Did Apple, Google and other tech giants really steal $9 billion from their own employees? 1

Did Apple, Google and other tech giants really steal $9 billion from their own employees?

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The luminaries of Silicon Valley are idolized like sports stars. They are adored for the revolutions they have launched and praised for the fortunes they have amassed. They are revered for their business savvy and shrewdness. But it turns out there is another darker side to the Silicon Valley success story.

It was early 2005. Silicon Valley had finally shaken off the hangover from the Dot Com Bubble and things were back in full swing. Steve Jobs had just introduced the iPod Shuffle to the world, the latest in a long line of tech hit wonders that were about to send Apple share prices into the stratosphere. Google Maps had just gone live, destined to send paper maps the way of the dodo bird. And the demand for high-tech engineers was about to go into overdrive. Google’s human resources department had recommended that the company “dramatically increase the engineering hiring rate”, which would involve “drain[ing] competitors to accomplish this rate of hiring.” In other words, Silicon Valley appeared to be on the brink of a bidding war for high-tech talent, threatening to stifle growth, profit margins and share prices.

Cue the quick-thinking CEOs of Silicon Valley, who got together and formed a pact not to recruit or hire each other’s employees and stave off the bidding war. The day was saved! Capitalism had prevailed!

Or had it?

Not according to an antitrust lawsuit filed by the Department of Justice in 2010 and a civil class action lawsuit filed against Adobe, Apple Inc., Google, Intel, Intuit, Pixar and Lucasfilm in 2011. According to the lawsuits, what Steve Jobs, Eric Reid and company had done was nothing less than an anti-competitive conspiracy to violate federal and state antitrust laws. The lawsuits estimated that the wages of over 100,000 tech employees were unlawfully reduced as a result of the illegal pact, leading to an estimated $9 billion in wages effectively stolen from them to pad the tech giant’s profit margins.

As one publication noted, there is a certain irony in the fact that spiraling demand for high-tech engineers may actually have lead to a reduction of their wages.

David Pando of Pando Daily has constructed an authoritative account of how the tech giants formed and maintained the pact to keep high tech wages down. He quotes from numerous emails that clearly weren’t vetted by any lawyers before they were sent. Based on the emails, it is clear Steve Jobs wasn’t exactly shy about bullying and goading other CEOs into line.

When Google began recruiting Apple’s Safari team, Jobs shot off this email to Google CEO Sergey Brin: “If you [Brin] hire a single one of these people that means war.” Brin immediately ordered a freeze on all recruiting of Apple employees.

Likewise, when Adobe began recruiting junior-level Apple employees, Jobs emailed Adobe CEO Bruce Chizen asking for an explanation. Chizen replied that he had thought the pact was limited to non-recruitment of senior level employees. Jobs then threatened: “OK, I’ll tell our recruiters they are free to approach any Adobe employee who is not a Sr. Director or VP. Am I understanding your position correctly?” Chizen immediately backed down and agreed to stop all efforts to recruit any Apple employees. Chizen told his staff: “if I tell Steve [Jobs] it’s open season (other than senior managers), he will deliberately poach Adobe just to prove a point. Knowing Steve, he will go after some of our top Mac talent…and he will do it in a way in which they will be enticed to come (extraordinary packages and Steve wooing).”

For all its glitz and glamour, Silicon Valley is becoming a tale of two cities, of haves and have-nots. John Plender of the Financial Times has calculated that Apple, Microsoft, Google, Cisco, Oracle, Qualcomm and Facebook have amassed a cash pile amounting to a staggering $340 billion in the form of cash and liquid investments. Awash in cash, these tech giants had no good reason to break the law in order to steal $9 billion from its own employees.

Unfortunately, civic responsibility is in exceedingly short supply in Silicon Valley nowadays. According to one study, the gap between the privileged and the rest in Silicon Valley has only grown more vast over time. The average house in Palo Alto sold for more than two million dollars in 2013. There are fifty or so billionaires and tens of thousands of millionaires in Silicon Valley. Meanwhile, poverty levels have also hit record levels accompanied by a 20% rise in homelessness due to soaring housing prices. Emmett Carson, chief executive of the Silicon Valley Community Foundation put it thus: “Rising tides do not lift all boats. . . We have to be intentional as a community about addressing inequality.”

