The Coastal Post - December, 1995

Temporary Contingent Workers—It's A Great Deal For Employers


Recently the Coastal Post ran an interview with Bernie Chiaravelle, Secretary-Treasurer of the Marin Labor Council, AFL-CIO and local president of the Communications Workers Union, Local 9404. It was his statement that led to this second discussion:

"The decline in [Union] membership is because of two primary reasons. First, weakening of labor laws and movement to third world countries... And secondly, with passage of the 1984 Tax Reform Act, the American work force is being changed to be made up of 'temporary contingent workers,' without benefits or pensions and [thus] very difficult to organize into unions. That's what downsizing is actually about, changing to 'contingent' workers."

We've all read the reports that temporary workers are the fastest-growing sector of the U.S. economy. That and the nebulous "service" workers who are often independent contractors, again without company benefits.

The Coastal Post went back to Mr. Chiaravelle for more information.

CP: Tell us about temporary contingent workers.

Bc: The IJ recently reported that Fireman's Fund won, I think, an $11,000,000 fraud suit against a payroll laundering firm.

The courts found there was fraud when this employer reported persons as their own employees to acquire lower workers' compensation figures. It was found these employees were actually from another company.

This is an example of the many ways companies are converting to some form of temporary contingent workers. The primary purpose is to avoid current labor laws and employment taxes.

What's happening is the Tax Reform Act of 1984 provided loopholes to avoid the employment protections of the Federal Employee Retirement Income Security Act 9 (ERISA) of 1974.

Now, ERISA guaranteed the vesting of pension benefits and health coverage after retirement of all regularly covered employees. The loopholes enacted by Congress, starting in 1984, created various types of contingent temporary workers who would be exempt from ERISA.

And that's why in the past 10 years, anyone looking in the want ads found 90% of the ads were for temporary jobs.

CP: Is that act responsible, in part, for the present-day raiding of pension plans the Republicans are now pushing in Congress?

Bc: Absolutely! Most private pension plans are negotiated independently of the government. However, in order for pension and health plans to be exempt from income taxes, they must be in compliance with the pension laws previously passed by Congress.

So, in that sense, the Republicans are attacking the entire pension system. The plan the government has the greatest say over is Social Security. The primary reason the Republicans have been attacking Social Security is to remove the employer's share of the contribution paid into the plan.

I'm convinced that Social Security is not the end of everyone's problems in old age, but it probably guarantees the vast majority of people some dignity when they're too old to work.

Unfortunately, history has proven people are not able or not disciplined enough to provide for their own individual economic needs in retirement.

CP: Or, like myself, they just don't have the extra money at the end of the month to be able to save. Rents and costs are skyrocketing, and wages are going down or staying flat. We need protection.

BC: Yes. And when you add the multi-national corporations' movement of jobs to the third world countries that provide the cheapest labor, our society as we know it is destined for complete destruction.

Labor unions are beginning to realize we have to put more effort on organizing multi-national labor unions to curtail the abuses of the multi-national corporations.