How Temp Agencies And Raiteros Rip Off Chicago’s Immigrants

Wage Theft?

Key parts of the raitero system, especially the transportation fee, may run afoul of Illinois’ temp labor law. But, ironically, that very law helped create the current system.

When he first started as a raitero, Aguilar said, he was employed directly by a now-defunct temp agency, Prime Staffing, which paid him $350 a week. In many cases, temp agencies recouped this cost by charging the workers, deducting ride fees from their paychecks.

Illinois changed its law in 2006, making it illegal for temp agencies to charge workers for transportation or to refer them to van drivers who did. The law already outlawed temp agencies from forcing a worker to pay a fee for cashing a paycheck.

As seen in this photo taken with a smartphone, a sign next to the punch clock at the Ty warehouse reads in Spanish, "Please do not punch in until 5:55 a.m. This measure will be strictly enforced, and measures will be taken with employees that don't follow the rule." (Michael Grabell/ProPublica)

As seen in this photo taken with a smartphone, a sign next to the punch clock at the Ty warehouse reads in Spanish, “Please do not punch in until 5:55 a.m. This measure will be strictly enforced, and measures will be taken with employees that don’t follow the rule.” (Michael Grabell/ProPublica)

As a result, temp agency managers say, most staffing firms did away with official, paid relationships with drivers. Instead, they developed informal arrangements with the raiteros, which insulated the temp agencies from responsibility.

In other parts of the country, the van systems have clearer ties to the temp agencies and the fees are legal, with some restrictions.

Throughout New Jersey, vans show up every morning right in front of the temp agencies. When hired, workers sign a waiver authorizing the agency to deduct the ride fee from their checks.

In Boston, vans sent by temp agencies pick up workers from street corners and shuttle them to fisheries and recycling plants throughout eastern Massachusetts. A new law that went into effect in January limits transportation fees to 3% of a worker’s daily wages and mandates that the fees can’t reduce pay below the state’s hourly minimum.

According to labor and employment lawyers, whether Select Remedy and other temp agencies have violated Illinois law depends on how free the workers are to choose their own transportation and check-cashing store and whether the rides and long hours of waiting are for the benefit of the worker or the company.

Miguel del Valle, the former state legislator who sponsored the day and temp labor act in Illinois, said that in his view the new transportation system still violates the law.

“We didn’t want to allow temp agencies to gouge people and take big chunks of money out of their paychecks,” he said. “They’re doing something that we tried to prohibit them from doing,” he added. “It’s abusive.”

Tennis Court And A Pool

While Castro struggles to make her rent, Ty Warner, the chief executive of Ty, owns an oceanfront estate in Santa Barbara, Calif. He is the 206th richest person in the United States, according to Forbes, with an estimated net worth of $2.5 billion

D. Stephen Sorensen, the CEO of the Select Family of Staffing Companies, also lives in Santa Barbara. His 8,200-square-foot mansion features a tennis court and a pool.

Select was started in 1985.

Beginning in the mid-2000s, it bought more than three dozen staffing firms, becoming a national chain. Its revenues skyrocketed from a little more than $300 million in 2002 to $1.8 billion in 2011, according to company press releases.

In 2012, Staffing Industry Analysts, a research firm, ranked Select the 10th largest temp agency in America and the fourth largest in the industrial sector.

Select has supplied workers to Walmart warehouses, Bank of America, Toyota, Costco, Trader Joe’s, General Mills, Mattel and Fisher-Price, according to court records, trade journals and the company’s website.

In recent years, Select has weathered several controversies over its employment practices unrelated to its use of raiteros.

In 2011, it was hit with a $50 million jury verdict in a civil fraud case brought by the California state insurance fund.

The lawsuit alleged that the company lowered its workers’ compensation costs by lying about its payroll and falsely claiming its employees worked for another company. Select appealed and in January announced it had reached a confidential settlement with the state fund.

The company has also faced several lawsuits accusing it of cheating workers out of their pay.

In August, while denying the allegations, Select Remedy agreed to pay up to $400,000 to cover unpaid wage claims from a group of more than 200 workers in the Chicago area. None of these workers used raiteros or worked at Ty.

Select Remedy entered the Chicago market in 2007.

There, the raiteros helped the agency satisfy corporate clients by getting large numbers of people to the worksite, according to five former managers.

“Recruiters are under a lot of stress to make sure they don’t lose out on the hours,” a former personnel supervisor for Select Remedy said, meaning recruiters needed to fill an order immediately or the client company would turn to another agency.

Indeed, volume is key. In the industrial sector, according to analysts, temp firms typically average only about 4% profit on each worker.

The supervisor, who asked not to be named because she signed a nondisparagement clause, recalled office-wide emails calling for, say, 200 workers all of sudden.

“They’re just trying to get bodies out there,” she said, and the raiteros are “the easiest way to do it.”

And one of the cheapest.

In addition to not paying the raiteros, Select Remedy avoids the cost of maintaining and insuring the vans.

“It always bothered me,” said the former personnel supervisor. “Half these employees were making minimum wage.”

Temp agencies that don’t use raiteros face other added costs, such as employing neighborhood recruiters. They also have to depend on individuals who might get sick, run late, or have cars break down.

Robert Stack, owner of Custom Staffing, which has an office in Little Village, said using raiteros definitely gives his competitors advantages. A big one: not having to pay rent in the neighborhood, which can cost a few thousand dollars a month.

Still, Stack said he prefers not to use raiteros.

“Simply put, it’s illegal,” he said.

‘Live the American Dream’

Promotional videos on Select’s website tell job seekers that the company can help them “get paid like a professional” and “live the American dream.”

In one ad, the pitchman jokes, “Did you know that eight out of five economists say that working at Select is 6 bajillion times more effective than standing on a corner?”

In fact, Select employees in the raitero system start their workday by gathering on Chicago street corners before dawn.

Many workers in Little Village don’t know the basics of where they work.

They often had to refer to their paycheck stubs for the name of their temp agencies. The companies they served were known simply by the Spanish name of the product they were handling — galletas (cookies), vinos (wines) or lechugas (lettuces).

A ProPublica reporter followed buses and vans from the early-morning pickups in Chicago to the warehouses in the far suburbs, and conducted more than 60 interviews with workers, raiteros, temp agency recruiters, managers of check-cashing stores and others.

We examined check stubs, court records, labor department files and undercover video shot by the Chicago Workers’ Collaborative, an advocacy group that opposes some temp agency practices.

Several workers agreed to speak for this story using their full names. Others like Maria Castro asked that only their second Spanish surnames be used for fear that they wouldn’t be able to find work in a labor market that is largely controlled by the raiteros.

“I would be homeless if they found out who I am,” she said.

Like many workers in this system, Castro is undocumented. However, companies must abide by most labor laws, such as minimum wage, for anyone they hire regardless of whether they are in the United States illegally.

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