What Have We Learned? The Fissured Workplace: When the Boss Is Three Companies Away

In 1996, a group of people who had worked at Microsoft for nearly a decade, sued the company. They had Microsoft badges (even if a different color), Microsoft email addresses, and Microsoft managers. They were expected to follow Microsoft policies, adhere and support the corporate culture, and took their directions from Microsoft professionals. What they did not have was any Microsoft's perquisites and benefits - health and welfare, stock purchase plan, other level-specific “goodies” because on paper, they were employed by a staffing agency, and not Microsoft.

The Vizcaino v. Microsoft case gave America the term "permatemp." Microsoft settled for $97 million in 2000, then rewrote its rules so that no temp could stay longer than 364 days without a 100-day break. Notice that the fix wasn’t to hire these workers as permanent full-time employees, or to create parity between permanent and permatemp workers, but to find a way to avoid the expense associated with providing – what would have been an entitlement - to these permatemp workers. Microsoft led this trend, and they were hardly alone. Over the past forty years, American companies increasingly learned to keep up productivity while shedding the workers by outsourcing, subcontracting, and otherwise shifting employment to third parties. Yet employment law, build largely around the assumption that a worker can identify the employer responsible for their pay, safety, benefits, and working conditions, has not keep pace.

The shape of the shed

The staffing industry is older than most people assume! Kelly Girl Service launched in 1946 and Manpower in 1948, providing the work of employees without adding formally to an organization’s headcount. For decades this was a niche industry. In the 1980s and 1990s, this industry was transformed because large firms, under pressure from investors to concentrate on their "core competency," began outsourcing all activity that could be done by a third party, including: cleaning, security, food service, logistics, call centers, and eventually parts of engineering and HR itself.

David Weil, a Boston University economist (now teaching at Brandeis), gave the phenomenon its name in his 2014 book The Fissured Workplace. Weil used this term and “workplace fissuring” to describe the restructuring of employment in which a lead company retains control over its brand, standards, outputs, and often how work is performed, which shifting employment to other organizations - staffing firms, subcontractors, franchisees, vendors, etc. Smaller lead firms could operate on thin margins, and the easiest place to find cost savings is in optimizing wages, scheduling, and compliance. For example, a hotel guest chooses the Marriott brand; however the housekeeper's paycheck comes from a management company the guest has never heard of, which hired the worker through a staffing firm the management company has never met.

Franchising works the same way at a larger scale. The International Franchise Association projects about 845,000 franchised establishments in the US in 2026, employing close to 8.9 million people. The brand sets the menu, the uniform, the software, and often the staffing model. The franchisee signs the paychecks and carries the legal exposure. People think that the Dunkin’ Donuts employee works for Dunkin’, but in reality they work for the franchisee.

The Bureau of Labor Statistics most recent comprehensive survey of alternative work arrangements, conducted in July 2023 and published in November 2024, identified 11.9 million independent contractors, or 7.4 percent of Americans up from 6.9 percent in 2017. Along with the 945,000 temp agency workers and 862,000 people employed by contract companies working at someone else's site, that rises to about 13.7 million workers or about 8.5% of all workers are fissured employees. These reports understate the phenomenon, because since the 2023 report, the government (GAO report) explicitly describes employers increasing temporary, part-time and contracted workers, and there has been a growth in platform/gig work - estimating nonstandard and contract work up to 30% of the workforce.

The man with a theory

David Weil is this month's person with a mission, and his story is instructive precisely because it did not end in a statute.

In 2014, President Obama appointed him Administrator of the Department of Labor's Wage and Hour Division – the agency that enforces minimum wage and overtime law. He used this position job to test his theory. Enforcement resources went to industries where fissuring was most concentrated, and in January 2016 he issued an Administrator's Interpretation on joint employment arguing that when a lead firm effectively controls the conditions of work, it shares responsibility for the workers, whoever signs their paychecks. The National Labor Relations Board (NLRB) had reached a similar conclusion a few months earlier in Browning-Ferris Industries, holding that indirect or reserved control could be enough to make a company a joint employer.

