Permatemping cases highlight lack of U.S. protections for temp workers.
Image from Flickr via Chicago Workers Collaborative
By Michael Grabell
By arrangement with ProPublica
For nearly six years, Limber Herrera has toiled as a temp worker doing the same work for the same company in Mira Loma, Calif. About 40 hours a week, he unloads shipping containers for NFI—one of the largest freight distribution firms in America—moving goods that will eventually stock the shelves of Walmart and Sam’s Club.
Herrera, 30, has been a temp so long that he’s outlasted the agency that hired him. But that mattered little. One day in late 2012 he was called into the break room to fill out some paperwork. Then he went back to work—only now employed by the temp agency that took over the contract.
If Herrera worked in South Korea, his temporary assignment would be limited to two years, after which the company would have to hire him as a regular employee. If he worked in Germany, he would be guaranteed the same wages and working conditions as employees hired directly by the company. And if he worked in Chile, his temp agency could be shut down if it failed to pay him his wages or put him in harm’s way.
But Herrera works in the United States, which has some of the weakest labor protections for temp workers in the developed world, according to data compiled by the Organization for Economic Cooperation and Development (OECD), which produces research on behalf of 34 of the world’s industrialized nations.
Since the 2007-09 recession, temp work has been one of the fastest growing segments of the economy. But a ProPublica investigation into this burgeoning industry over the past year has documented an array of problems. Temps have worked for the same company for as long as 11 years, never getting hired on full-time. Companies have assigned temps to the most dangerous jobs. In several states, data showed that temps are three times more likely than regular workers to suffer amputations on the job. And even some of the country’s largest companies have relied on immigrant labor brokers and fly-by-night temp agencies that have cheated workers out of their wages.
In contrast, countries around the globe have responded to similar abuses by adopting laws to protect the growing number of temps in their workforces. These include limiting the length of temp assignments, guaranteeing equal pay for equal work and restricting companies from hiring temps for hazardous tasks.
“The lack of basic protections for temporary workers in this country is shameful,” Rep. George Miller, the ranking Democrat on the House Education and Workforce Committee, said in a statement. “It is important that the U.S. examine some of these provisions and consider whether they can serve as models for statutes to help protect American workers.”
Herrera’s is an extreme case of “permatemping,” hiring a temp for years to do the same job permanent employees do, but without the benefits and protections.
Herrera’s is an extreme case of “permatemping,” hiring a temp for years to do the same job permanent employees do, but without the benefits and protections. A former construction worker during the housing boom, he desperately needs the work to support his family, but believes the practice is exploitive.
“I think that workers, everyone, deserves to have a good job hired directly by a company with good benefits,” said Herrera, who has a 5-year-old daughter and 3-year-old son.
Having strong labor laws on the books doesn’t necessarily mean they’re enforced. For example, Brazil has some of the world’s strictest temp worker regulations. But it also has an enormous underground economy in which workers are paid informally and abuses go unchecked. And a country’s protections for its temp workers may not apply to guest workers brought in from other countries for major construction projects or domestic work.
Still, the OECD statistics—which rank the United States 41st among 43 developed and emerging economies—show the types of legislation available for protecting temp workers who federal and state officials say are among the most vulnerable.
Even worldwide leaders in the temp business acknowledge that reforms are needed to rein in practices that have given their industry a bad name.
Denis Pennel, managing director of the International Confederation of Private Employment Agencies, cautioned that too much regulation can backfire. But his organization—which represents temp trade groups from 47 countries—has supported reforms such as equal pay and licensing for agencies. The group, he said, is also open to limiting the length of temp jobs.
While popular with the public, new labor protections have faced an uphill battle in Washington since the 1970s. In fact, the last time a bill to protect private-sector temp workers got a hearing in Congress was in 1971.
“Usually the maximum length of assignment is about two years,” Pennel said. “I would say we can live with that.”
The international group’s view stands in contrast to decades of resistance from the American business community. While popular with the public, new labor protections have faced an uphill battle in Washington since the 1970s. In fact, the last time a bill to protect private-sector temp workers got a hearing in Congress was in 1971. That bill, which didn’t go anywhere, would have required temp agencies to be licensed by the U.S. Labor Department and guaranteed certain benefits for temp workers. It was sponsored by Chicago congressman Abner Mikva, who went on to become a federal judge, White House counsel and a mentor to a young law school graduate named Barack Obama.
The global divide on temp worker protections comes down to legal and cultural differences, economists and former Labor Department officials said. Historically, the U.S. economy has been based on free-market, at-will employment while European countries emphasize universal benefits and strictly enforced employment contracts.
“There’s a very strong strain of economic thought in the United States that one of the reasons why we are as productive and successful economically as we are is that there’s so much flexibility in the labor markets,” said Seth D. Harris, who was deputy labor secretary until last month.
