By the National Employment Law Project
Last week, House Republicans sent a bill to the floor that, if passed, would leave our nation’s outsourced and contracted workers—a growing and often vulnerable segment of the workforce—even more open to corporate wrongdoing.
By repealing a 2015 National Labor Relations Board (NLRB) ruling on “joint employer” relationships, and more radically, by repealing a centuries’-old definition in the Fair Labor Standards Act (FLSA), the legislation would leave these workers with nowhere to turn if their rights on the job are violated.
This prospect is particularly worrisome given the rapid rate at which contracted and outsourced work has expanded in recent decades.
These arrangements include companies that outsource work by contracting with firms or temp agencies, as well as with individual employees, called independent contractors by the contracting company. In many cases, such arrangements are perfectly reasonable and simply reflect more efficient ways to produce goods and services—but others represent explicit efforts by employers to avoid their legal responsibilities to their workers.
And regardless of the employer’s intentions, this kind of low-road outsourcing often means that workers suffer.
It may work like this: A group of cleaning firms competes for a contract with a hotel. To keep their prices low and get the contract, the contractor may pay their cleaning staff less than a competitor, or cheat them out of overtime pay, health and safety protections, or benefits. And the owner of the hotel may be fine with choosing the lowest bidder, since they feel safely distanced from the workers who are harmed as a result. The person that cleans your hotel room would then be paid poverty-level wages, and if their employer violates their rights in some way, they may be left wondering “who’s the boss”—unsure of who to turn to for legal recourse.
Some experts believe that the rise of contract work is one of the central factors driving lower wages and poor working conditions in our economy today. Compared to their non-contracted peers, outsourced workers’ wages drop dramatically, ranging from a 7 percent dip in janitorial wages, to 30 percent in port trucking, to 40 percent in agriculture, while food service workers’ wages fall by $6 an hour. Dips at these rates would be hard felt by many of us—but to low-wage workers who are already operating on razor-thin margins, they can be devastating.
These same sectors also see routine incidences of labor law violations, including wage theft, with 25 percent of workers reporting minimum wage violations, and more than 70 percent of workers not paid overtime.
The concept of joint employment is a key mechanism in our labor laws that ensures that workers in these arrangements are protected—and that their employers are held accountable when they break labor laws and short-change their workforce.
Joint employment essentially means that two or more companies can employ a worker jointly, and be responsible for that workers’ protection under labor laws like the minimum wage and overtime pay, the right to form and join a union, and the maintenance of a safe workplace. Under our current labor law, the “lead” company—the one that calls the shots—must bear responsibility when workers are harmed.
Though one employer—say the contractor that hires the cleaning staff at the hotel—may handle the day-to-day employment responsibilities, like payroll, if the hotel is a joint employer and the worker is shorted on overtime pay, both the contractor and the hotel are responsible for rectifying the issue. If the contractor disappears, or lacks the means to pay the worker their back wages, and a court finds the hotel to be a “joint employer,” the hotel would then be required to step up and pay the worker.
A lead company may not necessarily be found to be a joint employer—the test for joint employment usually measures whether a company calls the shots in a workplace. But if a company has the right to call the shots, and is needed to get a remedy for the worker, it can be held accountable to the workers seeking recourse.
The concept of joint employment is as old as federal labor laws, dating back to laws such as the Fair Labor Standards Act of 1938, which established such fundamental standards as child labor protections, the national minimum wage, and time-and-a-half pay for overtime after 40 hours. Without joint employment, if the worker at your hotel gets hurt on the job or isn’t paid for every hour of work, for example, they may not be able to track down anyone to compensate them or ensure that they are safe—they may simply be out of luck.
The rise of outsourcing across the economy has made it all the more imperative that we have the means to hold lead companies responsible for their treatment of workers, but business groups are doing everything they can to undo joint employer standards, so that corporations can get away with low-road and illegal labor practices simply by inserting in contractors, free of consequences.
It is in this environment that House Republicans are now attacking joint employment. The legislation put forth by the Republicans would nearly eviscerate joint employment from both the National Labor Relations Act and the Fair Labor Standards Act, and if Congress passes such a bill, America’s workers will be even more vulnerable than they already are to harmful and illegal practices on the part of employers. Employers, meanwhile, will have even more license to break the law by simply pointing their finger at their contractors.
It’s becoming increasingly clear that our economy and the way we work and live is changing rapidly—and it’s quite possible that the very core of our nation’s labor laws—the employer-employee relationship—could one day be a thing of the past.
But no matter how the future of work may look, there’s no excuse for companies to shirk their responsibilities to their workforce—or for Congress to pave the way for corporations to dodge the law. Instead, companies should commit to hiring responsible contractors and to monitoring their practices to ensure that they are aboveboard and fair.