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Temp Worker Nation: If You Do Get Hired, It Might Not Be for Long

Writers and warehouse workers, janitors and business consultants, truck drivers and graphic designers -- none have a social safety net.

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FedEx Ground, for example, defines its 15,000 drivers as independent contractors, even though they drive company-assigned routes and must drive vans with the FedEx logo and color scheme.

“There are millions of Americans classified as independent contractors by the companies they work for, but effectively working as employees,” American Rights at Work, a Washington-based labor-rights nonprofit, said in a 2007 report on FedEx Ground. “These workers suffer the worst of both worlds: they toil without the protections and benefits of employees, yet are without the control over their work that true independent contractors enjoy.”

The legal definition, Ruckelshaus says, is whether the person is running an independent business—are they investing their own money, and can they pass on increased costs? The Internal Revenue Service’s general rule is that an individual is an independent contractor if the person hiring them has “the right to control or direct only the result of the work,” while the worker decides “the means and methods of accomplishing the result.”

The scam’s advantage for employers is that they don’t have to pay minimum wage or overtime, Social Security, Medicare or unemployment taxes, or workers’ compensation. The result, the American Rights at Work report said, is that FedEx drivers not only make less money than those at UPS, who are permanent workers with a union; they also have to pay for gas and maintenance for their vans. Many lease vans from a company-approved supplier, Ruckelshaus says.

Some employers define even janitors and home healthcare aides as “franchisees,” she continues. For example, an office building’s management might hire a cleaning-services subcontractor, which will then have its workers buy the job of cleaning one section of the building in exchange for a piece of the company’s fee.

Coverall, a Florida-based cleaning-services company, calls its more than 9,000 workers “franchisees,” and its more than 90 regional offices are “support centers.” In Boston, says Ruckelshaus, these franchisees might have to pay the company as much as $10,000 to claim a job, recouping that investment from their wages. If they don’t have the money, they can borrow it from a company-recommended lender. In some cases, she says, they have had to work the first month on spec, getting paid for it only if the Coverall boss approves them for the job. They also have to buy cleaning equipment and supplies from the company. But Coverall makes the deals for the jobs, so the workers can’t raise their rates or ask the client for work on their own.

In home healthcare, a field with 3 million workers, mostly women, that is one of the fastest-growing job categories in the U.S. economy, for-profit agencies are calling themselves “registries” of independent contractors. They do this, says Ruckelshaus, even though they hire the workers, train them, assign them to jobs, and set rates. It means they don’t have to pay minimum wage or overtime.

“There’s no enforcement,” she says. “It becomes part of the structure of these jobs.”

Warehouse and shipping work is a major area of abuse. Walmart and Amazon outsource their massive warehouse and shipping operations to subcontractors, who then use temporary agencies to hire workers. Workers often don’t even know who their actual employer is, says Ruckelshaus.

“They pit these little subcontractors against each other,” says Erin Johansson, research director of American Rights at Work. “To compete and win a contract, you’ve got to pay your workers minimal wages.”

In this system, according to the “Chain of Greed” report, workers are paid piecework, according to the number of containers or trucks they finish unloading on a shift, instead of an hourly wage. They don’t get paid for anything else they do on the job. The result is “rampant minimum wage and overtime violations,” the report said. Workers also have to unload dangerously stacked piles of boxes, some of which weigh up to 200 pounds, says Johansson.