George Packer of the New Yorker suggests tech titans have turned a blind eye toward the plight of their lesser brethren in part because they have constructed and lived in their own virtual worlds, physically and mentally aloof from their surrounding communities: “At Facebook, employees can eat sushi or burritos, lift weights, get a haircut, have their clothes dry-cleaned, and see a dentist, all without leaving work. Apple, meanwhile, plans to spend nearly five billion dollars to build a giant, impenetrable ringed headquarters in the middle of a park that is technically part of Cupertino. These inward-looking places keep tech workers from having even accidental contact with the surrounding community.”

This epidemic of moral aloofness has not infected all. Palm CEO Edward Collagan was one of the few willing to stand up to Jobs and fight for his workers. He emailed Jobs: “[Y]our proposal that we agree that neither company will hire the other’s employees, regardless of the individual’s desires, is not only wrong, it is likely illegal.…I can’t deny people who elect to pursue their livelihood at Palm the right to do so simply because they now work for Apple, and I wouldn’t want you to do that to current Palm employees.”

Fast forward to 2014. Palm is no longer around. Apple continues to dominate the tech world. And that class action? It settled for $20 million, a fraction of the $9 billion estimated to have been stolen from high-tech workers. What’s that saying about good guys finishing last?

Eugene Lee

About Eugene Lee

Eugene D. Lee represents employees throughout California who seek to protect their legal rights in the workplace. Mr. Lee has obtained numerous six- and seven-figure settlements and judgments for employees throughout California. Mr. Lee received a B.A. with honors from Harvard University, and a J.D. with honors from the University of Michigan Law School. Prior to starting his own firm, Mr. Lee was a lawyer in the New York offices of Shearman & Sterling and Sullivan & Cromwell.

It’s time to clean up the Los Angeles garment industry’s dirty secret 3

It’s time to clean up the Los Angeles garment industry’s dirty secret

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On March 25, 1911, 146 garment workers died in the Triangle Shirtwaist Factory fire in Manhattan. Today, we know our clothes are still often sewn in lethal conditions in foreign factories.  Last year’s disastrous Rana Plaza collapse and a series of deadly factory fires resulted in much hand-wringing over how to improve safety in Bangladesh’s garment industry. But 103 years after the Triangle Shirtwaist fire, we still have our own dirty garment secret, much closer to home.

There are some 5,000 garment manufacturers registered in Los Angeles County where an estimated 50,000 workers make clothes. The true numbers are almost certainly higher since many businesses do not report their employees, pay taxes, or carry insurance. Some L.A. garment factories are safe and decent workplaces where skilled employees make high-end denim, swimwear, and other products for elite brands. But in many others, where clothes are sewn for the “fast fashion” industry, the conditions are similar to those in New York sweatshops over a century ago or to those in Bangladesh today.

Bet Tzedek, the public-interest law firm where I practice, has represented hundreds of L.A. garment workers over the past decade, and their stories are sobering. Workers earn as little as two cents per completed garment. The pay, predictably, falls far below minimum wage, sometimes less than $200 for workweeks of 65 hours or more. Even in factories where breaks are permitted, piece-rate pay encourages workers to stay at their sewing machines for unbroken stretches. Musculoskeletal pain and related health problems are common. Over 100 years after workers were unable to escape the Triangle Shirtwaist Factory because the doors were locked, some of our clients have worked in factories without access to fresh water or functioning bathrooms, where bales of fabric block fire exits, and where owners lock workers in the building during overnight shifts.

Statistics bear out our clients’ testimony. According to research conducted by UCLA, over 90% of garment workers in L.A. experience overtime violations, and more than 60% are not paid minimum wage. The federal Department of Labor (DOL) found violations in 93% of the 1,500 inspections of garment factories it has conducted since 2008.

