60: The Fissured Workplace – a DOL Blog Post

A DOL blog post by Dr. David Weil, the Administrator of the Wage and Hour Division
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“Our basic mission at Wage and Hour is pretty simple: making sure people get a fair day’s wage for a hard day’s work.”

The U.S. Department of Labor, or DOL, is responsible for administering the U.S. labor laws. This includes creating rules and regulations and enforcing them.

The DOL states their mission as follows:

“The Department of Labor fosters and promotes the welfare of the job seekers, wage earners, and retirees of the United States by improving their working conditions, advancing their opportunities for profitable employment, protecting their retirement and health care benefits, helping employers find workers, strengthening free collective bargaining, and tracking changes in employment, prices, and other national economic measurements.”

Wow! That’s a lot to do. I guess that’s why their fiscal year 2017 budge is 65 billion dollars.

But hey, did you catch that one of their missions is to help you find workers? Have you used their recruiting services? Yeah, me neither.

Even their different divisions have their own mission statements. Here is what David Weil, the Administrator of the Wage and Hour Division says:

“Our basic mission at Wage and Hour is pretty simple: making sure people get a fair day’s wage for a hard day’s work. “The difficulty is the workplace has changed dramatically in the last 20 years, and figuring out how we really make sure that happens has become a more and more complicated thing to accomplish.”

Isn’t that awesome! Who decides what’s fair? A bureaucrat? A regulator, A politician? Why not you? Why not the two people engaged in the transaction? Don’t they have the most self-interest in the exchange, more than any other person, group or committee? What business is it of yours, or mine, or any other non-party to the relationship to dictate what a fair day’s wage is? Why can’t two free adults negotiate for their own exchange of labor?

You are not free to work if you can’t find someone willing to pay you the mandated minimum wage in your location. The harder it is to employ people the fewer jobs will exist.

I actually started preparing this episode on the subject of Joint Employer because the DOL and the National Labor Relations Board partnered up to broaden the interpretation of the joint employment definition. But, as I was doing research, I came across a blog post by Dr. Weil, which I read, shaking my head and wondering if he’s ever employed anyone in the private sector or been a business owner. He seems to lack a basic understanding of economics but I guess that’s a trait of almost every bureaucrat, regulator and politician.

Other than that, I think he’s a fantastic writer and academic.

Anyway, I wanted to share this and comment on it, as a lead in to the next episode where we’ll talk about Joint Employers. So, here’s what he wrote (my commentary is in orange)

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. He says “businesses receiving the benefit of their labor” and what about the workers benefiting from your employment, or do businesses have a social duty to employe people?

Often those secondary companies deepen the fissures, breaking those activities apart and shifting work even further out from the primary business. So what? How is that a bad thing?

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. You can tell right away his perspective on the relationship. Business is evil and workers are helpless victims.

The blurred lines from the fissured workplace make achieving compliance with the wage and hour laws we enforce a difficult task. No, your web of a million confusing laws and a billion regulations make it difficult.

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. So responsible law abiding employers don’t use subcontracting, temps, labor brokers, franchising or outsourcing, and the only reason these models exist is to avoid the law?

The costs in this race to be the lowest bidder are borne by workers deprived of their wages and their rights. Wow! Spoken like a true social engineer.

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 other words you need more money to hire more thugs to break some more kneecaps.

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 wonder how much it cost to recover that money from those filthy slum-employers. Shut those people down, force every employer to pay no less than a living wage as defined by the federal government. Better yet, have the government pay all workers and invoice the businesses. 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. I can fix your leak. Let people be free to decide what’s best for themselves, and use that 65 billion dollar budget to create a contract dispute resolution system that is affordable and fast.

If you use any of the compliance avoiding business models described by Dr. Weil, you’d better look out. He’s on a mission to change your behavior.

About the author, Thomas

I have 20 of years insurance industry experience in C-level management, focusing on all aspects of workers compensation, risk management, loss control, employee benefits, HR, payroll and professional employer organization (“PEO”) operations. Currently, I am the owner and CEO of Humanly HR, and founder and host of SmallBiz Brainiac; a podcast providing employer intelligence to small business owners.

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