Archangel Equity Partners, LLC    

Case Studies

August of 2012 University of California Berkeley Labor Center released a report written by Miranda Dietz "Temporary Workers in California are Twice as Likely as Non-Temps to Live in Poverty: Problems with Temporary and Subcontrcated Work in California".

Although this report sounds ominous, what should be sited is that those that hire temporary or subcontracted labor are free to choose the pay rate - just as is the case when a business hires on a permanent basis.

The report highlights on page 5 site how contemporary large businesses take advatage of the opportunity in temporary and contracted labor - small and middle market businesses have those same opportunities.

The examples on page 5 site that "The nature of employment is changing . . . Concurrent with this trend has been a change in the relationship between employers and employees."

Further, "vertically integrated companies have given way to longer and longer chains of subcontracting (Weil, 2010).  As part of this pattern of subcontracting, workers are increasingly seen as liabilities rather than assets, held at arm's length, dealt with as a procurement issue rather than human resources.  The resulting contingent employment situations . . . subcontracting and employment service agencies, erect barriers between powerful companies that set the terms of engagement within a supply chain and the workers themselves."

The next paragraph, "Examples of contingent work arrangements are well-documented in the U.S. and indeed world-wide.  Consider recent examples from the hotel and warehousing industries - Complex chains of subcntracting can complicate the story: a 'Hilton' hotel may be owned by a group of investors, run by a major operator such as HEI which buys the license to use the Hilton name, and uses a company like Pro-Clean Service to provide housekeeping (Lewis,2012,heihotels.com). A hotel with a Hilton sign, there may be no employees of Hilton."

Lewis, I. (2012, February 28).  Unite Here, Local 2. (M. Dietz, Interviewer)

Weil, D. (2010). Improving Workplace Conditions Through Strategic Enforcement: A Report to the Wage and Hour Division.  Washington, DC: Department of Labor

OPINION NOTES - 

New York Law in the field of Construction is no better example of where it is not the individual, but the legal environment that has created a relationship between employer and employee that may certainly be "seen as liabilities rather than assets."

NY Labor Law 240 and the consequences or "liabilities" are specifically sited and summarized well at the following link found on pages 3 and 28 of the March 18th, 2013 Crain's New York Business article "Builders, insurers stepping up effort to dismantle scaffold law."

http://www.crainsnewyork.com/article/20130317/REAL_ESTATE/303179971

Subcontracting Labor has significant advantages to businesses of all sizes, construction related and related to almost all other business sector.  It is also particularly important to subcontract labor carefully and make sure the definition of subcontractoted labor is understood, as sited in the following link for New York Construction:

http://www.labor.ny.gov/legal/construction-industry-fair-play-act.shtm

The following link is a recent article with some interesting data and an accompanying video how misclassification is not just a construction issue, but an overall economic reality factored into statistics: http://finance.yahoo.com/blogs/daily-ticker/2-trillion-shadow-economy-not-counted-jobs-numbers-114838216.html

Please call us so that we may discuss how our management consultants may assist.

News & Updates Links

08/14/2013 Forbes "If 30% of Pay is Benefits, What About Independent Conrtactors?"

http://www.forbes.com/fdc/welcome_mjx.shtml

Examples

Example 1 (Insurance):  Archangel Equity Partners, LLC engaged a New York retail insurance agency as a consulting advocate.  As a result of enhancing the marketing strategy by including products that improve the protections of their clients and prospects - they received a call from a prospect interested in these new products.  Introductions that Archangel Equity Partners, LLC made of a dividend bearing workers compensation product, the agency won the deal by virtually cutting the buyers costs in half and improving cash flow via a "pay as you go" option.  Not only was this new business for the agency, but due to the introduction of the "pay-go" risk financing faclity - the agency made more annual income than the incumbent agency that lost the deal.  The buyer has also since referred a number of other businesses to the agency.

The Buyer is happy and the Advocate is happy!

Example 2 (Transportation): In 2014, New York State passed the Commercial Goods Transportation Industry Fair Play Act:

http://labor.ny.gov/legal/commercial-goods-transportation-industry-fair-play-act.shtm

There is a large impact to Owner Operator Independent Contractor Commercial Drivers and those that use Independent Contractor Drivers to Transport Goods; many other states have passed similar laws.  

The second largest greenhouse in the nation contacted Archangel Equity Partners, LLC due to the fact that ramifications had hit both the greenhouse and hundreds of their Owner Operator Independent Contractor drivers making it not economicly for the drivers to work for the greenhouse and it was the beginning of the peak of their season!  The greenhouse may not be able to fulfill their orders and 40% of their business comes from a national chain that would replace the greenhouse with another that could - effectively putting this greenhouse out of business.  

Archangel Equity Partners, LLC reached out to an Advocate that is a Third Party Administrator (TPA) in this space.  AEP and the Advocate TPA met with the greenhouse and the truckers, educating all to the value proposition of the TPA and we engaged the solution successfully.  

The Buyer is happy and the Advocate is happy!  

Example 3 (Construction):  In 2014, New York State passed the Construction Industry Fair Play Act:  https://www.labor.ny.gov/legal/construction-industry-fair-play-act.shtm  

The goal of this law is to rein in the misuses of contract labor in the NY construction business, these misuses cost the state greatly.  

In the interest of employing this law, additional legislation has been passed in 2013.  As a result things are impacting the construction labor market place in 2015.  Archangel Equity Partners, LLC is working with legitimate Construction Contractors that fit the required profile that the 2010 law demands. 

Archangel Equity Partners, LLC has once again introduced legal and accounting Advocates to team up providing solutions that will assist our clients in coming through this period of great change successfully and gaining from the market correction.  

The Buyers are happy and the Advocates is happy!