Crooked Competition

In late October, federal officials raided Wal-Mart stores in 21 states, alleging the company’s building service contractors hired illegal immigrants. 250 janitors were arrested in 60 stores.

Wal-Mart claims to know nothing about any irregularities.Tom Williams, a company spokesman, told the New York Times, “We have seen no evidence thus far that anyone in Wal-Mart is involved in any scheme involving illegal workers.”

The Feds feel differently. Anonymous law-enforcement official told the Times the government used wiretaps and recordings of conversations between company officials and contractors. Current and former Wal-Mart cleaning contractors, who have not been named, reportedly are cooperating with the investigation.

This isn’t the first time Wal-Mart’s been in trouble for its cleaning practices. In 1998 and 2001, federal officials arrested more than 100 illegal immigrants working for Wal-Mart BSCs. Thirteen of those contractors later pled guilty.

Wal-Mart isn’t the only alleged culprit. In July 2000, the Los Angeles Times broke the story of Guadalupe Flores. According to the L.A. Times, Flores earned much less than minimum wage, worked at least 56 hours a week with no days off, no overtime and no worker’s compensation coverage. Flores allegedly worked with “strong chemicals that make his nose bleed, burn his fingers and eat the soles of his cheap sneakers.”

The newspaper alleged a large building service contractor, who had been hired to strip floors for an area supermarket chain, employed Flores.

California officials say legitimate BSCs are at a 25 percent disadvantage bidding for supermarket work because illegal hiring is so prevalent.

One Utah contractor says he’s lost more than his share of business to crooked competitors.

“I’m paying $7 or $8 an hour and I have to pay taxes,” he confided to me. “Because their labor is so cheap, they can have five or six employees in a store compared to my two or three. Any time I go out and solicit a store, two-thirds of the time ... I can’t match the service with the price.”

According to my friend, some of his employees have worked for sweatshop operations like this in the past.

“They never had taxes taken out, no days off, no overtime,” he says. “Without exception they were paid in cash or by personal check.”

Copies of checks I saw appear to support his claim.

Fighting back
What can legitimate cleaning contractors do to combat this? RICO might be one answer.

RICO stands for the Racketeer Influenced and Corrupt Organizations Act. When the law was originally passed it was designed to assist prosecutors in dealing with organized crime. But some immigration officials say it has had a profound effect on combating certain types of corrupt business practices like illegal hiring.

For instance, one Connecticut cleaning company used the law to take a competitor to court. Commercial Cleaning officials alleged their rival, Colin Service Systems Inc., had violated RICO by hiring illegal immigrants. According to The Wall Street Journal, Commercial’s suit claimed because Colin did not withhold taxes and worker’s compensation, the company had an unfair advantage. The Journal also reported Colin paid $1 million in 1998 to settle charges by Immigration that the company knowingly hired illegal immigrants. After the investigation, 2,500 Colin workers were dismissed.

Short of going to court, you can educate your customers about the dangers of doing business with unscrupulous competitors. According to one attorney, companies who hire this kind of contractor can be liable for back wages at the very least. Treble damages, injunctive relief and attorney’s fees are also likely to be included in any legal action.

Teach your clients to consider the BSC’s workforce. It’s a good idea to ask immigration officials to verify documents submitted by the contractor. Employers should also have a policy of investigating complaints.

Also, be willing to show your clients your payroll. Show them how much employees are being paid and where and when overtime occurs. Teach them they can often spot illegal hiring by simply doing the math.

Most importantly, aggressively market your training and safety programs. Contractors who use cleaning “slaves” don’t train their employees because they simply don’t care about them. Teach your customers how you train your employees to protect their own health and safety, as well as other occupants and the building itself.

In a $150 billion industry, it isn’t possible for the government to find all of the bad guys. But it is possible for us to police ourselves, and we should. The public perception of janitors is often persona non grata. Most people simply don’t understand the critical role custodians play in environmental health. But for cleaning contractors themselves to treat their employees as expendable is inexcusable.

If there is anything positive from the Wal-Mart investigation it may be that cleaning professionals will be forced to be just that: skilled professionals determined to keep their reputations, as well as their facilities, spotless.

John Walker is a regular Contracting Profits columnist. He is a veteran building service contractor; owner of ManageMen consulting services, Salt Lake City; and founder of Janitor University, a hands-on cleaning management training program.