But that view is not necessarily accurate, he said. Economies certainly suffer when companies can’t get rid of employees who aren’t productive, but they also suffer when employers don’t invest in training or pay living wages.
“There’s a need to find a balance,” Harris said. One of the “tragedies of the temp workers’ situation” is that it treats “workers as disposable inputs rather than valuable assets for their companies,” he said.
Carl Camden, chief executive officer of Kelly Services, one of the largest temp agencies in the United States, said that permatemping in general is a “bad concept.” But the wide range of industries that now rely on temps often require work that may be too complex for arbitrary time limits, he said. A pharmaceutical company, for example, may need staff for a clinical trial that could fail in its early stages or go on for years, he said.
In addition, the rise of just-in-time manufacturing and online shopping means companies often don’t know how many orders they will have – and how many workers they will need to fill them – until that very morning, others in the temp industry said.
“The rules have to make sense for the changing nature of work,” Camden said. “There is a secular shift in how people wish to work and how companies wish for people to work.”
‘Temporary is Forever’
Almost half of the 43 countries that the OECD collects data on restrict the duration of temp assignments. In Brazil, assignments are limited to three months unless the ministry of labor grants an extension. In Japan and Italy, the limit is three years. In the Czech Republic, it’s 12 months.
In the United States, temp workers often hold such jobs without recourse for years. Guadalupe Rangel, 45, was a temp at a Walmart warehouse in Mira Loma, Calif., for eight-and-a-half years until he was hired amid a federal lawsuit he and others filed over wages. His experience highlights the differences between the lot of a temp worker and that of a permanent employee.
When Rangel started working at the Walmart warehouse for Impact Logistics in 2005, he was paid piece-rate by the number of trucks he unloaded, he said, taking home $150 to $400 a week. As time passed, instead of getting a raise, he said, his rate per truck went down, dropping his weekly take to $100 to $300. Still, seven days a week, he said, he showed up in the morning to see if the warehouse needed him or not. If they didn’t, he went home unpaid.
Guadalupe Rangel stands for a portrait at his home in Bloomington, Calif. Rangel is suing Impact Logistics for unpaid wages under a system in which they were paid by the number of trucks they unloaded rather than by hour. (Patrick T. Fallon for ProPublica)
“It was very stressful, not knowing whether we were going to have work or not,” he said.
In August 2013, he and several other temps were hired directly by Walmart’s warehouse contractor, Schneider Logistics. Rangel said he now receives $13.80 an hour, health insurance, paid holidays and two weeks’ vacation.
“It just feels much better, more secure,” he said. “I can go out to restaurants because I know that money is going to come in next week, and before, I didn’t do that.”
Schneider declined to comment, as did NFI, the company where Herrera works. Walmart’s spokespeople did not return phone calls or emails.
In most of the developed world, temp workers like Rangel would not face a disparity in wages and benefits. Fearing that companies were replacing employees with temps to reduce costs, the European Union in 2008 mandated that temp workers receive equal pay and working conditions to employees hired directly by the company.
David Hamilton, the chief executive officer of Impact, insisted that his company was not a temp agency but rather “a logistics provider specializing in people.” His company, like a temp agency, provides workers to load and unload trucks for warehouses and adjusts the number of workers daily to meet a company’s needs. But Hamilton drew a distinction.
“A temp agency doesn’t manage their people, doesn’t train those people,” he said. Those responsibilities are handled by the worksite company. “When we go into a facility, we manage them,” he said.
Hamilton noted the company’s guiding principles include practicing “honesty, integrity and fairness in everything we do.”
In 2011, California regulators fined Impact for failing to provide employees with paystubs that displayed how their wages were calculated under the piece-rate system so that they could assess whether they had been fully paid for their work.
In most of the developed world, temp workers like Rangel would not face a disparity in wages and benefits. Fearing that companies were replacing employees with temps to reduce costs, the European Union in 2008 mandated that temp workers receive equal pay and working conditions to employees hired directly by the company. Many of the countries with the largest economies in Asia and South America have similar rules.
Such a provision would also help white-collar temps in the United States, who are often denied the benefits that professionals with academic degrees have come to expect, including sick days and paid holidays.
Philippe Boucher, who has worked as a temp reviewing apps for Microsoft for more than two years, has been pushing for such equality on his blog PaidHolidays.org. On Christmas, regular workers at Microsoft and other tech companies, he said, enjoy a paid day off when their employers close down for the holiday. But for temps, Christmas amounts to a cut in pay. “You don’t work, you don’t get paid,” he said.
Microsoft said in a statement that it wasn’t responsible for benefits provided or not provided to permatemps by its contractors.
“What does the definition of ‘temporary’ mean when temporary doesn’t end?” asked Boucher. “It looks like ‘temporary’ is forever.”
