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Transparency and the Janitorial Contractor-Subcontractor Relationship
Charlotte, N.C. - March 23, 2015 — In February 2015, a "legal alert" was released by FordHarrison, a law firm with 29 offices in the U.S., which focuses on labor and employment law.
The alert concerned a settlement they were involved in with a large contract cleaning company and a major retail department store chain. In this case, the department store hired the contract cleaning company to provide janitorial services for its stores (numbering in the hundreds) throughout California. To service these outlets, the cleaning contractor subcontracted the work to a network of local janitorial subcontractors.
The subcontractors filed a class action lawsuit against the contractor as well as the department store. They claimed they were not paid sufficient funds to allow the subcontractors to comply with applicable local, state, and federal laws such as meeting minimum wage requirements, employment taxes, etc. They also claimed that both the contractor and the department store "knew or should have known" that the funds (payments to the subcontractors) would be insufficient.
The case proceeded through the California courts, which ultimately agreed with the subcontractors and required both the contractor and the department store to pay $2.3 million to settle the case.
It also required the contractor to maintain records of the number of hours worked by individual janitors, review those hours for minimum wage violations, provide information of their rights under the California Labor Code, and ensure that the janitors receive overtime pay when applicable.
According to Terry Sambrowski, executive director of the National Service Alliance (NSA), a group purchasing organization for larger building service contractors and related businesses in the United States, both contractors and their customers can learn from this case.
"There must be a level of transparency so that all parties — the customer, the lead contractor, and the subcontractor — are sure they are in compliance with all federal and state employment regulations. That will help prevent situations like this from occurring and be healthier for the professional cleaning industry overall."
About the National Service Alliance (NSA): The NSA is a buying group serving the professional contract cleaning industry. Starting with 19 members, the NSA now has nearly 70 contract cleaner members — most of which are the leading names in the professional cleaning industry — as well as members in other service industries such as security and plumbing. Total membership is now nearly 300 members. Terry Sambrowski, is the NSA executive director.
This advisory is intended to provide general information on an issue impacting the professional contract cleaning industry. It is not intended to provide legal advice.