It wasn’t supposed to be this way. In January 2000, a landmark law went into effect in California with the intention of eradicating garment sweatshop labor. Before passage of the law, known as AB633, factories that often had no assets other than a few sewing machines would close, move, or reorganize under a different name in response to legal claims, leaving workers empty handed. AB633 established an administrative process in which companies that contract with sweatshops can also be liable for a share of workers’ unpaid wages.

In response, the industry reorganized. Over the past decade, thousands of middleman companies sprang into existence to funnel orders from retailers to factories. These subcontractors create a buffer between workers and the fashion houses that profit from sweatshop conditions. Not coincidentally, this is the same subcontracting structure that now prevails in the garment industry around the world, surprising brands like Walmart and Sears when their production documents are recovered from places like the rubble of Rana Plaza or the ashes of the Tazreen factory.

While we assume that U.S. garment factories are well-regulated, my clients know better: their bosses simply lock the doors to workrooms when potential inspectors are seen approaching. And paying citations is a relatively minor cost of doing business in an industry where the vast majority of workers, many of whom are Asian or Latina immigrant women, are too afraid to file a complaint.

In response to the tragedies in Bangladesh, some companies have entered agreements to inspect and monitor the factories there. Here at home, there is no such movement. When the DOL found garments allegedly destined for Forever 21 stores being sewn by workers in L.A. making less than minimum wage, Forever 21 fought the agency’s subpoena in federal court, arguing that it shouldn’t be forced to disclose sensitive information such as where it makes clothes or what systems it has in place to monitor compliance with the law.

There is little incentive for the law-abiding sector of the industry to get involved. Fashion houses paying fair wages for domestic labor are not competing for the same customers as the companies using sweatshop labor. And organizing a low-wage, immigrant workforce on an industry-wide scale requires investments of time and money that have not been forthcoming.

What else can be done? Paying workers less than minimum wage is theft, and criminal prosecutions of factory owners could cause many to rethink their business models. Aggressive investigations by government agencies could begin to unpeel the layers of subcontracting that protect the reputations of retailers and keep the sweatshop system humming.

The simplest solution would be a law clarifying that retailers are liable to workers who prove they sewed garments sold in stores, regardless of who signed the contract with the factory or how many subcontractors were involved. Such a law would swiftly clean up supply chains. But it would also likely mean fewer inexpensive clothes for shoppers and could send more garment jobs overseas if we aren’t willing to pay more.

The question is whether we want sweatshops in our backyard. It took more than 1200 dead bodies for the Bangladesh agreements to be proposed. What will it take here?

 

Kevin Kish

About Kevin Kish

Kevin Kish is the Director of the Employment Rights Project at Bet Tzedek Legal Services in Los Angeles. He leads Bet Tzedek’s employment litigation, policy and outreach initiatives, focusing on combating illegal retaliation against low-wage workers and litigating cases involving human trafficking for forced labor.

Sweat, blood, tears and stock options: the labor laws that protect all of us, even startup entrepreneurs

Sweat, blood, tears and stock options: the labor laws that protect all of us, even startup entrepreneurs

By Daniel Velton

If you live in Silicon Valley, it’s hard to miss news about deals like the recent $19 billion acquisition of WhatsApp, a young instant messaging company with a mere 55 employees. Or the $1 billion purchase of Instagram, a photo-sharing startup employing only about a dozen folks. Or the blockbuster deal for Waze, a small smartphone navigation company.

The lore of startup culture is by now well known. These often casual workplaces boast features like ping pong tables, 3D printer vending machines, skeeball, rock climbing walls, motorcycles, video games, draught beer taps, yoga mats and arcades. (Now television viewers can tune in to the startup world through a new HBO series.)

As hard as startuppers play, they work even harder. In their blur of 60-80 hour workweeks and caffeinated coding, dreams of being part of The Next Big Deal feed their dedication. They give up a lot of themselves and their personal lives in exchange for the elusive prospect of an early retirement. Many, though, often lose sight of the fact that there’s at least one thing they don’t give up — their rights.

