An explosive lawsuit filed by San Diego County last month alleges that sushi chefs throughout California are badly exploited, making subminimum wages while routinely working up to 70 hours per week, with no paid sick days or other protections. Such worker exploitation can be hiding in plain sight and has been widely documented in many other cases for years, highlighting the urgent need for more action by state and local governments, given the Trump administration’s gutting of labor agencies and abdication of workers’ rights.
San Diego’s lawsuit against half a dozen sushi corporations reveals that in hundreds of grocery stores throughout California — and likely nationwide — sushi chefs are not treated as employees. They prepare, package and price food for customers, just like employees behind the deli, meat or bakery counters. But the sushi chefs are treated as independent contractors, as if they were running their own tiny independent businesses within the grocery store.
This distinction matters because virtually all workplace laws cover employees and not independent contractors who run their own businesses. Minimum wage, overtime, paid sick leave, antidiscrimination, unionizing, and workplace safety and health laws protect employees. Businesses must buy workers’ compensation insurance and pay unemployment insurance and payroll taxes for employees.
For a business willing to mistreat people and break the law, a profitable slick maneuver is clear: Pretend that workers are independent contractors, and you may be able to shed a pile of legal obligations and pocket the savings — by most estimates, around 33% or more of labor costs.
Of course, genuine small businesses do exist, like the graphic designer striking out on their own, or the solo plumber who comes to fix your bathroom. But it’s against the law to treat ordinary workers who should be employees as independent contractors without rights. “Misclassification” is a misleadingly innocuous term for this phenomenon, as though a corporation accidentally placed a worker’s file in the wrong cabinet. Really, it’s fraud, plain and simple. It lowers people’s pay, shifts risk to workers, cheats the government out of taxes for programs supporting workers and creates unfair competition for businesses that follow the law.
Gig worker misclassification gets the most attention — and the Uber-Lyft model is unfortunately spreading — but misclassification erodes labor standards across the economy, affecting construction workers, truck drivers, court interpreters, delivery drivers, janitors and perhaps, it seems, the sushi chefs at your neighborhood supermarket.
The San Diego case involves an additional twist: The sushi chefs must pay to get their jobs, according to the lawsuit, because they’re treated as franchisees by large sushi companies that contract with supermarket chains.
If true, it wouldn’t be the first time this trick has been tried. In the janitorial industry, for instance, workers have been labeled “franchisees” even when they had no control over key terms of their work such as which customers they served or what rates they charged. Several courts have examined these facts and concluded that these so-called franchisees are actually employees and must be covered by workplace laws.
It makes you wonder: What else is going on just below our noses? Scratch the surface, and there’s worker exploitation in almost every sector of the economy.
Does your elderly mom or dad need full-time care? Widespread wage theft has been reported at care homes throughout California, and the San Diego district attorney in April even brought labor-trafficking charges in relation to egregious allegations in one facility.
How about getting a pedicure or going to the carwash? Whether it’s your toenails or your chrome rims, the person doing the polishing may be severely underpaid.
Do you order food from DoorDash? The corporation paid nearly $30 million for allegedly keeping tips that customers intended for workers in just two states and D.C.
Have you ever called customer service for help? Arise Virtual Communications — which handles customer service for national brands such as Dick’s Sporting Goods and Carnival Cruise Lines — treats its poorly paid workers as independent contractors. When the D.C. and Minnesota attorney general offices pursued Arise for wage and other violations, the corporation chose to stop operating altogether in those locations, rather than treat their workers as employees with legal rights. (In fact, Arise generally operates in states with lax workplace laws or enforcement.) Perhaps most appallingly, we’ve recently seen a widespread resurgence of child labor violations, with teenagers working the night shift in meatpacking plants, in auto manufacturing facilities, on rooftops and in other places posing extreme danger. Even well-known companies such as Chipotle have been cited for thousands of child labor violations.
In a time of deep economic distress, economic inequality and struggles to afford daily life, we need far more action to protect working people.
Unfortunately, the Trump administration is instead coddling corporations that flout workers’ rights. Federal agencies have been gutted, and federal labor enforcement has collapsed in the past year, according to the nonprofit Good Jobs First. The Trump Labor Department even proposed a rule, opposed by almost two dozen state labor enforcers, that would make it easier for corporations to get away with misclassifying their workers.
The resulting enforcement vacuum urgently requires strong action by state and local governments to stand up for workers. Some of them, including state attorneys general, district attorneys, and local and state labor agencies, have been taking on scofflaw employers for years.
California has been leading nationally on these issues: The state’s innovative Workers’ Rights Enforcement Grant program has sparked an uptick in local enforcement and served as a model for a similar program enacted in New York just last month. Lawsuits by San Francisco have successfully forced several gig staffing companies to reclassify their workers statewide as employees — and these victories have been replicated elsewhere.
But given the extent of exploitation, and the federal void, we need exponentially more: more resources, more enforcement, more fairness for law-abiding employers, more justice.
San Diego County is showing how it’s done — with bold action to protect hardworking people who, if the allegations prove true, have been chiseled and squeezed by predatory corporations. The sushi chefs preparing grocery-store California rolls and seaweed salad make the rest of our lives easier. Like all workers, they deserve a fair deal.
Terri Gerstein is the director of the Wagner Labor Initiative at NYU’s Graduate School of Public Service.
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