Workers were a hot item in
1996. Born-again populists of both parties
jostled for votes from the anxious and the
downsized. Labor was Big again, elevating
workers’ issues—at least ones that
contrasted Democrats from Republicans—back
onto the electoral stage. But the AFL-CIO’s
$35 million pro-Democrat gambit did nothing to
illuminate a massive legal crisis affecting some
30 million of America’s burgeoning class of
contingent workers, who comprise nearly one-third
of the U.S. workforce. Lacking union protection
and political clout, these temporary, leased and
"contract" workers are slipping through
widening cracks in U.S. labor laws.
Numerous studies and court
cases indicate a fundamental contradiction
between contingent employment and labor rights
which were scripted for full-time, permanent
workers.
A groundbreaking study
sponsored by the Department of Labor provides
potent evidence of this disconnect—but it
may never see the light of day. In an unpublished
report scuttled by Congress, the National
Commission on Employment Policy (NCEP) documented
major failings in a wide array of labor statutes.
"Frequently, Federal protections afforded
full-time, permanent employees do not reach the
contingent worker," the commission
concluded, upon extensive analysis of federal
civil rights, labor organizing, equal pay, and
other laws.
From well-paid computer
engineers and business consultants in contract
jobs to temporary and leased workers, janitors,
and taxicab drivers, contingent workers of all
collars are discovering their legal rights are
even less secure than their jobs. The list of
exclusions encompasses nearly every aspect of
U.S. labor law:
-
- Contingent workers—of
whom two-thirds are women and minorities—get
unequal protection when it comes to equal pay.
Proving that contingent positions require the
same skills and responsibilities, and therefore
the same pay, as core staff jobs is exceedingly
difficult, many legal experts say. Bureau of
Labor Statistics data show temporary and
part-time workers earn as much as $5.00 per hour
less than full-time employees in similar jobs. - Temporary, leased, and
contract workers rarely receive workers’
compensation, and most are not protected by the
Occupational Safety and Health Act, which only
requires companies to provide a safe workplace
for their own employees. - Millions of temporary and
part-time workers do not qualify for unemployment
insurance, even after a full year’s work. A
temporary worker earning the industry’s
average of $6.42 per hour for 30 hours a week
would fail the minimum earnings requirement in 19
states, according to Francoise Carre, an
economist and labor expert with the Center for
Labor Research at the University of
Massachusetts. Thirty-eight states prohibit
independent contractors from collecting
unemployment compensation, and many others
explicitly bar part-time workers from receiving
benefits during a job search. - Part-time, temporary and
casual workers at small businesses have little
protection against discrimination, according to
NCEP’s study. Companies that employ people
sporadically often fall below employee numerical
thresholds which determine whether an employer is
liable for civil rights violations. - Independent contractors are
excluded from anti-discrimination protections
covering civil rights violations and sexual
harassment. They are also exempted from
workers’ compensation insurance. The General
Accounting Office has found that 40 percent of
supposed "contract workers" are
actually employees who are improperly denied
legal protections.
