Californians head to court
Members of the contract cleaning industry in California have taken the next step in their campaign to combat illegal subcontracting. Service Employees International Union (SEIU) Local 1877, which represents thousands of Los Angeles janitors, is backing a class-action lawsuit alleging that Houston-based Encompass Services Corp., a major U.S. facility services company, and its subsidiary, Building One Service Solutions, have conspired with three local grocery chains to usurp state wage requirements.
The main allegations were announced at a Los Angeles press conference in late November. The Mexican American Legal Defense Fund (MALDEF) and Pasadena, Calif. labor-law firm Bahan & Herold jointly filed the 40-page lawsuit alleging that the grocery chains, Albertson’s, Ralphs and Vons, purposely tried to skirt wage and benefit requirements by utilizing Encompass and its subsidiaries to find cleaning workers at a cheaper price than in-house staff cost, and to misclassify them as independent contractors. The case also alleges that whoever is determined to be the true employer is liable for unpaid wages, wage-related taxes and benefits the workers reportedly never received when paid by cash or through personal checks.
“This case is unusual because the issue is whether or not the supermarkets and Encompass are joint employers of janitors,” said Orrin Baird, associate general counsel for the SEIU at the national level. While the SEIU often has contended that building owners should be considered joint employers over contract cleaning workers, Baird believes this is the first major case to ever attempt to make that distinction.
Plaintiff attorneys are trying to implicate the grocery chains by alleging that store managers directly supervised the employees, which is considered a breach of independent contractor status and, if found true, could be proof that the stores are liable for wages and benefits in question. The allegations are based on cleaning workers’ interviews and documents they produced, said Enrique Gallardo, staff attorney for MALDEF, during the press conference. The Maintenance Cooperation Trust Fund, created by SEIU Local 1877 and area contractors to investigate reports of illegal subcontracting, initially alerted attorneys to the workers’ allegations.
Eight workers are named in the lawsuit but it is filed on behalf of an estimated 600 janitors in California. “It’s conceivable that some of them may be undocumented citizens. But the laws we’re preceding under cover all employees,” said Gallardo. “A large number of them no longer work for the same company or even in the industry.”
Jeanne Buchanan, vice president of corporate communications for Encompass Services Corp., declined to comment on the company’s legal response to the lawsuit, but did say, “Encompass takes its obligations under the law very seriously. We’re fully committed to complying with all applicable laws and only use subcontractors who share our commitment.”
Encompass and its Building One subsidiary routinely require internal audits for wage and labor compliance; to date, the company wasn’t aware of any pending federal or state claims regarding such violations, added Buchanan.
When contacted, Ralphs also declined to comment on the case. Company spokesperson Terry O’Neill did say that 24 of the grocery chain’s 350 stores contract their cleaning services to Encompass and other companies.The decision to use an outside cleaning service was to help some stores become more efficient, O’Neill added. No jobs were eliminated; Ralphs employees who previously held the outsourced jobs were offered the opportunity to become a retail clerk or to clean at another store, he said.
O’Neill also clarified that when cleaning crews entered Ralphs stores, Ralphs employees did not manager them.
“We treat our employees with the utmost respect and abide by all labor relations, and we expect all the companies we work with to do the same,” he said. “[When hiring contractors] we knew the sensitivity of the issue and we [talked] with the SEIU to make sure we followed all the labor rules.”
When Albertson’s was contacted for this story and asked to comment on the case, Jenny Enohson, corporate director of media & community relations, said, “It’s difficult to speculate, but what I can do is tell you that to this date Albertson’s has not been presented with any evidence of a violation.”
The supermarket chain’s contract requires vendors to operate in compliance with all state and federal labor laws, and has a policy not to supervise cleaning crews, she said. The decision to subcontract cleaning for some of its 2,500 stores was “because we don’t wish to own and maintain the expensive equipment involved, and because we don’t have the management expertise in many of our stores to oversee the floor stripping and cleaning process,” said Enohson.
A call to a Vons spokesperson was not returned.
One could compare this case to some of the high-profile cases that have come out of Los Angeles involving the garment and agricultural industries over the last decade, said Gallardo. Having even a handful of illegitimate contractors in an industry makes it difficult for other contractors to compete among the undercutting, he added.
As of press time, no court dates concerning the case had been set, though, one of the workers named in the lawsuit had removed his case to federal court, in the hopes that it might progress faster.
A community forum is planned for Feb. 3 in Los Angeles to call attention to various violations, further explain how it affects the workers and include testimony from workers and contractors, said Blanca Gallegos, SEIU Local 1877 spokesperson.
“We definitely want to see a remedy for these workers,” said Gallardo. “We also want to see some conjunctive relief so this doesn’t happen in the future.”
Bill veto a blow to SEIU
At the same time that the SEIU took new steps to join the lawsuit, the organization experienced a setback as California governor Gray Davis vetoed an SEIU-sponsored bill that would protect employees working in a building where illegal subcontracting exists. Senate Bill 1877 would keep such workers from losing their jobs if a new contractor was hired to take over.
“It’s an industry where many workers are living paycheck to paycheck” and dealing with instability because contractors switch jobs frequently, said SEIU’s Gallegos.
“I realize job stability is sometimes the only compensation for low wages and janitors who do some of the most difficult work there is, but this bill sets a troubling precedent in regulating private sector employment relationships,” said Davis in his veto explanation. “I believe that the employment relationships between the contractor and janitorial employees should be resolved between the affected parties.”
Members of the Pacific Association of Building Service Contractors (PABSCO), as well as a variety of building owner groups, were opposed to SEIU’s bill because it would have required building owners and their new contractors to keep the same workers they were unhappy with for an additional 90 days before they could make any changes, said PABSCO lobbyist Pete Conaty.
“The more important and devastating thing is that instead of going to the labor commissioner if not treated right in those 90 days, those workers could go directly to court and sue the new contractor, and that would have been a full employment act for attorneys,” he added.
SEIU Local 1877 is strongly considering reentering the bill in California and Conaty said PABSCO still hopes to work with the union to create a bill that both management and labor could support.
SEIU Locals in Chicago and New York City also are drawing up similar bills for 2001.
Kristine Hansen is a business writer based in El Segundo, Calif.