Sub-contracting, Third-Party Companies, Closures and Successorship

Another challenge facing warehouse workers relates to permanent and stable work: the challenge of warehouse closures, sub-contracting, and the rise of third-party warehousing companies. Due to the close relationship between warehousing and the strength of the over economy and supply chain, warehouses are vulnerable to closures in times of economic contraction or shifting geographies of supply and demand. Our warehouse members expressed that employment standards around severance inadequately protected non-union workers, and even in unionized workplaces, there was a need for stronger closure language.

At the same time, the increasing use of sub-contracting and third-party warehousing companies created fractured employment structures and leave unionized workers more vulnerable to the effects of contract-flipping. The use of sub-contractors can create two-tiered workplaces, and undermine employment standards. It is worth noting that the use of third-party logistics companies and temporary staffing agencies are intricately connected to technological change, as warehouse employers turn to platform technology for a new source of “on demand” workers.

Other warehouse operators reported exploring the use of on-demand staffing platforms, which could simplify hiring processes for the benefit of employers and workers. However, using such tools also may encourage employers to reduce the number of direct hires and increase reliance on temporary workers, who tend to be paid less and have fewer protections on the job.*

*Gutelius and Theodore (2019).