- Contingent workers—of
-
- Rising from the ashes of
corporate downsizing, contingent labor has
arrived as a permanent fixture in corporate
cost-cutting wars. A June 1996 Labor Department
report boasting a 5.3 percent official
unemployment rate also revealed temporary
labor’s increasingly central role in job
growth. Far outpacing new construction and
factory employment, temporary-help agencies
accounted for 35,000 of the 239,000 payroll jobs
created in the second quarter of 1996. While
temporary labor makes up 2 percent of the overall
workforce, it comprised 15 percent of the latest
jobs.A 1995
Conference Board study found that contingent
employment has become a primary, if not vital,
ingredient in corporate downsizing. The
management research firm’s survey of
corporations concluded that contingent labor is
"closely identified with continued
downsizing, since headcount restrictions are
often imposed on managers to keep the core
employment down once the job cuts have been
made." Eighty percent of the respondents
said a just-in-time workforce "gives them
the ability to add and subtract workers with
little notice, a strategy that has become more
urgent because of unpredictable conditions in the
global marketplace." The business world
aptly terms this "accordion
management"—the inhaling and exhaling
of workers according to peak production and
marketing cycles.One of America’s
hottest yet lesser-known business trends, staff
leasing, is cashing in on both ends of this
accordion effect. "Professional employer
organizations (PEOs)," as leasing firms
prefer to call themselves, are making a booming
business of liability outsourcing—assuming
labor law obligations for their client
companies’ workers. To avoid the headaches
of personnel management and labor law compliance,
more and more businesses are firing their staffs
and renting their workers from a leasing company.The Your Staff leasing
firm, a 5,000-employee subsidiary of the Kelly
Services temporary labor corporation, is one such
company promising, as a promotional video puts
it, to "provide your company with an extra
measure of insulation against damaging litigation
and inflated insurance costs…Your Staff becomes
the employer of record for your employees, while
you maintain day-to-day control over directing
them."The promotions are working.
Leasing’s member group and lobbying arm, the
National Association of Professional Employer
Organizations (NAPEO), reports a staggering
industry-wide revenue growth rate of 30-40
percent per year. According to the Bankers Trust
Company, an investment analysis firm in New York
City, this boom is likely to continue through the
next five to ten years.In the past 12 years,
leasing has exploded from 98 firms leasing 10,000
workers in 1984, to 1,700 companies which now
employ 2 to 3 million workers. Gregory Hammond,
the former general counsel of NAPEO’s
predecessor, the National Staff Leasing
Association, predicts leasing’s exponential
growth will "culminate sometime in the next
10 or 50 years at a point when no one will ever
again be employed by the people for whom they
perform services."The industry advertises
this detachment of workers from employers as the
most efficient way to run a business in the
global economy. Retired Air Force Colonel Regis
Canney, a top industry executive, calls leasing
"America’s secret weapon" in the
global business battlefield. But leasing’s
primary allure is that it exploits loopholes in
family leave, pension, and worker health and
safety laws. In order to qualify for Family and
Medical Leave Act protection, workers must log
1,250 hours in a year for a single employer. But
according to Cathy Ruckelshaus, a staff attorney
with the National Employment Law Project in New
York City, a business can "employ a worker
for eleven and a half months and then switch over
to a leasing arrangement to avoid the
requirements."Businesses also use leasing
as a "secret weapon" against union
organizing drives. When the Service Employees
International Union attempted to organize
janitors employed by Advance Building
Maintenance, which cleans Toyota headquarters
offices in Torrance, California, Advance opted to
lease its workers. According to Jono Shaffer,
organizing coordinator for the Service Employees
International Union’s building services
division, Advance "tried to take the
position that they were no longer employing the
workers, that our dispute was with the leasing
company." Through aggressive corporate
campaigning, SEIU forced Advance to settle
collective bargaining agreements and numerous
wage and hour disputes.With such tantalizing
loopholes, this risky business of liability
outsourcing is expanding rapidly under minimal
regulatory oversight. Only 13 states require PEOs
to obtain a license or register their business.