Other Countries Do More
Day Davis, 21, was sent by his temp agency to work at a Bacardi bottling factory in Jacksonville, Fla., in August 2012. He didn’t make it to his first break on his first day. As a conveyor belt jammed and bottles of rum crashed to the floor, Davis was sent to sweep glass from under a giant machine that stacked cases onto pallets. His coworkers didn’t realize he was still under the machine when they turned it back on. He was crushed to death.
U.S. safety investigators found that Bacardi didn’t train temps because it didn’t think of them as their employees. Bacardi is “production, product and profits oriented,” one investigator wrote. “They do not want to slow down production and spend funds on temporary employees who may not be in their facility day-to-day.”
Temp injuries aren’t rare. Nor is it rare for companies to do little to train them. In December, ProPublica reported that temps in several of the largest states face a significantly greater risk of injury than regular workers, especially in blue-collar jobs. Temp workers nationwide have been repeatedly pulled into machines they didn’t know how to use or killed by fumes while cleaning the inside of chemical tanks.
Unlike the United States, about three-quarters of the countries tracked by OECD require temp agencies to register or become licensed before they can begin sending out workers.
In many other countries, temp workers would never face such risks. At least 12 countries have banned companies from hiring temps in dangerous industries or to do hazardous work. In Argentina, South Korea and Japan, for example, temp workers are prohibited in the construction industry. In Poland, the restrictions are even more specific: Temp workers can’t be assigned to work at heights, in confined spaces such as tanks or containers, inside machines or with hazardous materials.
“The main reason was the protection of the workers,” said Agnieszka Zielińska, head of Polskie Forum HR, the Polish temp agency association. The country recently reviewed the policy, she said, but officials worried that lifting it could be dangerous because “most accidents that happen, happen with workers who are just starting.”
In the United States, companies often use temps in traditional ways such as supplementing their workforce during peak periods. But many others temp out entire segments of their core business, such as warehouse work or cleaning hotel rooms, so that they have to pay only the number of employees they need for a particular day. Other companies follow the “try before you buy” motto of the temp industry as a way of screening applicants who get hired on three months, six months or, sometimes, several years later if they excel.
Countries such as France and Bulgaria restrict temp assignments to temporary situations such as filling in for absent workers or when companies have sudden increases in work. Others, like South Africa, cap the number of temps companies can hire to 30 percent of their workforce.
Other countries also do more to monitor temp agencies. Unlike the United States, about three-quarters of the countries tracked by OECD require temp agencies to register or become licensed before they can begin sending out workers.
At least 20 large countries call for financial guarantees to protect workers’ wages if the company goes out of business. When a U.S. temp agency goes bankrupt, workers are often left unpaid and must seek their wages in court or from the company to which they were assigned.
Slovenia, a country the size of New Jersey that split from Yugoslavia in 1991, has perhaps the strictest licensing rules. It requires temp agency managers to have a college degree, at least two years of experience and to have passed a professional exam before the agency can be licensed.
“It’s because you have a lot of precarious agencies,” said Denis Stok of ZdruženjeAgencijzaZaposlovanje, the Slovenian temp agency association. “If there are any irregularities that were found, they would just close down a company and start somewhere else. That’s why they have made it more difficult to start a company.”
Such rules are a rarity in America, where every day, thousands of workers, many of them immigrants, are picked up on street corners by temp agency vans, whose drivers charge them exorbitant fees for the ride without telling them where they’re going to work.
In response to such abuses in recent years, Massachusetts, New Jersey and Illinois passed laws requiring temp agencies to register with state authorities. The new laws also limit the fees agencies can charge. And in Illinois, Massachusetts and California, agencies must give workers notice of where they’re going to work and how much they’ll be paid.
Carlos Dubon worked as a temp for a recycling plant in New Bedford, Mass., for 11 years, never receiving a raise above the state’s minimum wage. When advocates began working on the temp worker right-to-know law, he pitched in to protest what he saw as unfair and unsafe conditions.
Now that the law has passed, Dubon said state and local authorities need to be vigilant or temp agencies will continue to abuse workers.
“The law is good if they follow it, but they are not following the law. They do whatever they want,” he said. “They are taking advantage of immigrants because they know we cannot ask for our rights.”
For Mikva, the former congressman who pushed federal legislation in the 1970s, protecting temp workers remains “one of the many causes that I left unsatisfied.”
“I still think it’s terrible and I still think that it’s one of these areas with an absolutely voiceless constituency,” he said from his home in Florida. “Squeaky wheels get the oil, and these wheels have no squeak at all.”
Michael Grabell covers economic and labor issues for ProPublica. He has produced stories for the New York Times, USA Today, NPR and the CBS Evening News.