Nested layers of temp agencies allow WalMart's supply chain to shave pennies through terrible, illegal working conditions

Dave Jamieson has a long investigative feature in the Huffington Post about the lives of subcontracted temps in the American warehouse supply-chain. Jamieson describes a world of nested layers of temps -- "temp agencies that supervise temp agencies that deal with temp agencies" -- providing layers of plausible deniability for the titanic corporations on whose behalf all the work is conducted. The agencies are "fly-by-night," operating from "garages, convenience store parking lots and, in one case, a Super 8 motel room," which means that it's nearly impossible for workers to get redress for illegal treatment.

Combined with the economic downturn and the cuts to employment benefits and the social safety net, this creates a perfect storm for horrific working conditions in the warehouses that serve the largest companies in America, such as WalMart. Workers are illegally docked pay, denied access to toilet facilities (one worker interviewed for the story describes how she got a bladder infection because she wasn't allowed to use the toilet while working), paid less than minimum wage, and billed for their own pre-hire background checks.

Meanwhile, the companies at the top of the chain are thriving, turning over great profits even in the midst of recession, and claiming no responsibility for the working conditions that their subcontractors' subcontractors workers endure -- despite the deliberate creation of this many-arms'-length relationship for the purpose of dodging liability.

Six lumpers at the warehouse filed a class-action lawsuit on the heels of the state investigation. Everardo Carrillo and his co-workers say they've been moving Walmart goods in a warehouse where the temperature regularly climbs to over 90 degrees, walking in and out of 53-foot-long steel containers that get even hotter baking in the Southern California sun. After working for a set hourly wage, the workers claim that a year and a half ago they were switched to a piece-rate pay plan -- an arrangement largely out of a bygone era. Their bosses told them they would earn "much more money" under the new scheme, which paid them according to the container, but their earnings actually fell, according to the lawsuit.

The workers claim it was never made clear how their pay was supposed to break down -- an allegation apparently bolstered by the state's investigation. They claim that when they complained about their confusing paychecks, their supervisors responded by sending them home without pay or refusing to give them work the following day. The lumpers were working on a temp basis. According to the lawsuit, the majority of workers were direct hires as recently as 2006; now, three out of every four workers are temps.

When asked if a Schneider executive could be interviewed about allegations from temp workers in its warehouses, a spokesperson sent HuffPost a statement, saying its labor suppliers are "separate corporate entities": "The only legal avenue which Schneider has to enforce their compliance would be to terminate the contract with these vendors. We have no plans to terminate the contracts with our vendors; our expectation is that they will comply with all applicable statutes, regulations and orders."

Walmart, whose products the workers were handling, also kept an arm's length from the charges. When HuffPost reported on the state investigation and lawsuit in October, a Walmart spokesman said the retailer is "not involved in this matter." When a similar lawsuit was filed in April in Illinois -- again, naming low-level companies contracted to move Walmart products -- the company asserted its distance from the allegations then as well, a spokesman noting that "the facility isn't operated by Walmart nor are the people who work in it employed by Walmart."

The New Blue Collar: Temporary Work, Lasting Poverty And The American Warehouse (Thanks, Deborah!)

(Image: Beautiful Day at the Walmart store in Gladstone, Missouri, a Creative Commons Attribution (2.0) image from walmartcorporate's photostream)


  1. Thank you for picking up this story.  Why I do not shop at Wal-Mart or Target and won’t be.  Disgusting labour practices.  Truly slaves, destined to work themselves into the grave or be replaced.  

    1. Hmm, I forget–does Godwin’s Law apply to inapt comparisons to slavery?

      Yeah, I have the same relationship to Wal-Wart that I do to McD’s. Haven’t seem them in years.

      1. Poverty and a desperate, immediate need to work even in conditions detrimental to health and livelihood, all the while being exploited by people withholding power and recourse from you, certainly doesn’t feel like ‘freedom’.

