The Fissured Workplace

by David Weil on October 17, 2014 · 0 comments

Editor’s note: This is the first in a series of several blog posts about a Wage and Hour Division for the 21st Century Workplace.

The 21st century workplace in many industries is no longer a traditional brick and mortar company owned and operated by a single employer. As a result, the Wage and Hour Division, long tasked with enforcing the laws which embody the principle of a fair day’s pay for a fair day’s work, reevaluated and refocused its strategies for protecting the rights of workers in light of the changing business landscape.

In recent years, the employment relationship between workers and businesses receiving the benefit of their labor has fissured apart as companies have contracted out or otherwise shed activities to be performed by other businesses. Often those secondary companies deepen the fissures, breaking those activities apart and shifting work even further out from the primary business. For example, when you walk into the lobby of a hotel these days operating under a well-known brand name, there’s a high probability that the workers who greet you at the desk or clean your room are likely not employed by the hotel chain of that corporate brand. Instead, the management of that hotel property has actually been contracted out to another business offering this service. In fact, many more of the services provided on site – cleaning companies, landscapers, food service providers, etc. – have also been contracted out to providers of these services. Employees are often unaware for whom they actually work.

The blurred lines from the fissured workplace make achieving compliance with the wage and hour laws we enforce a difficult task. Intense competition between business models like subcontracting, temporary agencies, labor brokers, franchising, licensing and third-party management leads to low pay, and noncompliance pulls down standards for all – making it difficult for responsible employers to survive in low margin, fiercely competitive conditions.  The costs in this race to be the lowest bidder are borne by workers deprived of their wages and their rights.

So what does this mean for the effort to protect workers and ensure a fair and level playing field for employers? It means that we need to use our enforcement resources even more strategically than before. In addition to responding to complaints, we are also engaging in directed investigations where we know through our enforcement experience and other evidence that workers are most at risk for violations. In these low-wage industries, the agency recovered more than $83 million in Fiscal Year 2013 for some 108,000 workers. I’ll have more on our enforcement efforts in my next blog post.

But we cannot protect the rights of workers solely through enforcement actions. That’s why we are committed to robust outreach to educate employers about their responsibilities under federal labor laws, and to inform workers about their rights. Increasing compliance requires increasing cooperation with our state partners and increasing our outreach and education to stakeholders. And it also means using 21st century solutions like social media to help workers, employers and the public at large. In the third part of this blog series, I’ll address our compliance assistance efforts in further detail.

We need to change behaviors within entire industries, as opposed to achieving compliance one employer at a time. Simply reacting to labor violations would be like mopping up water continuously spilling on the floor instead of finding the source and fixing the leak. Instead of reacting to violations that continue to spring up around us, we must instead address their causes.

Dr. David Weil is administrator of the department’s Wage and Hour Division.



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