Likewise, the industry’s self-monitoring
body, the Institute for the Accreditation of
PEOs, reports that but 13 of the nation’s
1,700 leasing firms have met the group’s
standards for ethical behavior and financial
stability.In their quest for cheap,
hassle-free labor, more and more companies are
finding creative—often illegal—ways to
erase workers’ rights. As a condition of
employment, taxicab firms now require drivers to
sign "lease agreements" which, on paper
at least, turn employee drivers into independent
contractors, thus denying them minimum wage,
unemployment insurance, workers’
compensation, and other protections.Workers’ compensation
is routinely denied to cab drivers, who,
according to a recent study by the National
Institute for Occupational Safety and Health,
hold the most hazardous job in America. In 1994,
86 drivers lost their lives on the job, the study
found. Thousands more are badly injured, and
frequently these uninsured workers must pay
enormous hospital bills out of pocket.In a profession where
knifings and beatings are part of the job
description, signing away your rights to
workers’ compensation seems suicidal. But
drivers say that under the cab industry’s
contracts—recently ruled illegal in a
class-action lawsuit—it’s
"economic suicide" to become an
employee.According to the
industry-authored lease agreement,
"lease-drivers"—those who sign as
independent contractors—pay $85 to rent a
cab for a 10-hour night shift, while
"employee-drivers" must pay $103. For
the extra $18 a night, employee drivers get
workers’ compensation and unemployment
insurance. Over the course of a year, access to
these basic employment rights costs $3,500 to
$4,000 a year—forcing drivers to choose
between higher incomes and employment rights."It’s
gangsterism," adds Paulsen, a driver for
DeSoto Cab Company since 1976. "You either
drive for these guys or you don’t drive at
all. You have no control…The driver is kind of
like an economic slave."Spurred by the near-fatal,
on-the-job beating of driver John Coleman,
thousands of San Francisco cab drivers joined and
recently won a class-action lawsuit against three
major taxi firms. According to the original
complaint, "Taxicab drivers who are injured
in the course and scope of their service…are
unable to obtain medical care for their injuries,
lose employment, are denied unemployment
insurance benefits, and in many instances are
forced on welfare." If it withstands appeal,
the San Francisco Superior Court ruling will
force taxi companies to cover their drivers for
workers’ compensation, unemployment
insurance, and other employee rights.But Ruach Graffis, a
long-time organizer with San Francisco’s
United Taxicab Workers, says major financial
incentives still encourage worker
misclassification. "This will keep happening
forever, until we get national health care,
because these companies don’t want to pay
workers’ compensation," says Graffis.Legal aid lawyer
Christopher Ho, who represented the drivers and
has handled similar cases involving strawberry
pickers, agrees. "This whole independent
contractor misclassification thing has really
taken off. Employers are doing it with increasing
frequency because it’s easy for them to
avoid statutory obligations…The fact that
it’s happening so far afield shows that
employers are using this as a ruse to save
money."Low-wage and immigrant
workers are not the only victims. Even highly
paid independent contractors by choice are denied
basic rights. Minnesota business consultant Caryn
Wilde endured sexual harassment by a county
development official for more than a year before
filing a restraining order. Within two weeks of
her complaint, the county agency, Wilde’s
largest client, "voted to cease all
communications" with her, Wilde testified in
court. Two months later, according to Wilde, the
agency terminated all its business with Wilde.Meanwhile, Wilde’s
legal and medical expenses related to the case
soared to more than $30,000. After losing her
biggest client and tens of thousands of dollars
due to her sexual harassment complaint, Wilde
also lost in Federal Court. The judge ruled that
since Wilde was an independent contractor, she
was not protected by Title VII of the 1964 Civil
Rights Act; nor was she covered by the Minnesota
Human Rights Act. When Wilde appealed to a
Circuit Court, the EEOC took notice and, at
first, offered its support. According to Wilde,
the agency soon backed out, saying that
"although they were very interested in the
case, they were still living under the narrow
interpretation of the term ‘employee’
as ordered by the Reagan/Bush
Administration."The EEOC’s about-face
corroborates the National Commission on
Employment Policy’s finding that Reagan-era
Federal courts have narrowed the scope of
employee status, often denying workers legal
protection. "The breadth of…the
legislative language is narrowing," the
report stated. "Congress may want to expand
coverage by extending the definition of employee
to independent contractors." To date, this
has not happened.The ultimate challenge,
says Anthony Carnavale, who headed the National
Commission on Employment Policy, "is how to
reconcile the need to furnish contingent workers
protections in the workplace similar to those
afforded permanent employees while continuing to
provide employers with the work force flexibility
they need to be competitive in a global
economy." The commission warned that
expanding contingent labor without extending
labor rights promises dire results: "It is
incumbent upon us to decide if, in the long-term,
it is economically and socially viable for this
country to sustain a large portion of the
American working population in such a precarious
and insecure employment status."The commission answered its
own question rather boldly, which may explain why
congressional Republicans and the Clinton
administration agreed to eliminate the group.
