Welcome to 2019, the era of the “shadow workforce.”
A wide array of temps, contractors and contingent workers are playing an increasingly large role in offices across the globe. As it turns out, these people who work with (rather than for) Google now outnumber the company’s actual employees, The New York Times reported this week, based on an internal document the publication obtained.
All told, Google works with 121,000 temps and contractors around the globe as of March, but only 102,000 are full-time employees. As of 2018, it was believed that less than half of Google’s formal or informal workforce consisted of temps, contractors or contingent workers. (Google GOOGL, -1.72% did not respond to a request for comment from MarketWatch.)
Google is far from alone. Studies have suggested that almost all of the job growth that occurred between 2005 and 2015 stemmed from “alternative” work arrangements including temping, contract work, on-call workers or jobs in the gig economy as independent contractors or freelancers.
Other research has suggested that more than one-third of U.S. adults earned money through some form of informal work. The American Staffing Association, a trade group representing staffing agencies that hire temp workers for other companies, says that workers hired through these agencies only make up 2% of the country’s non-farm workforce.
Google has 102,000 full-time employees and 121,000 temps and contractors.
Employers are driven by a desire to save money on wages and benefits, said Keith Cunningham-Parmeter, an employment lawyer and professor at Willamette University in Salem, Ore. “It has been an ongoing project of American businesses from the 1970s to off-load risk onto workers,” Cunningham-Parmeter said. Off-loading that risk, he said, takes many forms.
For a start, the divide between independent contractors and employees has taken on a renewed significance in recent months as allegations of sexual harassment in the workplace have cropped up increasingly across the country.
Federal discrimination laws only applies to employees, according to Workplace Fairness, a nonprofit public education and advocacy organization. And just a few states grant discrimination protections to independent contractors. Meanwhile, the nature of the jobs these people perform often puts them at a greater risk of harassment.
Not all temp jobs are created equally
Being a contingent worker can mean different things depending on the role and company.
Some of today’s temps are scarcely different from the so-called “Kelly Girls” of the 1950s. Back then, many staffing agencies specialized in placing workers, often women, in office administration or secretarial roles for a short duration. That model still exists today — many temporary workers do come on board to fill a vacancy for a short duration.
‘Google is trying to make it clearer that this class of workers don’t share an employment relationship with Google. I don’t think a judge or jury is going to buy that.’
But at major tech firms like Google, temps can serve other purposes. They may be hired to work on experimental or short-term projects, Cunningham-Parmeter said. Sometimes, a revolving door of temps will be brought in to contribute to a long-term project. Legally, these workers can stay with the company for no more than two years, and during that time they are paid for by the staffing agency.
But many corporations have gone the outsourcing route: They will hire an outside company to fulfill entire functions on their behalf within the workplace. This could include anything from technical support to janitorial services. In these cases, the workers are directly employed by that outside company.
These dynamics can have implications for workers long after they’ve stopped working with a company like Google because of how certain roles are being reclassified, said Pradeep Chauhan, founder of contract-work website OnContracting.com. “A lot of these jobs almost by default now are considered to be contractor jobs, so even if you get experience, it’s hard to go into the job market and find a full-time job,” he said.
Google and other companies separate temps to keep up appearances
For the temps at Google, their work experience was a far cry from that of a full-time employee, according to The New York Times. Former contract workers have described a divided workplace, where full-time employees had access to cafeterias, stores and meetings that temporary or contract workers were barred from.
These contingent workers are typically at the mercy of staffing agencies when it comes to factors such as benefits, schedules and overtime pay. And to top it all off, temps are required to wear special badges at all times that informed other workers that they’re not employed directly by Google. Quartz writer and lawyer Epgrat Livni compared the environment to a caste system.
‘The vast majority of temporary and contract workers are classified as employees of their staffing agencies and are, thus, protected under all labor and employment laws just like all other employees.’
There’s a strong reason behind why Google enforces this divided workplace: It doesn’t want to get sued. There is precedent for such cases involving contract workers.
In 2000, Microsoft MSFT, -0.97% was sued by thousands of temporary employees who claimed the company improperly denied benefits. Because of how well-integrated these workers were in the company, they argued they should have been classified as full-time employees. The tech company ended up agreeing to pay $97 million to settle the case.
To avoid so-called co-employment risk, therefore, companies that employ temps typically take strides to distance their contingent workforce from those who are directly employed, experts say. That means limiting who they interact with, the work they accomplish and even where they work within an office.
“Google is trying to make it clearer that this class of workers doesn’t share an employment relationship with Google,” Cunningham-Parmeter said.
However, Google announced in April that it will require all U.S.-based temporary or contract workers to receive at least a $15 minimum wage by 2020 and comprehensive health care including paid sick and parental leave by 2022.
Google temps have more rights than Uber drivers, but exist in a legal grey area
Workers in the gig economy have a tougher time from a legal perspective than temps and contract workers. Those who drive for Uber UBER, -2.47% or Lyft LYFT, -1.11% or deliver food for Postmates, for instance, are technically considered independent contractors or freelancers, not temps or contract workers. Consequently, they are not entitled to federal protections such as minimum wage, overtime, health insurance, etc.
“The vast majority of temporary and contract workers are classified as employees of their staffing agencies and are, thus, protected under all labor and employment laws just like all other employees,” said Stephen Dwyer, general counsel at the American Staffing Association. “Temporary and contract employees are protected under wage and hour, nondiscrimination, labor, workplace safety and other laws.”
Earlier this year, Uber filed an S-1 form for its initial public offering. In the document, the company stated, “We believe that drivers are independent contractors because, among other things, they can choose whether, when, and where to provide services on our platform, are free to provide services on our competitors’ platforms, and provide a vehicle to perform services on our platform.”
But it also issued a warning: “Nevertheless, we may not be successful in defending the independent contractor status of drivers in some or all jurisdictions. Furthermore, the costs associated with defending, settling, or resolving pending and future lawsuits (including demands for arbitration) relating to the independent contractor status of drivers could be material to our business.”
In the U.S., Uber has asserted that its drivers are self-employed. In fact, it’s gone one step further: The ride-share company believes it is merely the go-between drivers and riders and argues that drivers are independent contractors and, therefore, the company’s actual customers. The company told MarketWatch that the Securities and Exchange Commission has signed off on this business model.
The difference between being an employee versus an independent contractor is significant, Cunningham-Parmeter said. Depending on which side of the line you fall on, he added, you either get this huge basket of rights or basically nothing.”