LEGISLATIVE ANALYST REPORT

To: The Honorable Members of the Board of Supervisors

From: Elaine Forbes, Legislative Analyst

Date: April 25, 2001

Committee: Audit Labor & Government Efficiency

File no: 010199

Subject: Temporary Workers

Summary of Request

On February 5, 2001, the Board of Supervisors directed the Office of the Legislative Analyst (OLA) to conduct a study of working conditions for temporary workers, with particular attention to young workers in Information Technology (IT) occupations. In response, this report provides a profile of temporary workers and explores the legal protections, wages and benefits of the temporary workforce nationwide. The report places an emphasis on the conditions of young and IT temporary workers. A small group of San Francisco IT temporary workers and employment agencies were interviewed as sources to compensate for the lack of local data (see Source: Interviews on pg.12 for more information).

Executive Summary

In the 1980s, work arrangements began to shift from primarily full-time wage and salary work to include more temporary and contractual work, according to data from the Bureau of Labor Statistics (BLS). Temporary work arrangements that essentially outsource employees (independent contracting, temporary, leased and company contract employment) have grown. While the exact level of growth in temporary work is unclear, labor economists agree that the practice is a permanent and growing feature of the new economy.

Economists reach varying conclusions about the effects of temporary staffing methods on temporary workers. Some researchers believe temporary work arrangements provide flexibility that is necessary to meet variable market conditions and a changing workforce.¹ Other analysts conclude that temporary staffing methods have detrimental effects for temporary workers including erosion of pay, decline in benefits, loss of job security, and legal protections.²

This report finds that the characteristics, occupations, compensation and benefits, and preference among temporary workers vary. Many temporary workers earn less than their permanent counterparts, have much lower rates of health insurance coverage, and take temporary jobs only because they cannot find permanent work. Other temporary workers, particularly those in professional and technical fields, such as IT, earn more than their permanent counterparts and may prefer temporary arrangements. However, this report finds that temporary workers generally experience low rates of health insurance coverage and job instability. Individuals, particularly young workers drawn to temporary work by higher wages and flexibility, may undervalue job stability and health insurance when the economy and their health are good.

Background

Temporary Work Defined

In the 1980s, work arrangements began to shift from primarily full-time wage and salary work to include more temporary and contractual work, according to Bureau of Labor Statistics (BLS) economists.³ They attribute this trend to the potential for firms to cut labor costs and the ability for firms to quickly adjust the size of their workforce in response to changing market conditions. Several work arrangements that essentially outsource employees have grown in prevalence. In general, outsourced workers are of four types: independent contractors, temps, leased employees, and company contract employees. For the purposes of this report, the above groups are referred to collectively as temporary workers because they are not "permanent employees" and their hirers have no commitment to a continued worker/hirer relationship.

1. Independent Contractors. These are self-employed individuals who offer their services to companies on a contract basis. Independent contractors are responsible for securing their own benefits, and paying 100% of social security, federal income and unemployment insurance tax. According to the Internal Revenue Service (IRS), in a true independent-contractor relationship, the hirer controls only the end results of the work and has absolutely no say in how the job is accomplished.⁴

2. Temps (also referred to as "temporary employees"). Temporary agencies pay workers to perform work in other companies. These companies pay temporary agencies to recruit employees, and handle their wages, tax withholdings, workers" compensation and unemployment insurance. The firms that use temps, referred to as the "client company", are responsible for supervising and controlling the work environment. No rules regarding the allowable duration of temporary employment are currently in place.

3. Leased Employees. These employees work for one company and a separate firm serves as the human resources department and administers the details of their employment, such as benefits and payroll. The latter firm is often referred to as a leasing agency or professional employer organization (PEO).

4. Company Contract Employees. These employees work for companies that provide services to client firms. Employees typically work at the client"s work-site. Contract companies contract for services such as computer system support, janitorial work and landscaping. Generally, the jobs of these workers depend on the ability of the contract company to win bids for its services.

