A Look at the “Employment/Layoff Paradigm”

According to a recent news report from The Denver Post, there is a new “employment/layoff” paradigm at work in the United States, and it is blaming the victims of this system

The article begins with an account from a worker who was employed by a major corporation. This employee worked around 50 hours per week, and the company always paid overtime for hours in excess of 40 per week. However, this all changed when the company changed this employee over to an independent contractor following a routine layoff. Under the new contract, he was paid a flat rate for 37 hours a week, but the company still demanded the same level of work from him as it did when he was working 50 hours per week. In other words, they wanted to cut his pay and cut his benefits, but still get the same productivity

Because people are no longer motivated to work as hard when they are not being rightfully paid overtime and benefits, a company will often notice a reduction in output and may terminate a worker’s contract and hire a new worker to replace him or her. In doing this, the worker is being blamed for his or her reduced performance, even though it was a direct result of the company trying to get more for less. It reality, it was not the worker’s fault, but rather it was the company getting that for which it paid.

As our Orange County employment attorneys have seen all too often, when companies try to save money by cutting labor costs, they often end up with reduced production, increased training costs, and an unhappy labor force. While it seems like it is saving the company money, in the end, it can cost them more money that it is saving, along with costing a lot of good will with both employees and customers.

However, regardless of the problems with this shift towards contract-based employment, it doesn’t seem like the system will be going away anytime soon. Companies are starting to think that if they do not have any employees, the will not have any employment problems, even though, in reality, this is an oversimplification that is not representative of how things actually work.

One of the things employees who work in the contract-based economy must do is make sure their employers are not violating the law. For example, if an employee works at a company and is working as an employee, as opposed to an independent contractor, the company should not just be able to lay off the employee and hire him back as an independent contractor without changing the employee’s responsibility and level of supervision.   In other words, if an employee is working under the supervision of a manager and must work a set number of hours at a set location and use the employer’s equipment, that person is probably employee, regardless of the way the company labels the worker. If the employer is intentionally misclassifying an employee as an independent contractor to save money, this is illegal

Contact the employment attorneys at Nassiri Law Group, practicing in Orange County, Riverside and Los Angeles. Call 949.375.4734.

Additional Resources:

New employment/layoff paradigm excels at blaming its victims, August 20, 2015, Denver Post, By J.T. O’Donnell & Dale Dauten

More Blog Entries:

Hillary Clinton to Crack Down on Worker Classification, July 18, 2015, Orange County Employment Lawyer Blog