Employed Workers versus Contract Labor

As we head full steam into this season of sharing and giving it is important to take note of contract labor, once the bastion of the highly paid consultant, now the domain of the minimum wage part-timer. One of the effects of the dismantling of labor unions throughout this country in favor of contract independence is that companies get away not only with lower wages but cutting any life force from potential benefits.


Think of it – workers who are thrilled with their new found contract labor freedom suddenly realize by working a few hours less per week, or working full time and contractually agreeing to be looked at as a non-employee (contract labor), suddenly have to pay double social security taxes (their share and the share that once was paid by their employer) in addition to whatever other taxes might be inspired (such as disability, both federal and state) and have no rights when it comes to overtime, and lose all vacation pay, sick pay, and pension rights.


Contract labor pay, once higher than that of employees (partially to keep unions out and partially through the realization that benefits do not have to be paid and partially because it most applied to the specialized professional) no longer has to be an inducement rate to get nee-employees to accept.


Once workers were able to be heard when they demanded better working conditions or fairness in wages or in treatment of the work force in general, but that day is long past. In more and more industries the contract labor model has taken hold as workers are exploited by management. These contract labor models, from Uber to Amazon, help to guarantee phenomenal growth for the corporation but at the same time these models are one of the major conditions leading to income inequality. Labeling a worker temporary, or part-time or contract labor, also causes the worker to feel more vulnerable and less likely to revolt no matter how horrendous the working conditions.


One of the cynical tools employed by management these days is to schedule workers for hours almost up to the full-time threshold and then increase the hours worked by scheduled over-time. While the worker obtains some benefit from overtime the wage paid for that overtime, when compared to what would have to be paid for those same hours for workers with benefits, is still low.

Unfortunately the courts have not been labor friendly nor has Congress shown much interest (and when interested not much backbone) in supporting worker’s rights. Diminishing worker’s rights appears to be accepted by the courts if the employer can demonstrate that there are reasons for the reduction that exists outside of the desire to reduce benefits to workers. Corporations can usually find, no matter how apparently weak, alternative reasons for the reduction.

Contract Labor

Contract Labor

“A company’s decision to spin-off a division and implement a no-hire policy, that effectively ended the right of transferred employees to pension and retiree medical benefits, did not violate ERISA §510 because it was not specifically intended to interfere with the employees’ benefit rights, the U.S. Court of Appeals (CA-7) has ruled.”


“Abbott Laboratories spun off its Hospital Products Division (HPD) into a separate company, Hospira, in 2003. Prior to the spin-off, HPD employees had access to the pension plan sponsored by Abbott. As employees of Hospira, the former HPD employees no longer had access to the pension plan or retiree medical benefits, but were eligible for an enhanced 401(k) plan that provided for employer matching contributions.”


“The terms of the spin-off transaction included reciprocal “no-hire” policies, pursuant to which Abbot and Hospira were prohibited for two years from hiring employees or retirees from the other company. Accordingly, when HPD employees ceased employment with Abbott and became employees of Hospira, they lost their nonvested rights in the Abbott plan. In addition, retirement-eligible employees of HPD were prevented from retiring from Abbott before the spin-off and collecting an Abbott pension before joining Hospira.”http://hr.cch.com/news/pension/031212a.asp

About pulpdiddy

I've published an E-book (Neurotic Man), a hard copy book, (Dworb), produced movies (Woman of the Port and Liberty and Bash), and worked as a writer for Demand Media writing those ehow tidbits you've most undoubtedly seen. For many years I wrote business and marketing plans for service, retail and manufacturing businesses. Along the way I've also prepared tax returns, taught accounting, been a business start-up consultant, licensed arbiter, federal analyst, busboy, waiter, safety clerk, lighting salesman, restaurant manager, parking lot attendant, construction foreman, and cook.
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