The Bureau of Labor Statistics refers to independent contractors, temps, and contract firm as alternative employment arrangements, and contingent when the workers do not expect their current jobs to last.⁵ According to BLS staff, leased employees are not categorized specifically, but fall into both temporary help and contract firm categories depending on how they respond to the BLS Contingent and Alternative Employment Arrangement survey. This survey began in 1995 as a supplement to the Current Population Survey.⁶

The Growth of Temporary Work Arrangements

A 1995 Conference Board study found that 90% of U.S. businesses use temporary help. The extent to which temporary work has grown is difficult to measure. BLS"s February 1999 data shows that independent contractors (6.3%), temporary help agency (.9%) and contract firm workers (.6%) make up approximately 8% of our total workforce nationwide (see Appendix 1: Table 1 for more information). Other sources suggest the numbers may be higher. A 1999 U.S. Department of Labor Advisory Council on Employee Benefits study estimates that contingent workers make up 30% of the workforce. While the exact level of growth in temporary work is undetermined, BLS labor economists and others, such as Dr. Marianne Ferber at the University of Illinois, and Dr. Jane Waldfogel at Columbia University, New York, generally agree that the practice is a permanent and growing feature of the new economy.

Profile of Temporary Workers

National. The BLS survey in February 1999 showed a wide variation of worker characteristics among temporary workers (see Appendix 1: Table 2 for more information). For example, BLS data shows that compared to the traditional workforce, independent contractors tend to be older, white and male, while temporary help agency workers tend to be younger, female, African American and Latino. Contract firm employees, like temps, are younger than the traditional workforce, but like independent contractors, are disproportionately male. A wide variation in job satisfaction was also demonstrated in the BLS survey. The majority (84%) of independent contractors stated they were satisfied with their current arrangement. The opposite is true for temporary help agency workers, 57% of whom said they would prefer a traditional work arrangement.

The 1999 BLS data demonstrates an age gap between the contingent (temporary workers who do not expect their jobs to last) and noncontingent workforce. Fifty-seven percent of contingent workers are under 34, compared to 37% of the non-contingent workforce. Contingent workers were more than twice as likely as non-contingent workers to be under 25 (age 16-24).⁷ The BLS report suggests that the latter group may be over represented in the contingent workforce in part because temporary employment works well for students due to their irregular schedules.⁸

State and Local. Generating a snapshot of temporary workers in California and in San Francisco is difficult because data is not readily available.⁹ Dr. Sundari Baru from the Center on Policy Initiatives combined three years of data (1997 to 1999) from the Current Population Survey to study temp employees (employees placed through temporary agencies) in California. In her article, Working on the Margins, Dr. Baru shows that the characteristics of temp employees in California reflect many of the characteristics of temp employees nationwide. Compared to the traditional workforce, temp employees in California are disproportionately young, female, and African-American. However, unlike the national trend, the proportion of Latinos in the regular and temporary workforce is not significantly different.

Generating a snapshot of IT temporary workers, at the state or local level, is not possible at this time due to data restrictions. The Standard Industrial Codes (SIC) do not have an IT category and the existing categories do not overlap well with IT occupations. The 2000 Census corrects this problem. However, employment information will not be released until 2001, according to BLS staff.

Occupations that Hire and Agencies that Place Temporary Workers

Temporary workers are found in a wide range of occupations (see Appendix 2: Table 4 and 5 for more information). According to 1999 BLS survey data, independent contractors are over represented in executive, administrative and managerial occupations. Independent contractors and contract firm employees are over-represented in the professional specialty (i.e., engineers, computer scientists, and lawyers) and precision production, craft and repair (i.e., mechanics and construction trades) occupations. Whereas, temporary help agency employees are over-represented in administrative support (i.e., office clerks, secretaries, receptionists, and data-entry operators) and operators, fabricators, and laborers (i.e., packers, laborers, machine operators, and transportation and materials moving occupations). Thirty-six percent of all temp employees are placed in administrative support jobs and 29% are placed in laborer jobs. According to Dr. Baru"s January 2001 article, Working on the Margins, in San Francisco, temp employees work primarily in clerical and administrative support jobs, followed by production, construction, and materials handling, and professional and technical jobs.

