Union says cleaning firm uses ‘franchises’ to skirt wage laws

Why pay janitors to clean buildings if you can get janitors to pay you?

That, apparently, is the business model of Bellevue, Wash.- based National Maintenance Contractors (NMC), which sells immigrant janitors “franchises” that allow them to clean office buildings in Oregon and Washington, including the Fox Tower and 1000 Broadway buildings in downtown Portland, owned by developer Tom Moyer, a former non-union theater owner.

When that arrangement came to the attention of Service Employees International Union (SEIU) Local 49, which is busy unionizing downtown janitors, union leaders say they smelled a scam.

SEIU helped several former “franchisees” file a complaint with the Wage and Hour Division of the Oregon Bureau of Labor and Industries (BOLI), even arranging a Dec. 17 meeting at which Labor Commissioner Dan Gardner accepted the filing personally.

“NMC pursues a marketing scheme to induce people who are neither well educated nor sophisticated in business to buy franchises,” wrote labor attorney Gene Mechanic in a letter accompanying the filing. The company has about 410 franchises in Oregon and Washington.

The complaint alleges that the franchise structure is a way for NMC to avoid paying payroll taxes, unemployment insurance and workers’ compensation insurance.

NMC janitors pay franchise fees ranging from $2,000 to $20,000, depending on the volume of business they contract to do. Then they get five days of training and wait for the company to assign them cleaning contracts. Some franchisees wait many months after paying their fees before receiving their first contract.

Franchisees are told they will own their own businesses, but they don’t do their own billing or contracting. In fact, said Mechanic, they’re forbidden to communicate with their customers. And their work is supervised by NMC managers. These facts, Mechanic said, suggest the janitors are in reality employees of NMC.

Just not very well-paid employees — some don’t even make minimum wage under the arrangement, the complaint alleges.

NMC owner Lyle Graddon disputed that claim, saying the typical franchisee earns $12 to $14 an hour.

In September, NMC paid $300,000 to settle a class-action lawsuit by a group of Washington franchisees who charged that the company deceived them about how much money they would make and the nature of their relationship. Seattle attorney Samuel Chung, one of about a dozen lawyers representing plaintiffs in the case, called the relationship “indentured servitude” — once a franchisee agrees to the setup, they owe the franchise fees, and must work to pay them off.

© Oregon Labor Press Publishing Co. Inc.