        I see what you mean, but I don’t think that seeing this as a form of modern slavery is all that ridiculous.

        1. Actually, this is the perfect illustration of freedom according to Libertarian and Victorian standards….. There’s the freedom to work or not work…. They can always quit. It’s the perfect example of how laissez-faire capitalism is supposed to work.

          And… we as consumers are free to patronize or not patronize these companies.

  2. This is because people are f***ing worthless disposable pieces of sh*t, in the eyes of management.

    1. Yes. And if they don’t like it they are free to go elsewhere or get themselves a good education, aren’t they?

      1. Effectively, no. Education costs. Moving costs. Which trees can they pluck money from to get an education or go elsewhere, or find an employer that somehow survives in a town where everyone else is as ruthless and inhumane as Warmalt?

          1. That’s how I read it, why I liked it, and how I think most BoingBoing readers will understand it.

            So yeah. You, Deidzoeb and me, we’re all on the same side.

          2. I’m afraid the 5 people who clicked like on your post might have been taking your statement at face value

             @Deidzoeb:disqus , gosh… I hope not.  ಠ_ಠ

        1. Yeah. And education is an industry now with inbuilt grade inflation to keep the money coming in as the ‘American dream’ recedes further and further.

      2.  Yes, because poor people are very mobile, all public education is equal, and college is practically free.  The future is so bright!

          1. Oh, please. How many times have I been about to like a sarcastic Daily Mail comment and then suddenly realized that they were deadly serious?

      3. “At this festive season of the year, Mr Scrooge,” said the gentleman, taking up a pen, “it is more than usually desirable that we should make some slight provision for the Poor and destitute, who suffer greatly at the present time. Many thousands are in want of common necessaries; hundreds of thousands are in want of common comforts, sir.”

        “Are there no prisons?” asked Scrooge.

        “Plenty of prisons,” said the gentleman, laying down the pen again.

        “And the Union workhouses?” demanded Scrooge. “Are they still in operation?”

        “They are. Still,” returned the gentleman, “ I wish I could say they were not.”

        “The Treadmill and the Poor Law are in full vigour, then?” said Scrooge.

        “Both very busy, sir.”

        “Oh! I was afraid, from what you said at first, that something had occurred to stop them in their useful course,” said Scrooge. “I’m very glad to hear it.”

  3. Cheap is what we want, why are we surprised by low wages and terrible working conditions?
    Boycott walmart, amazon etc.

    1.  Unfortunately, some people don’t have the option. Walmarts have taken over their towns to the point where there isn’t anywhere else to go for some items, and if you take away Amazon, it becomes much harder to get things online as well. I can easily imagine a situation where someone is stuck in some isolated midwest town with no economy to speak of, no options for where to shop, no education opportunities and no job availability beyond big box stores. What do they do then? They can’t even move without both money and a job lined up at their destination.

      1. If you add in Maggie’s post from earlier in another 20 years or so they won’t be able to afford gas either.  So literally they won’t be able to move.

        1. Not only that, it’s already nearly illegal to live a life without money, so I suppose the best course of action is to invest in private prisons so all the people that fall by the wayside, or want to remove the influence of money from their lives, will have somewhere warm to sleep, and we can make a buck along the way.  Go America.

  4. I’ve been following this and it appears that Walmart wants to find out just how low the bottom of the barrel is.  I’ve worked in supervision for two contract labor/services companies.  Even when the work is hard and unpleasant the job doesn’t have to suck.  ‘It’s hard and they can go elsewhere’ is no reason not to ensure that the people that your profits depend on are treated humanely.

  5. Of course, the future of this is not going to be better working conditions, but robots. Like those manufactured by Kiva Systems – the company Amazon just bought for almost $1 billion.

    1.  This is correct. Automation will keep getting cheaper. Labor will get more expensive. But is it a bad thing?

      Only if we are so foolish and short-sighted that we allow ourselves to be deluded by rhetoric about the evils of “socialism” instead of building a society that does things because they’re the right thing to do and better for everyone…

      Oh wait. Nevermind.