California’s labor laws protect all of us, whether we work in shorts and flip-flops (or bunny slippers) in a fast and loose startup culture, or in slacks and dress shirts in a more traditional corporate environment.   More than one startup has learned this lesson the hard way.  The free-wheeling culture at Square Inc. has been cited by some as leading to a sexual harassment claim against the company’s chief operating officer.  Then there were claims of intimidation, violence and gunplay at the heart of a retaliation lawsuit against Color Labs’ co-founder.  And then there is the seminal Silicon Valley age discrimination case – Reid v. Google, Inc. – involving a 52-year-old manager allegedly referred to by managers as a “fuddy-duddy” with ideas “too old to matter.”   Eventually, his termination lawsuit went all the way to the California Supreme Court, which ruled that comments like those could establish age discrimination.   Finally, though well past its start-up phase, even tech giant Oracle Corporation was recently hit with a claim for retaliation by a sales manager who objected to what he says was national origin discrimination against Indian employees.

Silicon Valley interests may have successfully pushed through an 11th hour budget trailer in 2008 to end overtime pay for many computer professionals, but even in the wild world of startups, there are still laws protecting workers.  The bottom line is that laws that prohibit discrimination, retaliation and harassment, statutes that require employers to accommodate disabled employees, rules that mandate overtime pay for most hourly workers — these and many other protections cover all of us, regardless of where we work.

Startup employees may sell their souls, but they should be mindful that their legal rights don’t go away as part of the bargain.

 

Daniel Velton

About Daniel Velton

Daniel Velton began his career with the largest labor and employment law firm in the world. Using that experience, he brings valuable knowledge and perspective to his current practice, in which he exclusively represents employees in individual and class action discrimination, wrongful termination, harassment, wage and hour, and other employment cases.

Let’s drink to the hard working people 3

Let's drink to the hard working people

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I fell under the influence of the Rolling Stones as an early teenager and never left.  The other day I was listening to Keith Richards grinding out his raspy lyrics to the song “Salt of the Earth,” which begins with the guiding line, “Let’s drink to the hard working people.”  The Stones understood back in 1968 (and probably earlier) that workers should be appreciated and recognized, and it’s time the rest of us follow suit.

Workers, especially low wage workers, are much worse off today than they were 46 years ago when “Salt of the Earth” was released.  According to a recent study from the Center for Economic and Policy Research, 40% of Americans now make less than the 1968 minimum wage.  Had the federal minimum wage kept pace with gains in the country’s productivity since 1968, it would be $16.54 per hour as opposed to its current abysmal rate of $7.25 per hour.  Put another way, the current federal minimum wage is 32% less in 2013 dollars than it was in 1968.

Corporate America’s concerted attack on unions coupled with anti-union legislation has also hurt workers.  On average, unionized employees earn roughly $200 more per week than non-union employees.  Today, unions represent a meager 7% of employees in corporate America, which is one-quarter the level in the 1960s.  In 2013, the union membership rate was 11.3% compared to 20.1% in 1983.  A 2011 study argues that the decline of organized labor accounts for about one-third of the rise in income inequality for men and one-fifth for women — even for people who never belonged to unions.

Our country’s historically high poverty rate, which currently exceeds 15% of the U.S. population, is due at least in part to the failure to recognize and support labor.  Four out of every five Americans will experience near-poverty, unemployment or reliance on welfare programs at some point in their lives.  In 2013, the poverty wage level for a single full-time worker with one child was $8.11, which is almost a dollar more than the current federal minimum wage.

I call on all of us to raise our glass to hard working people and take action to reverse these devastating trends.  An increase of the federal minimum wage to $10.10 per hour would raise the incomes for 17 million Americans.  Federal law should follow California’s lead by imposing significant penalties against employers who fail to pay the requisite minimum wage or who fail to pay wages at all.  Finally, unions should be lauded instead of vilified, especially in the burgeoning high tech industry which has always been hostile to unions.

Workers ARE the salt of the earth, and it’s time for the country to show them the respect and appreciation they deserve.