The consequence was potentially substantial: if the lead company were deemed a joint employer, outsourcing the employment relationship would no longer necessarily outsource the employment-law liability. Under the FLSA, joint employers can be jointly and severally liable for unpaid wages, overtime, damages, and other relief; hours worked across joint employers can also be aggregated for overtime purposes. And under the NLRB's broader joint-employer approach, the implications extended beyond wage-and-hour liability: a lead company could potentially acquire collective-bargaining obligations and responsibility for certain unfair labor practices involving workers nominally employed by another company. That was particularly consequential for franchisors and companies using contractors or staffing firms. 

As a result, the franchise industry made Weil its primary target, and when President Biden renominated him to the same job, the Senate refused to advance the nomination.The joint employer standard interpretation has varied with each administration until  in February 2026 the NLRB formally reinstated the 2020 standard. Two days later the Department of Labor proposed to rescind the 2024 independent contractor rule in favor of a test that weights control and opportunity for profit most heavily, a framework that makes contractor status easier to defend.

Weil lost the policy fight, at least in Washington. What he did not lose was his impact on the way we think about the temporary workforce. "Fissured workplace" now appears in court filings, union campaigns, and HR conference agendas, and the impact itself has not been seriously disputed by either side, just the argument is over who should pay for it!

Amazon and the limits of the case-by-case approach

The most visible recent test of this question involved Amazon's delivery network. Most drivers delivering packages in Amazon’s familiar blue vans are not Amazon employees. They are employed by thousands of Delivery Service Partners (DSP) – small businesses that hire and manage their own drivers. Yet Amazon provides much of the infrastructure and technology supporting the delivery operations, designs delivery routes, establishes performance expectations and metrics, and puts its brand on the vehicles customers see every day. In 2024 an NLRB regional office concluded that Amazon was a joint employer of drivers at a California DSP that had been unionized by the Teamsters. In June 2026 an administrative law judge approved a settlement under which Amazon paid roughly $250,000 in back pay to 84 workers while  nothing about joint employer status. The Teamsters objected. The settlement left the central question unresolved: when does Amazon’s control over the work make it responsible for the workers performing it?

That is the American approach in a microcosm: employer status is determined cases by case, while the business model itself continues to grow. The result is continued uncertainty about where responsibility lies when one company employs the worker, but another substantially shapes the work - and the flipflop that occurs every four years, while the business models that depend on the answer keep growing.

What other countries are doing

Britain, the European Union, and Australia have each taken a different approach to the same underlying question: when a company controls important aspects of the work, how mych responsibility should it bear for the people doing it? 

In 2021, the UK Supreme Court ruled in Uber BV v Aslam that Uber drivers qualified as "workers," a legal status that carries rights to workers including minimum wage and paid holidays. The court looked beyond the contractual label and focus on the actual relationship: Uber set fares, established key terms, monitored driver performance, and constrained drivers’ ability to build independent customer relationships. In other words, the contract said one thing - the way work was actually manager said another. 

The European Union has taken a broader regulatory approach. Its Platform Work Directive requires member states to establish a rebuttable presumption of employment where the facts indicate that a digital platform exercises direction and control. 

Australia has focused more directly on the economics of labor  under hire. Under its 2023 Closing Loopholes Act, the Fair Work Commission can require labor-hire employees working for a host organization to receive at least the protected rate of pay that comparable directly employed workers would receive under the host’s applicable employment agreements - in essence, same pay for the same work. The government reported in 2025 that more than 5,000 labour hire workers had received pay rises under those orders, in mining, aviation, meat processing, and warehousing. The reforms  also allowed minimum standards to be established for "employee-like" gig workers.

These approaches differ considerably, and none is without costs and unintended consequences. However, greater worker protection and clearer accountability can also contrain some of the flexibility and economic advantages associated with contracting, franchising, labor hire and platform work. . But they share and important principle: the legal label attached to a worker is not necessarily the end of the inquiry.  The more a company controls the work - how it is performed, what standards apply, how performance is monitored, and in some cases, what workers are paid - the harder it becomes to argue that responsibility belongs entirely somewhere else. 

The United States has largely taken a different path, continuing to determine responsibility through shifting agency rules and individual cases. The result is persistent uncertainty about where the boundary of the employer actually lies. 

AI's supply chain of people

Fissuring does not stop at delivery vans. The most talked-about technology of the decade runs on a labor structure Weil would recognize immediately.