  6. I guess it’s time to start hating WalMart again.
    Despite their green energy moves (which is all about lowering costs so they can offer low-low prices) they are also a major funder of the right-wing American Legislative Exchange Council, which brought us the shoot-first laws that keeps their guns and ammo sales booming.

  7. Most all coporate entities of a certain size have a whole department dedicated to social responsibility, Vendor/ Partnerships/ Supplier diversity and/or guidelines – what ever it is they call the people they work with that provides them goods and services. Seems weird that, in trying to get a quote from Wal-Mart, the reporter didn’t call them out on their policy as a reason for responding. Wal-Mart is quoted above as saying “the facility isn’t operated by Walmart nor are the people who work in it employed by Walmart.” That doen’t matter in our modern corporate world – one reason all these special interest departments exist is because companies can’t afford to not know what’s going on with the people they do business with – culpability has trickled down enough in our litigeous society that large companies normally police even the people they do business with. A quick search came up with Wal-Marts Suppliers Guidelines. I didn’t read it and it probably relates more to product suppliers – but a diligent reporter could make the argument that Wal-Mart is beholden to guidelines for it’s labor suppliers as well.

  8. It has always seemed strange to me… the things we admire in people, kindness and generosity, openness, honesty, understanding and feeling, are the concomitants of failure in our system. And those traits we detest, sharpness, greed, acquisitiveness, meanness, egotism and self-interest, are the traits of success. And while people admire the quality of the first they love the produce of the second.

    –John Steinbeck

  9. This practice is one of the unintended consequences of the WARN act.  By using contracted work through temp agencies, large companies avoid the burden placed on them by WARN when it comes time to adjust the labor force.  The workaround is not exclusive to Wal-Mart or Target, but has been practiced by telecoms and other large companies for decades.

    1. Then it sounds like the WARN Act needs to be expanded to stop these loopholes.  The WARN Act is overall a good piece of legislation that keeps corporatists from (completely) screwing over their workers when they want to artificially boost their stocks (and sell it for profit) with layoffs.  And, in general, keeps families from being booted into the streets.

      The WARN Act needs more work anyway, so might as well look at the loopholes as well.

  10. But, but , but, the recession is over! (and this sort of practice is likely partly why)

    Seriously, they won’t stop until the whole US (or world?) is one big Foxconn plant, complete with nets.

    Is there any solution short of full-on protectionism?

      1. Bring back the whole Eisenhower era tax code (top to bottom) as a complete replacement for the current mess, and I’ll quite agree with you. 

  11. It occurred to me when I was desperate enough to work temp jobs that a temp agency is the anti-matter version of a union. Theoretically a union is a way for workers to get more bargaining power, usually by having a group of people represent them, resisting the pressure by owners or management to give workers as little as possible in pay, benefits, rights or job conditions. Temp agencies work on behalf of owners or management to give workers as little as possible in pay, benefits, rights or job conditions. The industry standard in the 90s used to be whatever wage you were paid as a temp, the agency charged twice that to the employer. So if you were making $10 per hour, the employer was paying $20 to the temp agency and they were giving half of it to you. Of course temp agencies have expenses and overhead and might give you some tiny benefits, but there must be a lot of profit in it.

    The stereotype of unions is of corrupt middlemen who profit off workers helping  management get the best possible deal. But that image of corruption is an exact description of the way temp agencies expected to function: middlemen who profit off workers helping  management get the best possible deal. Why is it corrupt when a union does that, but SOP when a temp agency does it? Because the temp agency is transparent about it?

    1. Because of a century, almost a century and a half here, of anti-union propaganda.

      The schools don’t teach labor history, but they bring in special presenters to teach about how great capitalists are, and how corrupt unions are, and how socialists should be sent to Russia. (I got that speech in the late nineties, so maybe they’ve revised it and maybe not.) The newspapers are mostly anti-union. The media in general are mostly anti-union.

