Recently, we learned that the Department of Labor’s Wage & Hour Division has launched a sweeping FLSA compliance review focused on major retailers who employ janitorial workers. As part of that initiative, WHD has visited multiple retailer locations and has interviewed location management and janitorial employees. WHD has targeted retailers that hire janitors as employees, as well as those that retain janitors through independent contractors. Although these first investigations appear to be confined to the Northwest, we believe that this is part of a national initiative and retailers around the country should expect similar investigations in the coming months. The Northwest, however, is not yet out of the woods, and we understand that WHD’s investigations in that region will continue.
Keep in mind that retaining janitors through independent contractors will not necessarily shield retailers from liability for employment law violations. In 2004, janitors filed a class action lawsuit seeking unpaid overtime compensation against three of the largest supermarket chains in California and they settled it for over $22 million. The supermarket chains had treated the janitors as independent contractors. In 2005, another major retailer reportedly agreed to pay $11 million dollars to settle accusations that it retained hundreds of illegal immigrants through janitorial contractors to clean its stores. More recently, the Washington Supreme Court overturned a trial court which had granted summary judgment to a grocery store chain on its janitors’ claims that the broker company which employed them and the grocery store chain were joint employers.