Temporary Workers in San Francisco.

Staffing and leasing agencies in and outside of San Francisco place temps in San Francisco"s businesses and government offices.¹⁰ At least 30 staffing agencies are located in San Francisco. According to the Employment Development Department, 942,000 people were members of the labor force in the San Francisco PMSA¹¹ between October and December of 1999, and approximately 87,630, or 9.3%, of those workers were temporary help and leased/contract employees.¹²

IT Workers. Most IT work is skilled and technical, and tends to be well compensated. Information technology (IT) jobs include web designers, computer support specialists, computer programmers, systems analysts and electronic solutions specialists. Interviews conducted by the Office of the Legislative Analyst for this report with local IT workers (primarily web designers and system developers) and staffing agencies in San Francisco revealed that many IT jobs are temporary. According to IT workers, work is increasingly through temporary and leasing agencies and decreasing through direct independent contracts. Staffing agencies, such as Manpower Inc., and IT interviewees both reported that IT work is often project-based and involves rapidly changing technology; these conditions lend themselves to impermanent hirer/worker relationships. Additionally, while most businesses require IT workers, startup companies, and in particular dot-coms, spurred a large growth in IT work in recent years, according to local staffing agencies.

In interviews, several IT workers expressed a preference for contingent work. The most popular of the reasons cited were flexibility, higher wages, and the ability to stay current on various platforms. Yet, other IT workers expressed frustration with not sharing in the benefits of their full-time permanent counterparts, such as stock options, vacation and sick leave, and overtime pay. With few exceptions, IT interviewees expressed concern about finding continual work in light of the economic downturn. Most agreed that established businesses that use computers and the web will continue to create IT work, but that work will be less abundant.

Temporary Hiring Practices in the City and County of San Francisco. The City does hire temporary workers for both technical and non-technical jobs. However, according to the Office of the Controller, no citywide database is available to determine the number of contracted staff/temp agency workers. The Department of Telecommunication and Information Services (DTIS), the primary employer of IT workers, currently has 451 positions in the Department, according to Liza Lowery, DTIS Director. Approximately thirty-eight are as needed positions, 3 are temporary and 26 are on contract. According to Ms. Lowery, DTIS utilizes temporary workers in order to expand and contract labor resources quickly in response to changing customer demands, when highly specialized skills are needed but not available internally, and for project-based work.

Current Law and Practice

There is uncertainty regarding labor and employment laws that apply to temporary workers, and which entity (the agency or the client company) is liable when the laws apply. According to Sallie Gibson in the Office of the City Attorney (San Francisco), laws designed to protect workers generally do not distinguish between temporary and permanent employees. Rather, a firm"s obligation to a worker depends principally on whether the worker is an employee or an independent contractor. In general, employees are covered; independent contractors are not. However, some laws contain requirements that also exclude certain temporary employees or make it difficult for them to be covered.¹³ For example, the Family and Medical Leave Act protects workers after 1,250 hours of work. In addition, in some temporary work arrangements, determining whether a worker is an employee can be difficult. Determining if a worker is an employee or an independent contractor is not a simple matter of the firm"s classification of the worker, but depends on several factors that the specific law in question determines. The most common determinative factor is the level of supervisory control the company exercises over the day-to-day activities of the worker. As a further complication, determining who the employer is when more than one company is involved can also be difficult.