    2. “The stereotype of unions is of corrupt middlemen who profit off workers helping management get the best possible deal. But that image of corruption is an exact description of the way temp agencies expected to function: middlemen who profit off workers helping management get the best possible deal. Why is it corrupt when a union does that, but SOP when a temp agency does it?”

      Because your stereotype of unions is bogus.

      1. Because the stereotype of unions is bogus — agreed. I’m repeating the stereotype, not advancing it as something I believe is true.

  12. This nowhere near being exclusive to Wal-Mart, or other huge corporations.  People would be shocked how common this is even in smaller businesses.   

    It’s also prevalent in the hotel industry.  I’ve worked at places where every single member of the housekeeping staff were all employees of a temp agency.  The hotel was owned by the Brazilian mafia and housekeeping at the hotel was nothing more then a giant immigration farm.

      1. That’s a wonderful hope.

        My ambition is more modest but may be attainable. I hope that our corporations can one day equal the ethical standards of the mafia.

  13. This is horrible.

    I wonder what the difference is between ‘plausible deniability’ and ‘actual, legitimate ignorance’. Not that it matters to the exploited workers, but it makes a big difference in how the problem is approached, i.e. the difference between “walmart is evil, let’s not shop there” and “hey walmart, your business practices have the unintended effect of incentivizing misbehavior on the part of your subcontractors. How can we work together to improve the situation?” Obviously from my language I tend toward the latter interpretation. I imagine if I were in charge of Walmart, I would probably have little information about what my subs of my subs of my subs were doing, and little control, especially if they were acting against my own policies. But then again, I’m not in charge of Walmart, and this is not like the first time the company has been criticized for its labor practices. And if management IS aware of this  now, they are responsible for doing something about it, even if we cut them a break for not anticipating it or being aware of it before.

  14. Walmart is the corporate villain du jour, but remember that indentured servitude is a very common practice in our society. The rule of thumb is that if a person is in charge of producing or moving goods, they’re probably being treated like subhuman trash by their employers, the government and general society.

  15. As at end of Friday, one share of WalMart Stores (NYSE:WMT) will cost you USD$60.75 plus whatever a discount broker charges you for the trade.  The annual general meeting is June 1, 2012 at 8AM.  As an owner of the company, however fractionally, you would have input into their labour practices.

    1.  Minor shareholders get ignored, sometimes even major ones. Just look at Newscorp.

      So you’re advising people reward a company for bad behaviour by driving their share price up, for a mirage of a chance at input.

  16. On another note, each of these intermediary layers have administrative overhead. And each of them needs to be profitable. Would directly hiring a full-time, humanely treated employee really be that much more expensive than their current wages plus the cuts of the middlemen? This might well be penny-wise but pound foolish.

    1. I think you’re making great sense here. But I also think a factor left out of your vision is the feelings against workers in the adversarial relationship between them and owners. Humanely treating workers is among the last things corporate owners want to do. And that’s because they think of, and feel about, workers as in some sense a collective enemy. And so, in a pathological way, treating them inhumanely feels more like the right thing to do.

      In other words, a desire for more money isn’t the only motivating feeling driving the actions of owners.

    2. Well, first of all, benefits and employment taxes are very expensive; I’m told they can be up to an additional 20% of the employee’s salary. So that provides an incentive to use part time labor. I think more importantly, using a temp agency, even for full time workers, makes it easier to adjust the number of workers to the amount of work. What Walmart saves by not having a full work crew when it doesn’t need one might be worth the markup when it does. Also, it is expensive to recruit and process employees — outsourcing some of that means they don’t need to maintain as big or expensive a human resources operation. That said, I would think a giant company like Walmart would want to vertically integrate this aspect of their operation.

