Thursday, June 13, 2013

Wal-Mart makes news for focus on temp hiring

WalmartReuters recently did a survey of Wal-Mart's hiring in recent months and published the findings today. The results are making a fairly decent size buzz in other media outlets and on twitter. The survey revealed a big surge in hiring temporary workers, who are automatically terminated after 180 days, although they can reapply for their positions. About half the stores surveyed were hiring only temporary workers, while others were hiring a mix of temporary and non-temporary workers. It appears that all of the temporary workers were hired to work part time, and that Wal-Mart makes a distinction between regular part-time work, and temporary part-time work. Regular workers aren't automatically terminated at the 180-day mark. The stores explained that this strategy allows them to be more flexible, able to react more quickly to changes in demand. Of similar types of stores, only Dollar General does temporary hiring year round. Most only do temporary hiring at the holiday season.

I have a serious question about this news. What does the "temporary" designation get Wal-Mart? It is a term without legal effect. We all know that in reality, nearly all of Wal-Mart's workers, and most workers in the U.S., are effectively temporary workers. They can be terminated at any time for nearly any reason with no notice. We also know, though, from Pauline Kim's (Wash. U. St. L.) work, and our own experiences, that many if not most employees don't realize this.

Clearly, people do attach legal significance to the terminology. Most of the commentary on the Wal-Mart news suggests that this kind of terminology has legal significance, as if the default employment relationship gave employees some level of job security, and hiring workers labeled "temporary" outside of the busiest season for that business is some kind of break with the norms of employment relationships.

So why use this terminology that has no legal consequences? Is this designation a way to make the workers feel even more insecure? Does it make them less likely to assert rights during their employment or after because they are told up front not to expect to continue? Is this kind of like noncompete agreements in places they are not enforceable? I have the same problem with other HR terminology, too, like "probationary" employees in an at-will setting. Or even full or part-time in an at-will context before the FMLA or the ACA mandated some limited benefits based on the number of hours an employee worked.

I ask these questions because I genuinely want to know what the answers might be. I speak to non-lawyers a lot about employment law issues, and I find that nearly every discussion or presentation ends up with me giving them bad news, that they don't have job security unless they have an individual or collective contract (or some statutory rights like civil servants and public school teachers). Our students, like most people, also tend to believe employees have job security until they take our classes. 

Maybe part of an answer is that even though at-will employees have no legal job security, they have practical job security because most employers have incentives to keep employees. Small employers and people with hiring and firing power often have personal relationships with those they have power over that make firing people difficult. And employers' own beliefs, which tend to overestimate the risk of liability mean that they rarely terminate people without a pretty good reason. Is that enough?

Feel free to weigh in on any of the questions in the comments.


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It's hardly surprising, in many contexts. I find that many inquiries that I receive --- seemingly, mostly from the entertainment industry --- ask about "financial core membership," even though private-sector employees wishing to exercise their Beck rights must resign from formal union membership. I don't know if it's a function of Supreme Court language ("'Membership' as a condition of employment is whittled down to its financial core," NLRB v. General Motors Corp. (1963)) inaccurately read and related by those unschooled in the pilpulisms of Federal labor law, or misleading responses by union functionaries to inquiries on the subject (to the extent that they will answer questions about it at all). Probably a combination of both.

Posted by: James Young | Jun 13, 2013 8:54:31 AM

For an employer with benefits programs, i.e. not WalMart, designation of an employee as "temporary" may have consequences for eligibility for benefits.

Posted by: Alan Hyde | Jun 14, 2013 12:06:28 AM

Note that the policy favoring temporary hiring seems to be a centralized Walmart policy. It seems only yesterday that Walmart was telling the Supreme Court that each store set its own promotion criteria.

Posted by: Alan Hyde | Jun 14, 2013 1:09:15 AM

My guess is that it is partially designed as a defense to potential discrimination claims -- as well as to further limit those eligible for benefits. Walmart already has an extremely high employee turnover rate -- 50% at least per year -- and is staffing much thinner than it did in the past. So, there does seem to be a logic at work: we need people to do a particular job (stock shelves, unload trucks, etc,) and then we want to be able to get rid of them with a minimum of risk. If potential damages are limited to 6 months pay, then worst case you are looking at a max of about $6,000 in backpay liability (32 hrs a week at min wage for max 26 weeks). That is barely nuisance value. And it could also (1) justify minimum wage pay as "temps" are used to that and (2) even prevent EEOC charges because the employee may figure that b/c she was a temp, she has no rights. Not a "nice" strategy, but very consistent with WM's business model.

Posted by: Brian Clarke | Jun 14, 2013 7:01:57 AM

A number of employers have begun using "temporary" employment as a trial run for permanent jobs. If the unpaid internship is at the very bottom of the employment hierarchy and "regular" full-time work at the top, then a temp job falls somewhere in the middle. Alan and Brian are surely correct that part of the story behind these temporary positions may be concerns about benefits and potential discrimination liability. Wal-Mart is renowned for squeezing out the "extra" costs in every aspect of their business. So it's not at all surprising that this company would take advantage of any arrangement that might reduce labor costs.

But I've heard of other very different businesses (e.g., Sotheby's) that use short-term temp jobs to screen potential candidates for permanent employment. Wal-Mart too leaves open the option of renewing a temp worker's contract after 180 days or hiring that same person as a permanent employee. Thus, a trial employment story may help to explain this practice at Wal-Mart. And in Wal-Mart's case, one can easily imagine managers evaluating workers for their compliance with the company culture as much as for their individual productivity. (Note that this screening function of temp jobs closely resembles the goal that David Autor identified to explain why temporary help services firms provide general training.)

Finally, it seems to me that Marcia is exactly correct that most employers, with some notable exceptions, have HR policies that require documented good cause for termination. Thus, employees are wrong about their legal rights, but their expectations about workplace and industry norms are largely accurate. In the case of temp workers at Wal-Mart, I expect they understand quite well the odds of being rehired or of graduating to "regular" status.

Posted by: Rip Verkerke | Jun 14, 2013 9:24:01 AM

Is there a healthcare reform (Affordable Care Act) angle here also?

Posted by: C | Jun 17, 2013 8:05:40 AM

Temps. have no "reasonable expectancy of continued employment" for various purposes. The answer probably lies somewhere in there.

Posted by: Anon | Jun 19, 2013 8:33:21 AM

Could also be a strategy for defeating UI eligibility (and thus experience-rated charges) on the theory that unemployment was "voluntary" when expected from the outset. Wouldn't fly in many states, but it might in some and who knows what ALEC has up its sleeves.

Posted by: Noah Zatz | Jun 19, 2013 3:35:02 PM

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