Scott Ames

About Scott Ames

Scott Ames has been litigating wrongful termination, discrimination, harassment, family and medical leave, breach of contract, wage and hour violations, unfair competition and trade secret matters, and other employee rights cases for over two decades. Mr. Ames’ demonstrated record of success has resulted in him being named among the Top 100 Attorneys in Southern California in 2012 and 2013, a “Southern California Super Lawyer” by Los Angeles Magazine from 2007 through 2014, and a “Best Lawyer in America” from 2006 through 2014. Mr. Ames is also active in his community, and has served on a number of committees and boards of non-profit organizations which seek to improve the lives of the disenfranchised or working poor.

High Court ruling threatens wage theft victims’ rights

High Court ruling threatens wage theft victims’ rights

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By Eugene Lee

In the early 1800s, workers in England rioted against unemployment, wage cuts and near-starvation, demanding “a fair day’s pay for a fair day’s labour.” Few would think to challenge such a demand. But two centuries later, fair pay remains as elusive as ever for low wage earning workers.

Consider the case of Everardo Carrillo and Juan Chavez. Both men worked for logistics companies with warehousing operations in California. According to Chavez, “I went 28 consecutive days without a day off. There were no lunch breaks, no rest breaks. ” Carrillo said, “I once worked from 7 a.m. to 2 a.m. the next day. . . If you asked questions [about pay arrangements], you could be laid off for two or three days or a week.” Carrillo, Chavez and four other workers took their employers to court in a class action suit seeking to recover more than $10 million in wage theft.

Today’s workers are facing what commentators have described as an “invisible epidemic” of wage theft. According to a survey conducted by Fast Food Forward, an advocacy group, a whopping 84% of fast food workers in New York City reported being victims of wage theft. That’s 4 out of every 5 fast food workers. Meanwhile, according to CNN Money, the number of collective lawsuits filed in federal court in 2011 alleging wage and hour violations of the Fair Labor Standards Act were up 400% from 2000 levels.

Until recently, workers who have been victims of wage theft have had the option of filing a complaint directly with the California Labor Commissioner, otherwise known as the California Department of Labor Standards Enforcement, or “DLSE.” The DLSE offers a number of benefits for workers over the usual route of filing a civil lawsuit: no filing fees, shorter processing times, hearings before deputy commissioners who appreciate and understand low wage worker conditions, assistance with collecting on any judgments awarded by the DLSE, streamlined evidentiary procedures, etc. For workers with wage claims too small to attract the interest of contingency fee attorneys, the DLSE may be their only feasible option.

Now that right is being threatened.

In a decision issued in October 2013, the California Supreme court held that employers can force employees who have signed arbitration agreements to give up their right to file a complaint with the DLSE. These workers must now submit their disputes to arbitrators, essentially private judges. As any attorney who represents workers will tell you, arbitration is a forum that is best avoided by workers. For one thing, arbitrators overwhelmingly tend to favor employers – who are often repeat customers – over employees – who the arbitrators will likely never see again. Arbitration can also be expensive, particularly compared to the DLSE complaint process which has no filing fees. Finally, according to Prof. Alex Colvin, a researcher at the Pennsylvania State Department of Labor Studies and Industrial Relations, employees who sue their employers instead of going to arbitration not only win more, they get bigger awards.

But not all hope is lost. The Supreme Court opinion went on to note that workers are still free to challenge the fairness or “unconscionability” of the arbitration agreements they had signed. Moreover, if workers can show that the arbitration would be less “affordable” and “accessible” than filing a complaint with the DLSE, that could “support” their challenge.

Most employees are not equipped to fight the battle against forced arbitration on their own.  And most contingency lawyers cannot afford to take on cases of wage theft unless the losses are in the tens of thousands of dollars.  So does this mean that low-wage workers have no choice but to seek redress in the unfriendly arbitration forum?  Not necessarily.   In select cases, the DLSE legal department can choose to step in or “intervene” on behalf of the worker.

