How 1099 Employment 'Strangles The Life Out Of The American Dream' In The Facility Services Sector

From industrial warehouses to life sciences laboratories, facility service workers play a vital role in maintaining commercial properties. 

In Houston — one of the nation’s largest cities, with an economy that is growing exponentially — these workers are the backbone of the city’s operations, said Mike Daley, Senior Vice President at CCS Facility Services. 

Harris County, which encompasses Houston and surrounding suburbs, has approximately 550,000 workers in the professional services sector. This includes janitorial professionals, security guards, building maintenance technicians and more. 

In the professional janitorial sector, which involves everything from cleaning carpets and floors to emergency water restoration and infectious disease response, subcontracting is a common practice. Many of these essential workers are employed through 1099 contracts rather than W-2 contracts.

While 1099 contractors often have more schedule flexibility and room for entrepreneurial growth compared to a traditional W-2 employee, this method of employment can open up a can of worms, potentially paving the way for challenges in regulatory compliance, fair treatment of workers, and even safety and security issues, Daley said. 

“There’s an unspoken truth in our industry that a lot of folks are in a race to the bottom of the revenue stream to win contracts,” Daley said. “Unfortunately, that steamrolls the front-line employees who are actually doing the work, the ones that deserve to make a living wage.”

In addition to ensuring fair wages, Daley said W-2 employment provides confidence in contractors and fosters a more loyal workforce. From an employee perspective, there is more dedication because they feel valued, see upward mobility for their careers and can support their families, he said. 

Employing workers via W-2 employment can also help to reduce risk — something that is vital in today’s uncertain commercial real estate market. 

In educational facilities, a properly vetted janitor with a comprehensive background check is essential to ensure the safety of students and teachers. In a healthcare facility, janitors must be thoroughly trained on how to keep a sterile environment, or patient safety may be at risk, Daley said. W-2 employees are more likely to be trained properly, enhancing quality of care and safety measures, he added.

“There's no better quality of work that's involved with subcontracting a workforce,” Daley said. “There's really no benefit outside of the cost impact. That 1099 mindset just strangles the life out of the American dream.”

Daley said that particularly in the facility services industry, there is a difference between a responsible 1099 contractor and an irresponsible one. A responsible contractor pays workers competitive wages, making sure that they have the “appropriate trimmings” on those wages, if they're not being paid the Affordable Care Act benefits that go along with the W-2 employee, he said.

“Put yourself in the position of an individual that perhaps doesn't speak English, or maybe they're guarded against being able to gain employment because of a paperwork issue,” Daley said. “This method of employment creates an environment where there's less trust between the folks who are doing the contracting and the folks who are doing the work.” 

CCS Facility Services, however, is challenging the status quo.

Aiming to set the new industry standard for employment practices, CCS Facility Services hires its workers via W-2 employment. It also advocates for other firms across the industry, in Houston and beyond, to follow suit — in the hope of making the facility service sector safer, fairer and more equitable.

“Moving forward, we can simply require bidders to explain how they obtain their workforce and what checks and balances are in place to ensure that their workforce is held to the same standards as every other workforce in the Houston market,” Daley said.

CCS is committed to providing workers with an employment model that is in their best interest, Daley said. Hiring employees via W-2 employment demonstrates its dedication to pushing industry expectations higher, he added.

As leaders in the Houston and national facility services industry, Daley said CCS has the responsibility to “do the right thing as it relates to people” because at the end of the day, people are who make these buildings and businesses run.

“These are human beings that we're talking about, so by getting them for the lowest pay rates and terms possible, we’re demeaning what they do for us as a society,” he said. “They're not widgets in a factory. They're not cogs in a machine.”

This article was produced in collaboration between Studio B and CCS Facility Services. Bisnow news staff was not involved in the production of this content.

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