Wage and Hour Laws¹⁴. Under the Fair Labor Standards Act (FLSA) and California Industrial Wage Orders (IWC) FLSA, "employer" is defined as "any person acting directly or indirectly in the interest of an employer in relation to an employees." The courts use the "economic reality test" to determine whether a worker is an employee. The factors of the test include (1) the degree of control the employer has to influence the manner in which the work is performed; (2) the worker"s opportunity for profit or loss; (3) the worker"s investment in equipment or materials required for her work; (4) whether the service rendered required a special skill; (5) the degree of permanence of the working relationship; and (6) whether the service rendered is an integral part of the employer"s business. FLSA states that in a joint employment relationship, both employers are responsible for complying with the state and federal wage and hour provision, and both would be jointly liable for any minimum wage or overtime violations.

Family and Medical Leave Act¹⁵. Under these laws, employees are covered if they have been employed for at least 12 months and have 1,250 hours of service during the 12-month period immediately preceding commencement of the leave. FMLA specifically covers joint employment situations, such as a temporary or leased employment situation. Generally, the "primary employer", the employment agency, is responsible for providing leave, maintaining benefits, and restoring the employee"s job following the leave.

Workers" Compensation¹⁶. The courts have traditionally extended workers" compensation to temps. In the case of temporary and leased employees, the client firm is most often responsible for providing workers" compensation benefits. The threshold under the California Workers" Compensation Act is whether the employer has the right to control the details of the employee"s work. If the employer has the right to control the day-to-day activities of the temp or leased employee, it will be responsible for providing workers" compensation benefits.

Workplace Safety Issues¹⁷. CalOSHA defines "employer" as a "person engaged in a business affecting commerce who has employees, but does not include the United States . . . any State or political subdivision of the State."¹⁸ To determine whether the client firm or the employment agency is responsible, CalOSHA has held that the entity liable as the "employer" is the one that could have or should have taken precautionary measures. Each case is decided individually, taking into account several factors that establish which employer had the "right to control" the injured employee. If CalOSHA laws protect independent contractors, depends on the level of control the employer exerts over them.

Unemployment Insurance. Temporary workers are eligible for unemployment insurance benefits if, at the end of a temporary assignment, the temporary agency is unable to provide a new assignment. However, as part of their duty to seek work, temps must regularly contact their agency to see if a new assignment is available. Independent contractors qualify only if they have made contributions in their name to the State"s Employment Development Department prior to claiming unemployment insurance.

National Labor Relations Act¹⁹. Temporary or leased employees have the right to vote in National Labor Relations Board (NLRB) elections. The issue of whether temporary employees have a right to join the same bargaining units as permanent employees with whom they work depends on the degree to which they share a "community of interest" with the employer"s permanent employees. For example, temporary employees who work at one site on a regular basis over a period of time can generally join the existing collective bargaining unit of permanent employees. Whereas, temporary employees assigned for a short period of time usually cannot join the unit. The 1947 Labor Management Relations Act excludes independent contractors from coverage under the National Labor Relations Act.

Employee Retirement Income Security Act (ERISA)²⁰. Temporary employees are covered by ERISA if the employer allows them to participate in a pension or welfare benefit plan. ERISA does not cover independent contractors. In general, client companies can exclude temporary employees from the benefits they provide to their permanent employees if plan documents expressly exclude temporary arrangements. However, if the plans do not define and expressly exclude temporary employees, temporary employees may be covered. In a recent lawsuit against Microsoft, the Ninth Circuit Court of Appeals gave temporary workers at Microsoft retroactive rights of participation in the stock-purchase plan. The court found the contingent workers to be "common law employees" and since "employee" was not defined within the Microsoft plan, the Court held that the temporary workers were eligible to participate (see Appendix 4: The Microsoft Case for more information).

Pending Legislation and Other Proposals

According to the General Accounting Office (GAO), on the national and state level, legislative proposals have been introduced that seek to increase coverage of temporary workers under employer-sponsored benefits plans and labor and employment laws.²¹ For example, Representative Lane Evans (D-Illinois, 17^th District) introduced House Resolution (H.R.) 2298, referred to as the Equity for Temporary Workers Act, in June of 1999. The bill is currently in the Workforce Protection subcommittee.²² The bill would make temps eligible to receive any benefit offered by an employer to permanent employees after the temporary employee works for the employer for 1,000 hours during a twelve-month period, "regardless of whether the employee is placed by the employer, a temporary help agency or staffing firm, or under a leasing arrangement by a third party." Representative Evans also introduced H.R. 2299, called the ERISA Clarification Act of 1999. Senator Kennedy (D-MA) and Rep. Robert Andrews (D-New Jersey, 1^st District) introduced companion S. 2946 and H.R. 4962, referred to as the Employee Benefits Eligibility Fairness Act of 2000. These bills would amend ERISA to require that all temporary, leased, or contract employees be included in a client firm"s pension, retirement, or 401(k) plan if they meet common-law-employee and minimum-service tests.

At the state level, proposals in Massachusetts and Pennsylvania would require employers to offer comparable benefits and compensations to all of their workers regardless of the number of hours an employee works each week. A similar proposal in Rhode Island calls for amending state laws to make all workers eligible for prorated coverage for both health and pension benefits on the basis of hours worked.

New Approaches Outside the Employer-Employee Relationship. According to the GAO, other proposals seek new approaches or alternatives outside the traditional employer-employee relationship.²³ For example, Working Today, a national New York based nonprofit membership group, has developed a model for delivering portable and more affordable benefits to temporary workers. Working Today is providing access to the individual insurance market through intermediaries such as professional associations, unions, nonprofits, and employers. It has launched a demonstration project for workers in New York"s IT industry. Other groups, such as Working Partnership USA in San Jose, have written codes of conduct for temporary employment agencies, which include providing health insurance after 90 days.

Issue Analysis: Relative Wages and Benefits of Temporary Workers

This section considers the wages and benefits of the temporary workforce compared to the traditional workforce nationwide, in California and San Francisco. Comparing the group temporary workers to the group permanent workers should be done cautiously because these groups may not be similarly situated in terms of on-the-job experience.

Wages

National. The BLS survey in February 1999 showed a wide variation of wages between alternative work arrangements (see Appendix 3: Table 5 for more information).²⁴ On average, full-time temp employees (which include some IT workers) earned significantly less than did full-time permanent employees. The median weekly wage was $540 for permanent employees and $342 for temp employees, which represents a difference of 37%. Regardless of age, gender, race, or ethnicity, full-time temp employees earned less on average (see Appendix 3: Table 5 & 6 for more information). In contrast, workers placed through contract firms on average earned more than the traditional workforce - a difference of 29%, with median weekly earnings of $756 and $540 respectively. Independent contractors on average also earned 16% more than did traditional workers; the difference between median weekly earning was $100. Independent contractors are responsible for purchasing their own medical insurance and for investing for retirement, which may account for their relative higher wage. The exceptions were independent contractors who are women and/or African-Americans, who on average earned less than did permanent workers who are women and/or African-Americans, according to BLS data.

State and local. The state and national numbers reveal similar patters regarding the relative lower earnings of temp workers. In Working on the Margins, Dr. Baru reports that between 1997 and 1999, temps" hourly wages were less than those of traditional, full-time workers with similar personal and job characteristics. Controlling for personal characteristics (such as race, age, urban status and education) and job characteristics (such as industry and occupation), Dr. Baru found that male temps earned 8.8% less than their permanent, full-time counterparts, and female temporary employers earned 6.7% less than the permanent, full-time counterparts.

Local numbers indicated that while temp workers on average earn less, temporary workers in professional and technical fields, such as IT, may earn more than their permanent counterparts. The most recent San Francisco wage data for workers in the personnel supply services (EDD SIC Code 736- temp and leased employees, by occupation) are for 1998 and are reported by the Employment Development Department (EDD). The 1998 figures indicate that in San Francisco temporary janitors, laborers, cashiers, secretaries, receptionists and general office clerks earned less than were the average earnings for the same occupation.

The table above shows that the mean hourly wage of temp and leased laborers was 33% less than the mean wage of laborers overall. Temp secretaries and general office clerks on average earned 13% less than the mean for the occupation overall. In selected IT occupations, temporary systems analysts and computer programmers had higher mean hourly wages by 28% and 22% respectively, than did the average of all workers in those occupations. Temp computer support specialists earned 6% less than did computer support specialists overall.

Health Benefits

In the United States. The 1999 BLS survey demonstrates that temporary workers are more likely to be uninsured than are traditional workers. The reasons include lower levels of employer provided health insurance, an inability to qualify for or afford the insurance temporary agencies offer, and beliefs than the insurance offered is too expensive or not worth the price. In 1999, 83% of permanent workers had health insurance, while only 59% of temporary workers were covered. Temps fared worse than did independent contractors and contract firm employees. Table 7 shows that approximately 60% of temps were uninsured and only 9% received health insurance from their temporary employment agencies. In contrast, the majority of independent contractors purchased health insurance or received insurance from another source (spouse, domestic partners, parents, etc.), while 27% of independent contractors were without health insurance.

Most major temporary help agencies do offer health insurance packages which employees may purchase. For example, Manpower, Inc. (the largest temporary employment agency in the U.S., with 180,000 employees at any one time and approximately 700,000 employees per year) insures between 9 and 10% of its employees. Employees are eligible for health insurance in the month following their first month of hire. To maintain eligibility, employees must work 100 hours a month and 33 hours per week. The plan costs workers between $52 and $139 dollars per month; Manpower covers approximately 40% of the cost. According to a Manpower spokesperson, the low rates of health insurance plan participation can be explained by the short time employees work at Manpower²⁶ and by employees having health coverage from other sources. In interviews, temporary workers who were not insured cited three primary factors influenced their decision not to purchase insurance: 1) inability to afford the insurance rates, 2) a belief that the insurance offered was not comprehensive and consequently not worth the price; and 3) among those who said they could afford the insurance, being young and in good health was also cited as a reason.

Other Benefits

Employee benefits beyond health insurance, such as sick leave, paid vacation time, and employer supported retirement programs, and stock options are other components of compensation. Historically, like health insurance, temporary workers have been excluded from client company plans because client companies do not consider temporary workers employees (see Current Law and Practice section above). Additionally, job stability is a benefit. While most workers are "at-will", meaning they can be fired without cause, temporary workers experience additional job instability because their hirers have no commitment to continued worker/hirer relationships. Many firms use temporary workers when they have a peak in demand, and consequently temporary workers may be the first to lose work in a recession. According to the BLS Daily Report of April 17, 2001, compared to last year, the nation has experienced a threefold increase in layoffs this year. The Daily Report also finds that the temporary help industry has lost more than 200,000 jobs this year, which indicates employers are shedding temporary workers to trim costs.

Conclusion

Temporary work is a permanent and growing feature of the new economy. This report finds that there is some uncertainty regarding labor and employment laws that apply to temporary workers, and which entity is liable when the laws apply. This uncertainty limits legal protections for temporary workers and gives temporary workers lower levels of access to benefits than are given to the permanent workforce.

The characteristics, occupations, compensation and benefits, and preference among temporary workers vary. For example, while temps in clerical and laborer jobs on average earn less and desire permanent employment, temps in professional and technical fields, such as IT, may earn more and prefer contingent work arrangements. That some workers prefer temporary work, however, does not alleviate the low rates of health insurance coverage that many temporary workers experience. Additionally, these individuals may undervalue job stability and health insurance when the economy and their health are good. Our research also found that temporary workers experience job instability because they may be the first to lose work in a recession and can be replaced easily.

In order to address the conditions of temporary workers in San Francisco, the Board of Supervisors may wish to further study the City and County of San Francisco"s temporary hiring practices and the practices of those who contract with the City and County. The Board may also wish to explore potential policies and programs that would provide San Francisco"s temporary workforce with increased access to health insurance and other benefits.

Sources

Interviews

Between March 23 and March 29, OLA staff interviewed temporary and permanent IT workers, and employment agencies. Eight IT workers were interviewed, 6 temporary and 2 permanent. The workers were employed in private industry and in public agencies: two worked for start-up companies, two for an established financial services institution, two for a federal agency, and two for a local public agency. The interviewees ranged in age from 24 to 37. The average time working in IT was 2years but ranged from less than 6 months to 5 years. Ten local employment agencies were contacted to access the industries and occupations that utilize temporary workers. One employment agency, Manpower, Inc. was interviewed in depth in terms of employment practices, health and other benefits provisions.

Others

Baru, Sundari, Ph.D. Working on the Margins: California"s Growing Temporary Workforce.

San Jose, California: Center of Policy Initiatives, January 2001.

Brogon, Timothy. "Thriving In a Dwindling Pool of Available Workers: ASA"s Annual Analysis

of the Staffing Industry," Staffing Success, June 2000.

Dietz, Elizabeth and Jordon Pfuntner. "BRIEF: A look at temporary help wage rates,"

Compensation and Working Conditions Online, September 1996.

Employment Development Department. Industry Trends and Outlook, 1995-2002: San Francisco

County, online at http://www.calmis.ca.gov. Sacramento, California, 1995.

Ferber, Marianne A. and Jane Waldfogel. "The long-term consequences of nontraditional

employment," Monthly Labor Review, May 1998.

General Account Office. Contingent Workers: Incomes and Benefits Lag Behind Those of the Rest

of the Workforce. Washington, D.C., June 2000.

"Hiring" Temporary, Leased Or Casual Employees. From Labor & Employment Law Symposium:

Current Issues. Curiale Dellaverson Hirschfeld Kelly & Kraemer, LLP., 2000.

Kundu, Krishna. Temporary Work: A Catalyst for a Stronger Economy. Washington, D.C.:

Employment Policy Foundation, June 2000.

Jorgensen, Helene J., Ph.D., When Good Jobs Go Bad: Young Adults and Temporary Work in

the New Economy. Washington D.C.,

2030 Center, 1999.

Polivka, Anne E. and Thomas Nardone. "The Quality of Jobs: On the definition of "contingent

work," Monthly Labor Review, December 1989.

Slaton, Joyce. "Secrets of Silicon Valley" Exposes the Have-Nots of the New Economy, SFGate

online, at www.sfgage.com, April 5, 2001.

Williams, Harry B. "What temporary workers earn: finding from new BLS survey," Monthly Labor

Review, March 1989.

Appendix 1

Table 2: Employed persons in the United States with alternative and traditional work arrangements, by selected characteristics, February 1999

Source: BLS Contingent and Alternative Employment Arrangement Report, February 1999

Shaded numbers indicate percentages above those of the traditional workforce

Appendix 2

Appendix 3

Appendix 4

The Microsoft Cases. The Microsoft case²⁷, which reached settlement in December 2000, involved independent contractors and temps who were excluded from participating in the Company"s Savings Plus Plan and Employee Stock Purchase Plan. The employees sued for benefits under the Company"s plans. They argued that they had the same supervisors, performed the same functions, and worked the same hours as Microsoft"s permanent employees who were not excluded from the benefit plans. However, under their employment agreements, they declared that they did not have an employer-employee relationship with Microsoft. The Ninth Circuit Court of Appeals ruled in favor of the temps in part by granting them retroactive rights of participation in the stock-purchase plan. The court determined that the temps were not entitled to the savings plan because the plan explicitly stated that the plan administrator would determine whether the phrase "on the United State payroll of the employ" encompassed contingent workers. The stock option plan, however, required only that the individual seeking to participate be an "employee" of Microsoft. The Court found the contingent workers to be "common law employees" and since "employee" was not defined within the plan, the Court held that they were eligible to participate.

¹ See Richard S. Belous, "How human resource systems adjust to the shift toward contingent workers," Monthly Labor Review, March 1989.

² See Dr. Sundari Baru, "Working on the Margins," Center of Policy Initiatives, January 2001 and Dr. Helene Jorgensen, "When Good Jobs Go Bad," 2030 Center, 1999.

³ See Anne E. Polivka and Thomas Nardon, "On the definition of "contingent work," Monthly Labor Review, December 1989.

⁴ See IRS Publication 937.

⁵ Alternative employment arrangements match this report"s definition of temporary workers. The contingent worker category is a subset of the temporary workers category. Contingent workers are temporary workers and do not expect their jobs to last.

⁶ The Current Population Survey is a monthly survey of about 50,000 households that is the primary source of information on the nation"s labor force. The non-standard work supplement was conducted February of 1995, 1997 and 1999.

⁷ See Contingent and Alternative Employment Arrangements, online at http://stats.bls.gov

⁸ Ibid.

⁹ The Employment Development Department collects labor market and employment data for California, but does not separate temporary workers from the traditional workforce. The national BLS data and the Census Bureau"s Current Population survey samples people throughout the national. The data regarding temporary workers cannot be dissaggregated to local levels because local sample sizes are too small.

¹⁰ While staffing firms would not release the list of their clients, temps reported working at business and other entities throughout San Francisco, including the City and County of San Francisco and established and start-up companies.

¹¹ A PMSA is a Primary Metropolitan Statistical Area. The San Francisco PMSA includes San Francisco, Marin and San Mateo counties.

¹² Data about the number of independent contractors is not available. The period for which data is available is over the holiday season, a time when temporary work rolls increase.

¹³ General Accounting Office Report, Contingent Workers, June 2000, pg. 27.

¹⁴ The wage and hour requirements under the Fair Labor Standards Act (FLSA) and California Industrial Wage Orders (IWC) impose minimum wage, overtime, and equal pay requirements for covered employers.

¹⁵ The Family Medical Leave Act (FMLA) and the California Family Rights Act (CFRA) mandate that employers with 50 or more employees provide up to 12 weeks of job-secure unpaid leave for the birth or adoption of a child and family medical emergencies.

¹⁶ California"s Workers" Compensation Act gives employees insurance for job-related injuries in return for their waiving their right to sue the employer for negligence.

¹⁷ Under the Occupational Safety and Health Act of 1970 (OSHA), and its California counterpart, all employers have a duty to maintain a safe and healthy workplace.

¹⁸ 29 U.S.C. § 652 (5).

¹⁹ The National Labor Relations Act guarantees the right of employees to organize and bargain collectively. The act applies to all employers and employees in their relationships with labor organizations whose activities affect interstate commerce.

²⁰ The Employee Retirement Income Security Act (ERISA) establishes uniform standards for employee pension and welfare benefit plans. However, the act does not require employers to provide pension or welfare benefits to employees.

²¹ General Accounting Office Report, Contingent Workers, June 2000, pg. 36.

²² Lane Evans" staff explained that no action was taken on this bill last year, but the bill may be reintroduced if political support improves.

²³ General Accounting Office Report, Contingent Workers, June 2000, pg. 40.

²⁴ This may reflect the occupational concentrations of each arrangement (see above). For example, independent contractors were more likely to hold high-paying professional specialty jobs (engineers, computer scientists, and lawyers). In contrast, temp workers were more likely to be in administrative support and laborer occupations, which tend to pay below-average wages.

²⁵ A PMSA is a Primary Metropolitan Statistical Area. The San Francisco PMSA includes San Francisco, Marin and San Mateo counties.

²⁶ Industry-wide, seventy-two percent of temps have a permanent job within 7 months.

²⁷ Vizcaino v. Microsoft Corp., 97 F. 3d 1187 (9^th Cir. 1966).