Employers across California increasingly are cutting labor costs by using long-term temporary workers — and not employees — to pick crops, sew garments, clean hotel rooms, flip burgers and toil in a range of low-wage industries.
This trend toward “perma-temps” has alarmed workers, labor unions and their allies who are concerned about the growth of so-called staffing agencies that do the hiring of these temporary workers and handle the wages. The use of these workers and their treatment are the focus of a major battle in Sacramento this year between organized labor and business groups.
Nationwide, there were about 3.4 million so-called staffing-agency jobs last year, or 2.25% of total national employment, according to a report being released Wednesday by the National Employment Law Project, which advocates for low-wage workers. The sector grew 41% from 2008 to 2012.
Critics call the accelerating shift a modern-day “sweat shop” system that creates “disposable” workers. They support legislation to crack down on abuse by staffing companies.
But staffing-supply companies object to the criticism, and the American Staffing Assn. says the firms follow California and federal labor laws. State and local chambers of commerce, dozens of industry trade groups and big agriculture are lined up solidly against the bill
Caitlin Vega, a lobbyist for the California Labor Federation, warned that many such contractors exploit legal loopholes that allow unscrupulous bosses to skirt labor laws governing pay, overtime, safety and access to workers’ compensation and unemployment insurance benefits.
“When they’re used up,” Vega said, “it’s on to the next one.”
Gladys Hernandez testified at a March legislative hearing that she “wore the same uniform” as other housekeepers at a Santa Monica hotel but was paid only $8.50 an hour as a temporary agency employee, far less than the hotel’s permanent employees made.
“There were no sick days, vacation days, health insurance benefits,” she said in Spanish, using a translator. “Sometimes, I had to clock out and go back in to finish my 14 suites per shift.”
Contracting out for workers gives employers flexibility, the staffing industry says. Businesses can concentrate on their core operations of designing and marketing a product or service.
That’s a legitimate way to foster efficiency, the Law Project report says, as long as it’s not part of “explicit strategies to evade labor laws and worker benefits.”
Vega and the labor community are out to curb such abuses. They’re backing a bill to make both the labor contractor and its client company, say a hotel owner or a retail goods distribution warehouse, jointly liable for payment of wages, accurate reporting of hours worked, wages, benefits, tax deductions and insurance coverage for victims of on-the-job injuries.
The bill’s author, Assemblyman Roger Hernandez (D-West Covina), said he’s concerned about a “race-to-the-bottom mentality that has infiltrated many industries, seeking ways to cut costs, coming many times on the backs of the workers.”
Hernandez’s AB 1897, modeled on recent Illinois and Massachusetts laws, already has been approved by the Assembly Labor and Employment Committee and will be heard Wednesday in the Assembly Appropriations Committee.
The legislation, along with another union-backed effort to let workers file property liens against employers they accuse of wage theft, have been deemed “job killers” on an annual list of what the California Chamber of Commerce considers anti-business legislation.
The American Staffing Assn. argues that passage of the Hernandez bill would make a company responsible for any lapses in pay, benefits or safety practices of a staffing agency that supplies it with workers. Innocent, third-party individuals or businesses would be held liable for conditions that might be beyond their control, it says.
State labor and workplace safety regulators already have enough authority to enforce current state laws, Jennifer Barrera, a state chamber lobbyist, said at the March legislative hearing.
What’s more, she added, staffing workers who contend they are being abused already can file lawsuits seeking damages. In fact, warehouse workers in the Inland Empire have been pursuing such a claim against Wal-Mart Stores Inc. and the company that runs a number of distribution warehouses for the retailer.
Such lawsuits are difficult to prove and can take years to litigate, said Catherine Ruckelshaus, one of the principal authors of the Law Project report. The Illinois model is better, she said, because it automatically assumes joint responsibility on the part of the labor contractor and the client firm.