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Stop Corporate Wage Thieves

Fact Sheet

 

Purpose

To hold companies accountable for the treatment of their workers by subcontractors and temporary agencies.

 

Background

Today we face the greatest inequality on record. The poverty rate in California is growing three times faster than the population. The average wage in California is at a 30-year low, while income concentration for the wealthiest Californians is at an 80-year high.

This extreme income inequality is due in part to changes in the nature of work. The traditional employment relationship has been eroded by the use of subcontractors, shielding those at the top from liability for the abuses committed by intermediaries. Labor contractors, temporary agencies, professional employer organizations and misclassification of workers as independent contractors have become commonplace in an attempt to sever the ties that once bound a company to its workforce.

In the 1970s, nearly all companies still relied upon the “core worker model,” hiring workers directly as employees. Over the next few decades, as corporations
raced to maximize profits in a globalizing economy, every form of contingent work increased. Even the public sector has seen dramatic increases in contracting out and the use of temporary workers. Temporary work is now the fastest growing sector of our economy. Since 2009, 54 percent of all jobs created have been in temporary staffing services.

This trend is only expected to accelerate as a result of the massive job losses we have endured in recent years. In fact, some management attorneys are recommending that companies permanently move to a contingent worker model to increase flexibility and evade their employer obligations.

Temporary staffing agencies are no longer being used to fill short-term vacancies or cover seasonal highs. Instead, they provide year-round labor with no strings attached. From warehouse work to hotel housekeeping, the jobs we once thought could never leave our shores are increasingly being outsourced here at home to temporary staffing agencies.

While permanent jobs are scarce in this economy, temporary work is on the rise. The number of temporary workers jumped 25% in the third quarter of 2010, with an average of 2.6 million workers a day doing temporary jobs.

The effect of the dramatic increase in temporary jobs goes beyond just the downward pressure on wages. Widespread temping means there is no expectation of permanent employment as workers in the contingent economy can easily be disposed of and replaced. It also means there is little accountability among employers, as workers do not know where to turn when their rights are violated.

The use of third-party labor contractors, whether a temporary staffing firm or a subcontractor, often serves to shield the company that is calling the shots from liability. Workers may labor under a chain of subcontractors, each link intended to
distance the company at the top from the workers on the bottom.

Workers in this system are extremely vulnerable to abuse. The warehouses in California’s Inland Empire provide a chilling example. Between 1990 and 2007, temporary employment in this region grew by 575%. By 2007, more than 50,000 workers were employed by temporary staffing companies. As one study noted, a decade ago, these warehouses had 80% direct employees and 20% temporary employees. Today it is just the opposite. It is no wonder that 41% of warehouse jobs, once the backbone of our middle class, now pay less than $10.50 per hour.

But low wages are not the worst of it. These workers often do 16-hour shifts, with no overtime pay. They are paid a group piece rate that often adds up to less than the minimum wage. They are denied meal breaks, rest breaks and water breaks. Workplace injuries are frequent due to the dangerous work and lack of training, and workers are discouraged from reporting injuries. Those who try to organize for better conditions are retaliated against and often fired.

Current law is simply insufficient to protect workers’ rights in the shadows of the subcontracted economy. A failure to address the realities of contingent work will result in more than just the creation of a permanent underclass; it would make
rebuilding a middle class impossible.

 

What Needs to Be Done

We need to keep companies from using temporary agencies and subcontractors to shield themselves from liability when the law is broken and workers’ rights are violated.

 

Support

~ California Labor Federation (Sponsor)
~ California Teamsters Public Affairs Council
~ California Rural Legal Assistance Foundation
~ Communications Workers of America, District 9
~ Service Employees International Union California State Council
~ United Food and Commercial Workers
~ UNITE HERE!

 

Key Contacts

Caitlin Vega, California Labor Federation - (916) 444-3676, ext. 17
 

Read our White Paper: Confronting the Rise of Contingent Work in California.