      In theory, I’ve always though temp agencies sound great on paper, a way to efficiently to match employees and employers. Employers can benefit from the economy of scale and full-time hr services of the temp agency, which wouldn’t be worth the investment for a part-time employer. Employees can benefit from being ‘available’ to dozens of companies at once, much more than it would be efficient for them to market themselves to seperately.  In practice, I guess it doesn’t turn out that way.

      Disclosure: Though tried to use a temp agency to find summer employment once when I was a student, I never ended up joining the system. Though I didn’t know to expect anything better at the time, in retrospect, they did treat me like a common interchangeable hardware, like a bolt or a washer, that can be completely specified by one or two numbers. They had a checklist of tests and gave me a numerical rating, based on whether I could pick up a 20 pound box off the floor and put it on a shelf over my head, for example, or read an English paragraph and do what it said to do.

    3.  an alternative way of looking at this would of course be that you are paying all those middlemen for a service, which is to be the fall-guy if allegations are made regarding inhumane treatment, or an accident happens.

      it’s like having lawyers on retainer, except that money comes out of a worker’s wages. win-win!

    4. Using all those layers also makes it much, much easier to deniably employ ‘illegal’ immigrants, who can be treated much, much worse than citizens, thus increasing overall profits.

  17. I saw a doc about Forever 21 and how they exploited sweatshop labor in LA while proudly maintaining a “made in USA” policy through use of extensive  of subcontractors so they could deny any wrongdoing was taking place. In the end, change only occurred because workers went on strike and the media was ratcheting up attention on their practices. With a company as large as Wal-Mart, it might take years for that kind of thing to happen.

  18. Went shopping at WalMart this morning for a vacuum cleaner….came home, read this story….feel like a douche bag….returning the vacuum cleaner tomorrow morning

    1.  Buy a second-hand one from a thrift shop FTW.

      Not much to go wrong with a vac. Just look for a well-designed bagless one.

  19. Libertarians and conservatives often talk preach about self-responsibility.

    Yet they are very often the most ardent supporters of the most irresponsible entities on this earth that attempt to hide their responsibilities with “plausible deniability” and “externalities”.  Which to normal people means lying, cheating and stealing (and often killing).

    The only stooges that think these unsustainable corporations can be plausibly deregulated are in denial.  Left to run wild, the corporatists would happily enslave us all.

    Government has never and will never be perfect, but it’s literally the only buffer between us and outright corporatist fascism in the United States.  The fact that these corporations have taken over too much of our government should terrify us all.  We need to get it back by supporting the Occupy movement and doing everything in our power to get more average citizens involved in government.

    Be in denial all you want, conservatives and libertarians…  the corporatist “think tanks”  (, etc.) and other FUD machines that spew bullshit “studies”are getting weaker and weaker in the face of our new connectivity.

    We’re going to tweet you to death.  Welcome to the information age, where information is more powerful than bullets.  The fight is just beginning.

    1. Well said, we all know now what we need to do. Communicate with each other. If we are united, they are outnumbered. Even if they manage to destroy the internet, the meme is established. A new one would pop up in it’s place over night.

    2.  ” it’s literally the only buffer between us and outright corporatist fascism in the United States.”
      That buffer is long gone.   It’s done.  Over.  Citizens United was the last nail.  NDAA is gravy.  See the effort just to ban something as blatantly unethical as insider trading in Congress? 

      Fight?  Remember, the army has all the freakin flamethrowers!

      1. I don’t agree that the citizen united ruling is the very last nail (as horrible as it is). There’s work to reverse the damage going on as we speak, nationally and locally.

        It’s not going to be easy, but the fight is most certainly still on.

    3.  I have a bit of time for the libertarian headspace, but not to the crazy extent of equating any sort of collectivism with coercion. That’s just bananas.

      Seems to me a lot American libertarians secretly crave a ‘return’ to some mythical Old West.

      1. I lean libertarian on some things as well…. but yeah, there’s a limit before it gets crazytits.

  20. Funny all the outrage at Apple and Chinese working conditions, but meanwhile, in our own backyard conditions are worse than the actual at FoxConn. (A comment focused on here, not implying that it’s okay there). 