This is what actually happened for one of my clients. After I filed a DLSE complaint for my client, I learned that he had signed an arbitration agreement. The employer’s law firm immediately filed a petition to compel arbitration in civil court, asking the court to order my client to dismiss his DLSE complaint and participate in what no doubt would have been a long, expensive, and probably futile arbitration. Given the relatively small size of my client’s claim, challenging the petition or proceeding to arbitration probably would have made little economic sense.

Cue the DLSE legal department. A DLSE lawyer called me and let me know that the DLSE legal department would be willing to step in and fight the employer’s petition on my client’s behalf. In the end, the threat of that intervention was enough to get the employer to cave. The case resolved and my client and I thanked the DLSE lawyers profusely.

I’m encouraged that the DLSE took action to vindicate my clients’ rights and I’m rooting for the agency to keep up the good work.  Forcing low wage workers into arbitration is really just an attempt to cut them off at the pass that would lead to recouping their stolen wages.  The more employers learn that the DLSE is serious about being a law enforcement agency, the more likely wage and hour laws will be followed and forced arbitration won’t serve as a get-out-of-jail-free card for scofflaw employers engaged in wage theft.   As worker advocates fight for a legal standard that can keep the DLSE’s doors open to low wage workers,  DLSE intervention in these cases stands as an essential bulwark against exploitation of low-wage workers.

Eugene Lee

About Eugene Lee

Eugene D. Lee represents employees throughout California who seek to protect their legal rights in the workplace. Mr. Lee has obtained numerous six- and seven-figure settlements and judgments for employees throughout California. Mr. Lee received a B.A. with honors from Harvard University, and a J.D. with honors from the University of Michigan Law School. Prior to starting his own firm, Mr. Lee was a lawyer in the New York offices of Shearman & Sterling and Sullivan & Cromwell.

New California law protects immigrant workers from threat of deportation for exercising employment rights 1

New California law protects immigrant workers from threat of deportation for exercising employment rights

By Michael Marsh

Did you know that, nearly one in ten workers in California is an undocumented immigrant? That a majority of undocumented immigrants work in hard-labor, low-wage occupations where health and safety laws are often ignored? That twenty nine percent of California workers killed in industrial accidents are immigrants?

These sobering facts are among those reported in a recent study by the National Employment Law Project, which also found that immigrant workers are often cheated out of their wages. Seventy six percent of those surveyed worked “off the clock” without pay, and eighty five percent did not receive overtime.

How can this be? Unscrupulous employers, who ignore workers’ undocumented status when hiring, use the threat of deportation to intimidate employees from exercising basic workplace rights. This cut-throat behavior not only hurts their employees, it also adversely affects the economic well-being of their law-abiding competitors and of the citizens and lawful permanent residents whose wages and working conditions spiral downward in response.

Late last week, Governor Brown signed into law a bill sponsored by Senator Darrell Steinberg. The new law makes it illegal for an employer to report or threaten to report the immigration or citizenship status of any worker or member of a worker’s family who complains about unsafe working conditions, refusal to pay earned wages, sexual harassment or other illegal employment practices. The law expansively defines “family member” to cover not only immediate family, but also grandparents, aunts, uncles, nieces, nephews and cousins, from such threats.

Penalties for violation are substantial, and may include fines of up to $10,000 per incident, as well as suspension or loss of one’s business license. Furthermore, attorneys who report the immigration status of parties, witnesses or family members of employees involved in an employment rights lawsuit, risk having their law licenses suspended or being disbarred.

With the signing of this law, Governor Brown has made it clear that knowingly hiring undocumented workers, benefiting from the fruit of their labors, and threatening them with deportation for asserting California employment rights will no longer be tolerated. It’s about time.

Michael Marsh

About Michael Marsh

Michael Marsh is Directing Attorney of the Salinas office of California Rural Legal Assistance, Inc. His practice focuses on working with farmworkers to improve the quality of their working lives.

Is franchising the new frontier for wage theft? 1

Is franchising the new frontier for wage theft?

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By Monique Olivier

The woman who empties your trash in your office, moving quietly around you at your desk as you finish that late night project – did you know there is a good chance she “owns” her own cleaning business?

