Skip Navigation

How Labor Laws Disfavor People of Color

Big companies have made statements in support of racial justice, but it’s time for them to put their money where their mouth is, writes Brennan Center Fellow Caroline Fredrickson.

hyejin kang/Getty

Prompted by the nationwide demonstrations against racism and police brutality, many companies have made grand statements of committing to more inclusive hiring, and some have made donations to civil rights organizations. But as many have pointed out, these efforts are belied by a sorry history of not following through on good intentions when it comes to workers of color, or workers of any kind.

The failure, however, is not just one of inaction, but one of longstanding and aggressive opposition by business interests to fixing the core defects of our labor and employment laws that have excluded many workers of color from the economic gains of the 20th and 21st centuries. In Silicon Valley, for instance, much of their of color workforce is employed in minimum wage or contractor positions, and the same companies have fought tooth and nail against remedying the omissions of these workers from core employment protections.

During the New Deal, even those elected officials who claimed to have the best interests of low-wage workers at heart saw fit to exclude certain people to accommodate hostile legislators predominantly from the South. In the case of the legislation protecting workers’ rights to join a union and earn minimum wages and overtime after 40 hours of work in a week, Senate Dixiecrats conditioned their votes on the exclusion of household workers and field hands so wealthy southerners could continue to benefit from these workers’ cheap labor.

Faced with an opposition campaign targeting white women trumpeting, “Housewives beware! If the Wages and Hours Bill goes through, you will have to pay your Negro girl eleven dollars a week,” President Roosevelt declared that “domestic help” would not be covered by the bill. He went on to sign legislation that excluded certain occupations, such as household and farmworkers — in the South, a predominantly Black workforce — from the major laws seeking to fight poverty and rally the economy during the Great Depression.

The Social Security Act also directly excluded farmworkers and domestic servants from old-age benefits and unemployment insurance, clearly targeting the African-Americans who filled these jobs. Southern whites were thus able to use New Deal programs to build their prejudices into the law, infusing a large amount of federal spending into efforts to maintain what historian Jacqueline Jones describes as “the fundamental racial and sexual inequalities in the former Confederate states.” Charles Hamilton Houston, an NAACP leader at the time, described the Social Security Act when it passed in the 1930s “as a sieve with the holes just big enough for the majority of Negroes to fall through.”

As a result of these deals, the New Deal legislation omitted large categories of workers explicitly acknowledged to be made up primarily of workers of color, and particularly African-Americans. Indeed, 90 percent of black working women received no benefits at all from the new laws providing for a minimum wage, maximum hours, the right to join a union, and assistance for the unemployed and elderly. By leaving out these workers, New Deal legislation actually ensured that, relative to other workers, African-American women particularly, and domestic and agricultural workers generally, would be worse off than before. This “original sin” has become a lasting taint on American democracy.

Perhaps most significantly for today’s workforce, Congress also left out a category of workers where people of color are overrepresented. By narrowly defining “employee” as well as applying the laws only to businesses over a certain size, the New Deal legislation handed business a strategy to avoid coverage by the laws.

This perverse incentive today allows companies to avoid paying the minimum wage or unemployment benefits to large numbers of workers by spinning off functions, outsourcing, setting up franchises, or designating a certain number of employees as independent contractors to bring the company under the threshold, which is based on either the number of employees or the size of the company’s profits.

Avoiding overtime liability or the minimum wage, not to mention a possible union drive, has bottom-line appeal for employers. But even if the company hit the threshold in terms of employees, its non-employee employees (temporary workers or independent contractors) are not covered by any of these New Deal laws. This strategy has been used by the tech giants to claim their drivers, shoppers, or janitors cleaning their buildings don’t actually work for them but are contractors — and thus they don’t to provide unemployment insurance, overtime, or health care.

Now the confluence of the pandemic and the demonstrations for racial justice should put a spotlight on the need to update these laws. So while JP Morgan Chase, Walmart, Nike, Uber, Lyft, and Amazon have been in the news for their grand statements about addressing systemic racism, until they actually stop classifying their workforce as contractors, commit to covering more workers under the labor and employment laws, and join worker advocates in a full-throated effort to raise the minimum wage, we should all write off their pronouncements as just a brand update and nothing more.

The views expressed are the author’s own and not necessarily those of the Brennan Center.