Labor Ready Inc. Investigated

Author Subject: Labor Ready Inc. Investigated
Marty Posted At 21:05:20 06/02/2001
Did Temp Agency Misclassify Work?
AFL-CIO. Department of Building and Construction Trades investigates Labor Ready Inc. over employee compensation premiums)
(Brief Article)
Author/s: Todd Nighswonger
Penton Media, Inc.: December 2000

The AFL-CIO has charged Labor Ready, one of the nation's largest temporary employment agencies, with misclassifying work performed by its employees to secure lower workers' compensation premiums.

An analysis by the Building and Construction Trades Department (BCTD) of the AFL-CIO contends that Labor Ready has been paying lower "white-collar" premium rates for a significant share of its employees in two states, even though the company has consistently described its work force as "primarily blue-collar" workers. Workers' comp premium rates are considerably higher for blue-collar workers.

Labor Ready's "customers are primarily businesses in freight handling, warehousing, landscaping, construction and light manufacturing industries" that "require workers for lifting, hauling, cleaning, assembling, digging, painting and other types of manual or unskilled work," according to the publicly traded company's 10-K annual reports filed with the federal Securities and Exchange Commission.

When BCTD reviewed workers' comp records in Ohio and Washington, it found that the temp agency has been making premium payments at lower, white-collar rates for many of its workers. In 1998 in Washington, for example, 47 percent of Labor Ready's work force was classified as performing work in the "offices services" category, the union claims.

In Ohio, the base premium rate in 1999 was $10.86 for every $100 of payroll for landscaping employees, compared with 43 cents for clerical employees. In Washington, the 1999 rate was $2.24 per hour worked in construction and 8.18 cents per hour worked by office service workers supplied by temporary agencies.

"We're checking into the charges to see if there's anything to it," Labor Ready spokesman John Goodman said. "The union has made a lot of charges against the company [in the past]. So far, most of them have been baseless and without merit."

BCTD is calling for an investigation by state governments and the National Council on Compensation Insurance (NCCI), the primary organization for workers' compensation rate-setting. Spokesman Greg Quinn said NCCI will determine whether to investigate the charges. The organization only can issue recommendations. It is up to states to take any legal action, Quinn added.

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