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October 2005, Volume 11, Number 4

Sanctions, FLCs, Labor Markets

Canyon County in southwest Idaho filed a racketeering lawsuit against several agricultural companies accused of hiring illegal immigrants in an attempt to recoup money the county says it has spent on the workers. This marks the first time that the Racketeering and Corrupt Organizations Act has been used by a government to demand damages from businesses for the costs of allegedly illegal employees; previous RICO suits were filed on behalf of US workers who said that employers hired unauthorized workers to lower their wages.

The five firms named in the federal lawsuit were Syngenta Seeds, Sorrento Lactalis, Swift Beef Co. and Harris Moran Seed Co. and the nonprofit Idaho Migrant Council. About 20 percent of the county's 130,000 residents are Hispanic, and the suit was spearheaded by County Commissioner Robert Vasquez, who is running for Congress.

Labor Market Layers. For decades, farm labor reformers tried to make the farm labor market more like nonfarm labor markets by eliminating intermediaries such as FLCs and having the farmers who benefited from workers on their property be responsible for ensuring that labor laws were respected. Cesar Chavez was especially critical of FLCs, and under California's ALRA FLCs cannot be employers, so that if there is an election on a farm, the votes of FLC employees and directly hired workers are mixed together to determine if workers want union representation. However, FLCs are generally liable for any violations of immigration and other labor laws.

Farm labor market features are spreading to nonfarm labor markets, where a variety of brokers and middlemen have emerged to add layers between workers and the beneficiaries of the work done. Supermarkets, banks and other building owners have outsourced cleaning and maintenance to firms that contract and subcontract with firms who often hire immigrant workers.

In the construction industry, some estimates are that up to a sixth of the million workers employed may be provided by brokers, many of whom are based in southern right-to-work states and send recently arrived immigrant workers around the US to work long hours in drywall and other jobs. On a major construction site, the general contractor may subcontract with another contractor, and that contractor may turn the job over to a subcontractor who calls his employees independent contractors in order to avoid having to pay Social Security and unemployment taxes and overtime wages. Independent contractors are responsible for their own workers' compensation insurance.

In many cases, crews are moved before local investigators have time to build cases alleging labor law violations. However, Brother's Construction II, a $5.6 million-a-year business that supplied hundreds of workers, nearly all illegal immigrants, to some of the country's major drywall contractors, was indicted in December 2001. The indictment charged that, by claiming the workers were independent contractors, the company evaded more than $500,000 in payroll taxes over 15 months, and did not pay them $1 million in overtime.

Michael Riley, "Labor brokers cut costs, corners," Denver Post, February 18, 2003.