Who’s the Boss: Restoring Accountability for Labor Standards in Outsourced Work

Our economy is in the midst of a major restructuring in the way business operates, particularly in fast-growing service industries. Whether the result of contingent work structures, outsourcing to contractors, the misclassification of employees as independent contractors, individual franchising, or other strategies, increasingly the businesses that individuals “work for” are not the ones they are “employed by”—a distinction that can hamper organizing, erode labor standards, and dilute accountability.

These organizational changes are an important part of the story of the “future of work” and have greatly contributed to the degradation of jobs and attendant income inequality in many sectors.

Some of these arrangements—broadly termed “outsourcing” (see box below for related terms)—truly reflect efficient ways of producing goods and services, while others represent explicit attempts by employers to evade their legal obligations to workers. But all challenge nearly century-old workplace policies built around direct, bilateral employment relationships, and many discourage companies from taking responsibility for workplace problems. In outsourcing work, all too often companies outsource responsibility as well—and by design or effect, create poor-quality jobs and undermine businesses trying to do right by their workers and the economy overall.

This report illuminates the scope and characteristics of companies’ decisions to outsource or use related structures in a variety of high-growth and lower-wage sectors that result in poor working conditions, with no accountability on the part of those companies. It describes how this lack of responsibility in the face of complex supply chains, multi-tiered business arrangements, and inaccurate job labels harms workers, law-abiding employers, and the economy overall. It details the culture of non-compliance that has emerged in many of our economy’s largest and fastest-growing sectors, as firms encourage intense low-bid competition by subcontractors, evade unions, and skirt baseline labor and employment standards.

Finally, the report chronicles policy responses to the problems under existing and new models, assessing successes and lessons learned, and proposes a new framework to encourage and require more accountability from those in a position to ensure fair working conditions.