"Our goal should be to provide all workers
with the same level of protection to reduce the
incentives to create a two-tiered labor
market," the report said.But as contingent labor
proliferates, policy makers are ignoring this
challenge. Only two members of Congress have
proposed reforms, and both (Ohio Senator Howard
Metzenbaum, and Colorado Representative Patricia
Schroeder) have opted for
retirement—effectively removing contingent
labor from the national policy making map. The
two congressional attempts to extend legal
protections to contingent workers languish in
archival obscurity.Senator Metzenbaum’s
"Contingent Workforce Equity Act,"
proposed in October 1994, remains by far the most
comprehensive attempt to protect contingent
workers. It proposed to "extend the
protections of Federal labor and civil rights
laws to part-time, temporary, and leased
employees, independent contractors, and other
contingent workers, and to ensure equitable
treatment of such workers." Among other
provisions, the bill would have made it illegal
for companies to pay temporary and part-time
workers less than regular employees doing similar
jobs. The European Court of Justice has already
taken a similar tack, ruling that unequal pay for
part-time workers is discriminatory.When Metzenbaum retired the
measure was passed along to now-retiring Illinois
Senator Paul Simon; it has since been forgotten.
Nonetheless, the bill amply reflected attempts by
advocacy groups and unions to write contingent
workers into the law. The National Employment Law
Project, a New York City-based group advocating
for the unemployed and working poor, is urging
the Equal Employment Opportunities Commission to
include Workfare recipients and other contingent
workers within its antidiscriminatory aegis. The
aim, according to staff attorney Cathy
Ruckelshaus, is to "make it clear in the
definition of employee that they’re
covered."The Law Project and many
policy researchers urge a complete overhaul of
U.S. labor law, arguing that single-issue reforms
"simply encourage the development of new
forms of contingent status," a coalition of
worker advocacy groups told the Dunlop Commission
on the Future of Worker-Management Relations in
1994. "Mandating fair treatment for
employees…gives employers a reason not to
directly hire ‘employees,’ but instead
to hire ‘temps,’ ‘lease’
workers or engage ‘independent
contractors’ for whom they have no
responsiblity."Francois Carre and fellow
labor experts Virginia duRivage and Chris Tilly,
say the National Labor Relations Act needs to be
re-framed to allow new forms of union
association—enabling temps and other
transient workers to join collective bargaining
units based on their occupation or geographic
location, rather than on the traditional NLRA
model of employer-based unionism.Proposals for reform pile
up by the dozens at labor conferences and in
congressional archives. What’s missing is
government will and interest in discouraging
unprotected work and expanding labor protections.
If the silent slaying of NCEP’s report is
any indicator, politicians of both parties would
rather not even discuss it. And while some
unions, most notably the Service Employees
International Union and the United Food and
Commercial Workers, have pressed hard to address
the needs of part-time and contract workers, the
labor movement has been slow to embrace
contingent workers as the new frontier for
organizing.Even in seemingly
labor-friendly circles, the legal problems of
contingent workers are merely "a topic that
merits further inquiry." Such was the
conclusion of the Dunlop Commission, a Clinton
Administration fact-finding panel that many saw
as the best hope for progressive labor law
reform. Contingent workers merited but 2 pages in
the commission’s 200-page report, which
failed to promote any reforms. According to one
labor union source close to the commission, chair
John Dunlop, the U.S. Labor Secretary under
President Gerald Ford, "just didn’t
want to talk about it. He didn’t think
contingent workers were an issue that needed to
be addressed."
Christopher D. Cook is a
freelance writer from San Francisco who has
written for The Nation, In These Times,
and The San Francisco Bay Guardian.
- Rising from the ashes of