At least that is what companies like Jani-King, Coverall and Jan-Pro would have you believe, and want the courts to believe as well.  Their business model relies upon the fiction that these janitors — having paid thousands of dollars in cash up front to buy the right to clean — will reap the rewards of being entrepreneurs.

In fact, these janitors do not even control their own wallets, let alone their professional destinies.  A key distinction between a “janitorial franchise” and, say, a McDonald’s or if for example one gets a service station for sale, is that the janitors have no right to control the stream of income they recognize.  Franchisors like Jani-King hold all of the cleaning contracts and grant or refuse permission to franchisees to clean particular accounts.  They also dictate the terms of the accounts – when a janitor will clean, what a janitor will clean and how much the janitor will be paid for each cleaning job.

Sound suspiciously like the janitors are employees?  Several courts and experts think so, and cases decided in the realm of cleaning franchise litigation are being closely watched by business and workers alike.

A case against Jani-King currently pending in the federal Ninth Circuit Court of Appeals, Juarez v. Jani-King International, may provide guidance as to whether these so-called “franchisees” are, in fact, employees under California law.  In Massachusetts, a federal district court already ruled in favor of similar workers, deciding that classifying them as independent contractors instead of employees was against the law.  Another Massachusetts court, in a case filed against Coverall North America, not only concluded that its cleaning worker “franchisees” were employees  under the Massachusetts Independent Contractor Law, but pointed out the similarity between its self-described “franchising business” and a Ponzi scheme.

Boston University’s David Weil agrees.  According to his excellent research, janitorial franchisors’ profitability (which can be upwards of 40%) depends on a steady stream of fees from new “franchisees,” regardless of whether there is sufficient work to sustain the ones it already has.

Recently, the National Employment Law Project weighed in on other widely recognized abuses by so-called “franchise” cleaning companies in the commercial cleaning industry. In a friend-of-the-court brief filed in the Juarez case on behalf of a coalition of workers’ rights organizations, NELP reviews the janitorial industry’s abysmal scorecard on fair pay and working conditions, arguing that janitorial franchising schemes enable rampant non-compliance with basic labor standards.

Even the U.S. Department of Labor has gotten into the act.  Its 2012 proposed budget targets misclassification of workers as an important enforcement priority, noting that the janitorial industry has a higher rate of violations than many other industries.

What it comes down to is this – sophisticated corporations, dissatisfied with earning money the old-fashioned way, are tricking unskilled low-wage workers into paying  thousands of dollars for the privilege of cleaning America’s office buildings in the futile pursuit of a fake American Dream.  The time is now for the courts and the government to rein in these abuses.

Monique Olivier

About Monique Olivier

Monique Olivier is a partner at Duckworth Peters Lebowitz Olivier LLP where she represents individuals and classes in employment, civil rights and consumer cases at the trial and appellate levels. She frequently speaks on and writes about class action and employment issues. She also makes a mean pulled pork.

Swipe paycard, have wages swiped

Swipe paycard, have wages swiped

By Daniel Velton

When you make minimum wage at $8 an hour, you expect it to actually be $8 an hour. Not $7, not $7.25, not $7.99.

Reinforcing that obvious principle, federal consumer protection regulators last week issued a bulletin warning employers that they cannot force workers to accept wages on pay cards, many of which later lead to surprise fees for withdrawing the money those workers have already earned.

Across the country almost 4 million households have someone who receives their wages on a payroll card, according to a recent survey by the Federal Deposit Insurance Corporation. The cards, often issued to workers without a bank account, have led to numerous complaints about undisclosed fees those employees encounter when trying to access the funds.

In June, a Pennsylvania woman filed a class action lawsuit against the McDonald’s franchise where she worked based on alleged minimum wage violations caused by a pay card system that charged her and other workers to withdraw their earnings. In her case, the pay cards allegedly charged between $1.50 and $5 for each withdrawal.

