Indirect Employment: Should Lead Companies Be Liable

This paper was written for a symposium of the Comparative Labor Law & Policy Journal on David Weil, The Fissured Workplace (Harvard UP, 2014). Weil’s book offers a comprehensive and penetrating account of indirect employment – a problem plaguing labor relations and labor law throughout the world. He provides a wealth of data and analysis showing how extensive this practice is in the United States, and goes on to offer several proposals to “mend the fissured workplace”. The current article has two aims, both complementary to (rather than critical of) Weil’s book: first, to use the Israeli example as background to consider some possible paths forward, and second, to consider the possible justifications for imposing liability on “lead companies” (the ultimate clients/brands/franchisors) towards indirect employees.

Part I of the Article opens by describing the phenomenon of indirect employment in Israel, where it is widespread. Part II then critically considers the solutions adopted in Israel so far. I then move to discuss some additional/alternative solutions, to a large extent in line with Weil’s proposals, offering some more details on the appropriate legal structures and their justifications. Part III begins by clarifying the legal questions, proposing some distinctions, which I find useful and necessary. Part IV then moves to address the question least developed so far in the case law and literature, which is whether firms (or other entities) could sometimes be held directly responsible for workers employed by their subcontractors/franchisors, even if they have no direct relationship with them. The final Part concludes and adds some preliminary suggestions regarding methods, i.e. possible legal routes to establish legal responsibility by lead companies, assuming it is indeed justified.