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June 25, 2001
Poor Practices Catching Up with Labor Ready
by Mark Thomsen
Worker complaints and lawsuits contribute to financial woes of national manual labor temp agency.
SocialFunds.com --
Legal difficulties with its workers continue to hurt America's largest manual labor temporary
employment agency. Labor Ready, Inc. (ticker: LRW) had its fourth major legal setback in the past
month on issues such as the right to organize, on-the-job injuries and underpay. The attention
these labor issues have drawn may have contributed to the 90 percent drop in stock price from its
high two years ago.
 "For the past year, we have pointed out
that Labor Ready treats its workers poorly, paying them poverty wages with no benefits or training,
putting them in dangerous working conditions, and then punishing them when they complain," said
Edward C. Sullivan, President of the Building and Construction Trades Department (BCTD) of the
AFL-CIO.
Labor Ready began last month under a National Labor Relations Board (NRLB) order
to post an official notice in all U.S. Labor Ready offices. The notice was to tell workers that
the company would not punish them for talking to each other, or to Labor Ready customers, about
their pay and working conditions, and would not interfere with or punish workers for organizing.
A few weeks later, California-OSHA (Occupational Safety and Health Administration) issued
decisions against Labor Ready and Manpower (ticker: MAN) in two cases involving injured temp
construction workers. Cal-OSHA held temp agencies directly responsible for worker safety at
customers' job sites and ordered them to inspect sites before dispatching workers.
In
late May, California state auditors found Labor Ready underpaid temp workers assigned to several
state college construction projects. Labor Ready had to pay workers almost $100,000 in back wages,
plus penalties and added assessments to the state.
Then on June 1, the US 4th Circuit
Court of Appeals in Richmond upheld the authority of the NLRB to compel Labor Ready to stop
punishing workers for exercising their right to join unions. The case began in December 1996, when
members of the Tri-State (Kentucky, Ohio, West Virginia) Building and Construction Trades Council
tried to help Labor Ready workers unionize. Building Trades members filed unfair labor practice
charges that were upheld by the NLRB, but denied by Labor Ready.
The Tacoma,
Washington-based company has also had problems in its own state. In February Washington's state
Department of Labor and Industries found that Labor Ready owed more than $734,000 for worker's
compensation premiums, interest and penalties. The company is challenging the finding.
The BCTD has been monitoring Labor Ready in part through its "Temp Workers Deserve a Permanent
Voice @ Work" campaign. The campaign is a national, multi-union effort that has the goal of
exposing what the department calls "the often unethical and/or unlawful practices of temporary work
agencies in the construction industry."
The BCTD displayed a different type of
shareowner activism when it issued its own reply to the annual 10-K report that Labor Ready filed
on March 30 this year with the Securities Exchange Commission. Entitled "An Alternative Analysis of Labor Ready's
Year 2000 Performance," it questions management on a wide range of issues, from why is Labor
Ready's overhead over 10 percent higher than Manpower's or Kelly's (ticker: KELYA), to why is
Labor Ready's injury rate for workers three times higher than the average for the construction
industry, to what happened to 4.2 million shares of stock owned by former CEO and founder Glenn
Welstad.
Labor Ready's stock has fallen somewhat steadily from a high of over $42 a share
in July 1999, just before a 3:2 stock split, to $4.19 at the close of yesterday. At the annual
meeting, the company announced the turnover rate among branch managers remained about the same in
2000, a whopping 60 percent a year. With problems stretching from worker mistreatment lawsuits to
a slowing economy, it is no wonder the company executives no longer expect any major revenue growth
for the rest of the year.
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SRI World Group, Inc. All Rights Reserved.
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