Contracting out costs Lyons Group $424 k

I keep hearing from the right-wing (and some progressives) about how much money taxpayers would save if we contract out public services. Use the private sector as a model for public sector services they cry.

Well in the private sector, the Lyons Group just got a lesson in the real cost of contracting out:

The Lyons Group, which operates 15 well-known Boston-area eateries, has agreed to pay $424,000 in back wages and damages to 409 employees in order to resolve alleged violations of the Fair Labor Standards Act, according to the U.S. Department of Labor.

Patrick Lyons of the Lyons Group will also issue a public statement warning restaurant owners about the pitfalls of using contract labor providers who are not compliant with the Fair Labor Standards Act

So on top of paying the outside contractor the Lyons group is on the hook for $424,000 more! What a deal.


3 Comments . Leave a comment below.
    • Nothing to do with Public Subcontracting.

      Some private businesses subcontractor out their employees. I believe this is done – to let someone else deal with the HR aspect.

      The business who hires this subcontractor is ultimately responsible for wage violations, this happened in this case and the employees got paid.

      Subcontracting does work for non-core functions of a organization. Who do you think did the majority of the plowing of state roads – it was private subcontractors.

      • Subcontracting out helps

        prevent workers from gaining a critical mass in order to organize. When individuals are hired as contractors, as one of my brothers-in-law often is, they lose out on benefits, and work when needed, not when they need to work.

        You’re right with the non-core functions. You don’t want to keep snowplowers on the payroll year round. I know guys, however, that won’t plow for the state because it takes a while to get paid.

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Tue 28 Mar 7:24 PM