Why all the noise over a few bucks here or pennies there? First, minimum wage workers rely on every last cent of their income to make ends meet, and paying fees on a regular basis to receive that income adds up. Second, the payroll industry is a $25-45 billion sector. Processing pay stubs and physical checks for companies with thousands of employees costs a lot of money. In other words, cutting out those processes (for example, by implementing mandatory pay card systems) results in tremendous cost savings and a net benefit on the corporate bottom line. Banks, who charge the withdrawal fees on pay cards, win big too. There is only one loser in this picture.

Nevertheless, pay cards can be put to good use. In principle, they provide easy access to wages for workers without bank accounts, preventing them, among other things, from having to make regular trips to a check cashing business that charges transaction fees.

California lawmakers have tried to regulate the use of pay cards. A couple years ago, Senate Bill 931 passed in spite of fierce opposition from business and banking interests. The Governor, however, did not sign the bill, stating that it would impose numerous and costly new requirements on pay card providers. At the same time, he recognized that “reasonable protections are needed for those who use pay cards” and vowed to work with legislators on a regulatory solution.

With the growing use of pay cards across the country, lawmakers who revisit this important issue should keep in mind that people already work hard for their wages. They shouldn’t have to pay for them too.

Daniel Velton

About Daniel Velton

Daniel Velton began his career with the largest labor and employment law firm in the world. Using that experience, he brings valuable knowledge and perspective to his current practice, in which he exclusively represents employees in individual and class action discrimination, wrongful termination, harassment, wage and hour, and other employment cases.

Is your favorite restaurant a sweatshop?

By Kevin Kish

Last week, thousands of workers at fast-food restaurants across the U.S. walked out of work to protest low pay.  Their actions brought rare media attention to the millions of people in this country who work full-time shifts – or more – without making enough money to meet basic life needs.

But paying more at a restaurant than you would for a fast-food meal is no guarantee that workers are earning enough to live on, or even that they are earning the legal minimum wage.  The New York Times recently reported about one of my clients who was never paid overtime wages for 60-hour workweeks despite working at a Beverly Hills restaurant where a meal can cost more than $500.  For one person.

In fact, in my experience representing hundreds of restaurant workers in claims for unpaid wages in Los Angeles, there is generally no relationship between the price of a restaurant and the way the workers there are treated, including whether they are paid all of the wages they earn.  At fancy date-night spots and at neighborhood lunch counters alike, workers get paid the minimum, or not, depending on whether the owner cares about following the law.  Many don’t.  A nation-wide study from 2009 found that more than 23% of cooks, dishwashers, and food preparers were not paid minimum wage, and a whopping 70% of restaurant workers experienced overtime violations.

One reason for this is that employees often fear speaking out about unfair or illegal treatment, for good reason.  In the Beverly Hills case, my client was fired on the spot when he asked to go home after working for 9 hours with a fever, and after more than five years of service at the restaurant.

Most people care about whether other people are treated fairly in the workplace.  But in a global economy, where your shirt is made in Bangladesh and your phone is made in China, it can be difficult to feel you can make a difference.

Restaurants are a good place to start.  75% of Americans eat out at least once a week, and when we walk into a restaurant to eat, we also walk into a workplace where we can make a difference directly.  A national restaurant-worker organization, Restaurant Opportunities Centers United, has published its second-annual Diner’s Guide to Ethical Eating (also available as a free mobile app) with information about labor practices at restaurants around the country.

You can find out, for example, whether your favorite spot offers employees paid sick days, so you know your meal wasn’t prepared by someone with a fever. If it doesn’t, ask the manager or owner about it.  As consumers, we have insisted on healthier choices in restaurants, on calorie-counts and on fresh ingredients free of pesticides.  More than 10 million Americans work in restaurants.  We can also insist they get a fair shake.

Kevin Kish

About Kevin Kish

Kevin Kish is the Director of the Employment Rights Project at Bet Tzedek Legal Services in Los Angeles. He leads Bet Tzedek’s employment litigation, policy and outreach initiatives, focusing on combating illegal retaliation against low-wage workers and litigating cases involving human trafficking for forced labor.

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