1

Context:

I am very new to contracting work in the US and started a couple of months ago. I felt pressured to accept a job where the pay was very low due to difficulties finding employment during the COVID-19 pandemic.

The employment ended up being more complicated than I had anticipated:

  • I went for a w2 with a staffing agency (Company A)
  • Company A contracted me to another company (Company B)
  • Company B contracted me to another company (Company C)
  • Company C are approved vendors for a consulting company (Company D) from which they can hire an external workforce
  • Company D was paid to have me work on a project for their client (Company E)

I am not sure how much Company E paid for me but I am aware that out of the sum Company C/D (they worked as one unit) paid for me, Company B took a 20 percent cut and Company A took a 46% cut leaving me with am approximately 35% cut or less of what Company E has been paying for me.

I am quitting soon because when I asked for a small pay increase I was told that they couldn't do it without bothering the source. I was also informed that Company B and Company A have asked for double the original amount they were paying for me so that each sector were going to profit by a good percentage while I get my measly couple of dollars to keep floating.

When I quit the Company C/D job I informed the boss that my wage was the only reason I was leaving. The low wage shocked him and possibly burned Company B's bridges with him. I was afterwards "warned" by Company B's HR that I should not divulge my wage as it "violated" my contract and would hurt my chances of having them as a "future reference". I read my contract carefully as it was only with Company A, not anyone else, and I was not given any other documents. I told them I have not violated any contract I signed so it doesn't really apply to me. As for burning bridges, the boss I worked with in Company D was very understanding and did not hold it against me when he heard my wages.

My questions are:

  1. Is this type of employment setup normal?
  2. What can I ask legally and with due process to avoid these kinds of employments?
  3. Are there any laws or ethics or norms in place that I can use to call out these kinds of staffing agents who are out to exploit people like me?
  4. Can I be held responsible for divulging my measly wage? I know to not sign anything with wording to that affect, but want to know if this is just HR-speak or are there companies that actually put this in a contract for a low paying job? How can I contest this kind of contract?

Finally please direct me to any source that gives me a good idea of keeping myself informed and protected in this Contracting market that seems unregulated to say the least.

Thanks a lot for reading if you came this far and sorry for the long post!

Lily

1
  • "don't be a contractor if having your employer make money from your services bothers you" - is that what you took away after reading the question, that the OP is bothered by their employer making money? – Aaron F Dec 2 '20 at 10:18
4

There's nothing unethical about it.

Every entity involved needs to make money. It's not uncommon for a company to be awarded a contract and then "sub" the work out to another firm. It's not unusual for there to be several layers between you and the client that is ultimately receiving the services, each layer taking their piece of the pie. As a contractor, determine what your hourly rate needs to be and present that to whomever it is that's hiring you. If they pay you your desired hourly rate then it doesn't matter what they ultimately charge for your services, and it doesn't matter how many layers exist between you and the end client.

I present my hourly rate to my client, they agree to pay me my hourly rate, they put me on a project for their client and charge their client a higher hourly rate then they're paying me. Because they need to make money. That's the way it works. What they charge their client is irrelevant and immaterial to me, and frankly is none of my business. they're paying me what I asked for and that's all that matters to me.

I can hire a contractor to remodel my home at $xxx.xx per hour and the contractor can then sub the work out to a subcontractor for $xx.xx per hour who then pays the workers $x.xx per hour. That's the way it works. It's only natural that the contractor get a larger per hour amount because he has to pay the subcontractor, who then has to pay the workers.

If a factory pays $x.xx to manufacture a widget, which they then sell to a distributor for $xx.xx, who then sells it to me for $xxx.xx is that unethical? No. That's the crux of capitalism.

2
  • 1
    It's difficult to find the answer to the question here. This answer seems to spend most of its time telling OP that their ethics are wrong. And "is that unethical? No. That's the crux of capitalism" - it appears that you're saying that something cannot be unethical if it's the crux of capitalism. – Aaron F Dec 2 '20 at 10:39
  • 1
    No, I'm saying that the OP's scenario isn't unethical. I didn't make a blanket statement that all capitalism is ethical. I also made no such aspersions regarding the OP's ethics. They asked if the situation they find themselves in is unethical and I answered that it is not, in fact, unethical and is perfectly normal and common. – joeqwerty Dec 2 '20 at 13:58
0

Well, a couple things.

  1. Wage wise, you are worth what you can get. What other people charge foe you, frankly, isn’t really important. Even if you are working direct for a company they are hoping to use your labor to make way more revenue than what they are paying you, that’s how it works. If a company is billing you out at $100 and you’re getting $35, that doesn’t mean you can go get $100 yourself, the intermediary is taking care of a lot of nonsense the primary company doesn’t care to deal with and are dealing with getting you a job you otherwise wouldn’t have. If you can get more than $35 yourself direct or through someone else take it of course, but would you be happier being billed at $50 and getting $25 of it instead of $35 of $100 just because the intermediaries are “exploiting you more?” No, and this whole thing is a fairly immature problem.

  2. About discussing wages, however, anyone who attempts to discourage wage disclosure is for sure looking to exploit people. In many places wage discussion by employees is protected by law for that reason. Though in a consulting scenario there may be NDAs and such which override that. So yes, your contract might (and probably does) enjoin you from sharing internal details of the consulting company with the client. And whether it does or not, it can certainly cause the consulting company to not rehire you and - maybe - to not give good references, but that can be legally tricky for them so it’s less likely.

What can you do? Get another job that pays more, ideally. If you want to avoid complex setups like this, you need to get a direct job and not contract, or independently contract and not go through a firm. But then there are fewer job opportunities, which if I read this right is why you took this gig in the first place. So...

I personally prefer direct positions and - usually - I can make that happen. But during the last downturn in 2001 I couldn’t and was making ends meet as a subcontractor. Remember the old adage, “Beggars can’t be choosers.” You may have a choice between a position like this and no position, in which case you’ll have to ask yourself you don’t want someone to make money off you enough to be unemployed.

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .