Flouting Workplace Laws in ‘Fissured Workplaces’ | DCR Workforce Blog

Flouting Workplace Laws in ‘Fissured Workplaces’

As workplaces today morph from brick and mortar edifices to virtual offices and nomadic lifestyles which require a worker to have only an active data connection, workers are losing the protection of workplace laws which were established under very different work conditions! Loyalty to the employer is a thing of the past and gigs are the way to go!

Amidst all this change, the Wage and Hour Division (WHD) of the Department of Labor (DOL) has recently come to the realization that the employment relationships have fissured. As a direct result of this, workforce laws which have been promulgated over the ages may or may not prove effective any more. They may actually be failing in their avowed aim of protecting the rights of workers. Today’s vastly different business environment may not ensure fair treatment to the workers as new business models come into play, with workers setting up themselves as independent contractors; secondary companies taking over the tasks of paying the workers all the way to employing them and deputing them to work for their clients as contingent workers. Today, the employment relation eludes not just the cleaners in a hotel chain, or the programmers of a software company – it extends to the skilled teams which manage the outages of a nuclear power plant! Many more can be found working as drivers, in food supply and as landscaping artists or content editors and creators.

Worker rights violations in a fissured workplace:

As workplaces sign up for subcontracting, temporary agencies, labor brokering, franchising, licensing and third party management, workers’ rights violations in workplaces are posing some of the following challenges, making it hard for DOL to ensure a level playing field for employers and fair treatment for the workers:

  • Responsible employers are facing unfair competition from unscrupulous players in their industry even as the workers are being victimized through payroll law violations like paying low wages and non-compliance with wage and hour laws.
  • When outsourcing key business functions and enlisting the help of staffing agencies, many companies mistakenly relinquish employer responsibilities. As a result, workers suffer a loss of benefits, inadequate health and safety protections and even lower pay.
  • Companies misclassify a portion of workers’ earnings as per diem payments (or compensation for living expenses incurred on behalf of the employer, such as transportation, meals and lodging) and exclude them from gross wages on which they must calculate the workers’ overtime pay. This practice deprives the government of tax dues because per diem payments are excluded from both state and federal taxes.
  • Sometimes, workers are employed by two subsidiaries of the same company, which track their hours separately and never pay overtime through the subterfuge.
  • Worker safety is compromised when contingent workers are brought on board, which is another issue being tackled by the DOL through relentless efforts.

Apart from responding to complaints, the DOL is also directly investigating industries which have come under the cloud through earlier acts of violations. It’s also educating employers about their responsibilities under federal law while informing workers of their rights and how to protect themselves from using new generation methods like social media.

It’s estimated that 7.3 million establishments and 135 million employees are covered by WHD laws in the U.S. which enforce minimum wage and overtime protections. The rate at which workplaces are getting fissured has the DOL determined to re-evaluate and re-focus its strategies to suit the needs and requirements of today’s workers and to protect them against possible employment law violations. The fact that the WHD found over $246 million in back wages for more than 240,000 workers makes evident the overwhelming magnitude of the task the DOL has set for itself. It also calls for employers to be on guard in their dealings with their workers!

How else do you think fissured relationships will affect the workplace?

The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.