    So, gee Mr. Daisy, you could have an honest act 2, and save the cost of travel to China and an interpreter.

    One of the unique things about the current depression, that leads to these conditions, is that it is contracted out to a minority segment of our population, similar to our military efforts, so it’s distant from the majority experience making denial an viable option for now. 

    The last “great” depression was a combination of a sea change in the form of a massively reduced need for farm labor paired with the concentration of wealth/power in a narrow band at the top. We are going through an equivalent shrinkage of the need for manufacturing labor, accompanied by the near doubling of the work force from women having to work and tax cuts stripping the public sector, with no promise of the  equivalent to what turned things around then. That is, there is no great depression to create a majority of desperate voters (yet) willing to vote their real needs vs. made up social wedge issues, and there is yet to be any equivalency to WWII in terms of putting people back to work. 

    Exploitive labor practices here or in China are a means to prolong the ability to sell goods cheap enough that the majority of the population can continue to be “consumers”. Once the threshold is crossed where there simply isn’t enough money in play to sustain existing markets we may see political changes assuming we don’t devolve back to the the neo-cons dream of Aristocracy and Serfs.

  21.  Unfortunately Walmart is built on a long history of taking advantage of its employees and contractors.  If there was a union, the collective strength of the employees could demand compliance with minimal wage laws.
    The state governments are also at fault for not for not making sure that minimum wages are paid.  Where are the state employment inspectors? That’s right the budget for state inspectors was cut or eliminated.  So now  employees are being deprived of their legal wages and the state is collecting lower income taxes.  Good solution,  big business does not want it any other way and is willing to pay lobbyists to stop government from budgeting money for inspectors and enforcement officers.
      interesting to know how many of the warehouse employees are eligible for food stamps and Medicaid?

  22. Very interesting article. One minor typo:

    which means that it’s nearly impossible to for workers to get redress for illegal treatment.

  23. had the same problem at a amazon construction site . ended up working 8 hours with no break and no lunch for 7.25 an hour.the porta john was 1/8 mile awaythe faster you worked the faster the concrete trucks kept coming.finallly told them to f-off.

  24. Let’s imagine there will come a time, if our civilization survives, when thanks  to automation most of us will not have a job. 

    Are we then going to just let everyone share the few hours remaining or let everyone starve to death? Not everyone is going to be the design engineer, the service technician, or the professional.

    Without a drop in population this leads to a future that requires some form of socialism.

    I would say we are already in the beginning stages of this transformation.

    Capitalism will end in its present form. It is up to us to recognize this reality. Lifespans are going to continue to increase. We must reduce population, provide quality of life health care, and share the wealth so that everyone of us lives with dignity and has the opportunity to enjoy their lives.

  25. OSHA and the Department of Labor are not mind readers. If your workplace is unsafe or if your employer is playing games with your pay, you pick up the freaking phone and tell them. It’s like if you need the cops, you call the cops. You don’t just sit there and hope the cops read your mind and come on their own.  They depend on you letting them know when you have a problem. OSHA and the Dept of Labor were never designed to preemptively inspect every workplace. They were designed to respond when somebody reports a problem. Sometimes they may preemptively inspect certain high risk locations, but like the police, they mostly respond to complaints. In democracy, everybody is part of the government. It’s not you and me here and the government over there. We’re all the government and we need to communicate and work together. That’s what citizenship means. It’s the difference between being a citizen and being a subject.

  26. The recession did not come about because people were not sufficiently exploited for companies to generate profit. To argue that only exploitation can get an economy out of recession seems a specious argument.

    It is simply scary how big companies have managed to undermine civic rights by legal smokescreens. Smaller companies may profit, but it is the big lobbying that creates the legal framework.

    ACTA is just a humble trade agreement… and companies like Walmart are just compulsive outsourcers. Everything above board. Genius, isn’t it?

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