When Outsourcing Cheats Workers

By Adam T. Klein, Esq. and Mark R. Humowiecki, Esq. A paper on corporate outsourcing and how it cheats workers.

More than 60 years after the passage of federal minimum wage and overtime laws, hundreds of West African immigrants were working twelve hours a day, seven days per week, for as little as $1.25 per hour, at New York City’s largest retail grocery stores and pharmacies. How could well-known, multi-billion dollar companies, such as Duane Reade, A&P, and Gristede’s, so openly and egregiously violate the law? Welcome to “outsourcing”— a corporate practice touted by business visionaries as a way of focusing on core competencies and producing efficiencies, but also a tried and true means of lowering labor costs, escaping liability for employment law violations, and blocking labor organizing efforts, all achieved by avoiding a formal employment relationship with outsourced workers.