Labor Ready cheats on workers' comp, AFL-CIO contends

TACOMA--With hundreds of union workers picketing Labor Ready's annual meeting yesterday, the state announced it is investigating whether the Tacoma company withheld money from Washington and Ohio workers' compensation systems.

The audit, which was first reported yesterday in The New York Times, is the result of an AFL-CIO complaint sent to the Washington state Department of Labor and Industries officials earlier this month. The complaint accuses Labor Ready of improperly classifying a large percentage of its temporary workers as clerical even though the vast majority are manual laborers whose jobs require activity such as digging or lifting.

Under the workers' compensation system, companies pay the state's insurance premiums in proportion to the level of risk their employees face on the job. For example, a department store would pay a lower share than a construction company because a cashier would be less likely to be injured on the job than a crane operator would.

In 1998, Labor Ready said 47 percent of its workers performed office-type jobs and should have paid an additional $2 million to the state, according to union officials.

Based on the AFL-CIO's information, "we found sufficient reason to move forward with an audit," said Tammy Firkins, a Labor and Industries spokeswoman.

Dick King, Labor Ready's president and chief executive, said he has not yet examined the labor organization's report, but denied the company intentionally fudged its data.

"There is no incentive for our employees to miscode an employee's compensation claim," said King, who will meet Labor and Industries officials this week.

The episode is only the latest in a string of complaints against Labor Ready by the AFL-CIO's Building and Trades Department, an umbrella group of unions.

So far, the group has sued, alleging the company siphoned money from workers' salaries by charging them fees to use company cash machines to cash paychecks. In 1999, Labor Ready generated $7.7 million from the machines. King said the machines are voluntary.

Labor and Industries officials said the practice is legal in Washington as long as workers can cash their checks elsewhere.

The union brought out its biggest names yesterday during a morning rally at the Tacoma Dome, including AFL-CIO President John Sweeney; Ron Judd, AFL-CIO's Western Director; and Michael Monroe, president of the International Union of Painters and Allied Trades.

"Labor Ready takes the lowest possible road in treating its employees," said Sweeney, who was also in town stumping for Vice President Al Gore. "Although (temp workers) are not organized, they still deserve the same benefits of workers who have decent employers."

In a way, Labor Ready's financial woes gave union officials the perfect opportunity to strike back against a company who, in the past, has provided replacement workers to clients during labor disputes, including the Kaiser Aluminum strike.

"Recruiting strikebreakers and supplying scabs is a bad and needless way for Labor Ready to do business," said Terry O'Sullivan, president of Labor International Union of North America. "It earns little money for Labor Ready and makes it no friends worth having."

Some labor officials attended the packed meeting and were able to question King, because the Building and Trades Department owns 550 shares of Labor Ready stock. The meeting, however, ended smoothly with a few shareholders grumbling about the limited time the company allowed for questions.

Although King struck a conciliatory tone, he made it clear Labor Ready would continue to provide replacement workers.

"We're pro-business," said King after the meeting. "We are going to do what's right for our customers. That's Biz 101."

Shares of Labor Ready fell 6.25 cents to close at $3.88 in New York Stock Exchange trading.

Thomas Lee's phone message number is 206-464-2448. His e-mail address is: tomlee@seattletimes.com.