protect orchard and warehouse workers in government agencies, legal services and others attempting Washington State and promote union organizing have filed to help them enforce their rights. In addition, supposed a case under the North American Agreement on Labor “employer sanctions” under U.S. immigration law have not Cooperation (NAALC), NAFTA’s “labor side agreement,” stopped the hiring of undocumented workers, but have which obligates the United States, Mexico and Canada to enabled some employers to respond to union organizing by enforce their own labor laws. In addition, Mexico has used threatening to seek INS enforcement. Thus, labor unions the NAALC machinery to seek an investigation into the should organize immigrant workers, and immigrant work- treatment of Mexican citizens working at a large egg pro- ers should be granted a status that minimizes their vulner- duction facility in Maine. There are also efforts in Congress ability to exploitation. Immigration programs are to be to incorporate respect for basic labor standards in future preferred over guest worker programs because they free international trade agreements, as well as a heightened role workers from dependence on an individual employer and for the International Labor Organization of the United the threat of withdrawal of the worker’s visa. Nations. As international labor standards and organizing expand, worker advocates must continue these efforts to ______minimize abuses associated with labor subcontracting. Edited extract of From Orchards to the Internet: Confronting 6. Immigrant Workers Contingent Work Abuse. This report is based on the Subcontracted Worker Initiative Strategy Forums, the Employers often prefer undocumented workers result of a partnership of the National Employment Law and guest workers because they are so vulnerable. Most Project (NELP) and the Farmworker Justice Fund, Inc. guest workers are hired through labor contractors and (FJF). The directors of the SWI are Catherine Ruckelshaus, employer associations. Such workers have no political the Litigation Director at the National Employment Law power since they have no right to vote and no immediate Project, and Bruce Goldstein, Co-Executive Director at the prospect of becoming a citizen who could vote. They have Farmworker Justice Fund, Inc. no economic bargaining power since they may only work The full report is available on the National for the employer that obtained the visa for them and must Employment Law Project Web site at return to their homeland when the job ends. The workers http://www.nelp.org/swi.Additional print copies of this know that the labor contractors and employer associations report can be requested by calling NELP: (212) 285- will not request a visa for them in the following season if 3025.Copyright 2002, National Employment Law Project, they “cause trouble” by seeking to enforce their rights or Farmworker Justice Fund, Inc. Reprinted here by permis- asking for better wages and working conditions. U.S. work- sion. ers soon learn that there is no point in even trying to get a job at an H-2A employer because employers prefer guest workers over workers with options. Under the H-2A and NOTES 1 st H-2B guest worker programs, there is little political will at Bruce Goldstein and Catherine Ruckelshaus, “Lessons for Reforming 21 Century Labor Subcontracting: How 19th Century Reformers Attacked ‘The Sweating System,’ the Department of Labor for enforcing even the modest
29 9 See NAFFE Web site at
30