In 2023, Time magazine reported that OpenAI had contracted with Sama, an outsourcing firm, to label toxic content used to make its systems safer.  The Kenyan workers performing that work reportedly earned between $1.32 and $2 an hour while OpenAI paid Sama $12.50 an hour for the work. Data annotation, model evaluation, and other forms of human input have become part of the global supply chain of contractors and sub-contractors, sometimes several layers removed from the companies whose products ultimately depend on their work. The lead company  establishes the specifications and the quality standards; the people doing the work may be employed somewhere else entirely.

There is an irony here. AI is frequently described as replacing human labor, but it can also make human labor less visible. Behind an apparently automated product may sit annotators, evaluators, moderators, engineers, contractors, and vendor employees distributed across multiple companies and countries. The technology may look automated to the customer - and even to the company deploying it - while remaining dependent on human work that has largely disappeared from view. 

The same dynamic is increasingly visible in conventional knowledge work. Employer-of-record platforms allow companies to engage talent around the world without directly employing them. Task platforms divide projects among contributors who may have little connection to the enterprise ultimately benefiting from their work. And AI agents add another layer: managers can now distribute work amont employees, contractors, vendors, and technology, making it increasingly difficult to see where human contribution begins and ends - and who is accountable for it.  (Blockchain made tracking units of value transparent - labor however, under this new model is completely invisible.)

Our retirement blog post in August traced how risk shifted from the employer to the individual’s account. Fissuring moves responsibility in another direction: away, from the organization that ultimately benefits from the work and across a growing chain of intermediaries. AI may extend the chain even further. 

If organizations cannot see all the people contributing to their products and services, can they really understand the human capital required to create and manage their value?

Worth, and who answers for it

Across this series we have used four lenses: work, workforce, workplace, and worth. The fissured workplace touches all four. It changes how the work is organized, who counts as part of the workforce, where the boundaries of the workplace lie, and ultimately how worth is created, measured, shared and paid for. 

In 1926, when IRC4HR's founders wrote that workers were assets rather than costs, the worker and the company were assumed to have a direct relationship. A century later, many of the people who make a company's products, serve its customers, deliver packages, and train its AI models may have no employment relationship with it at all. HR may not even have a record that they exist!

This creates an important distinction: the legal boundary of the workforce and the economic boundary of the workforce are no longer necessarily the same. A company may legally employ one population while depending on a much larger ecosystem of people to create its products, serve its customers, and generate enterprise value. 

This creates a ling-of-sight problem in both directions. Workers can lose sight of how their contribution connects to the strategy, performance, rewards, and value of the enterprises they ultimately serve. At the same time, the enterprise can lose sight of the people whose work creates that value. The consequences extend beyond engagement and motivation to workforce planning, capability, productivity, risk, and investment in human capital. It also creates a measurement problem. Consider measures such as revenue per employee (productivity), workforce cost, human capital investment, human capital return on investment (HCROI) and other materiality metrics. If the output being measured is produced by employees AND contractors, temporary workers, outsourced teams, and other non-employees, while the workforce data capture only employees, what exactly are we measuring? 

 And this is precisely why fissuring is also a governance issue. If workers outside the formal employee population provide capabilities that are material to strategy or operations, management - and where appropriate, the board - needs to understand that dependency. Where does critical capability reside? What can we as an organization control? Who is responsible for rogue AI outcomes? What happens if access to the workforce disappears? What standards govern the people performing the work? Who is accountable for the associated human capital, operational and reputational risks? What should be reported, and how can this reporting be standardized?

Your Sphere of Influence

What you can act on	A practical move this quarter
Visibility	Build a single view of everyone doing work under your brand: employees, temps, contractors, franchise staff, offshore vendor teams, data annotators. Know where important work is being performed and by whom.
Measurement	Examine whether workforce measures capture the human inputs actually required to produce the company’s output. Employee-only measures of productivity, workforce costs, and human capital investment may tell an incomplete story when non-employees perform material work.
Line of sight	Ask whether people performing work for the enterprise understand how their contribution connects to organizational outcomes—and whether the enterprise understands how those workers contribute to value creation. Consider whether workers have sufficient agency to act on that line of sight by improving how work is performed.
Control	Audit where your company sets the schedule, pace,the tools, or performance metrics for people it does not employ. Legal responsibility may depend less on what the contract calls the relationship than how the work is actually managed.
Standards	Decide what minimum expectations for safety, working conditions, conduct and reporting should apply to people performing material work on your company’s behalf, and incorporate appropriate standards into vendor and contracting relationships.
The AI chain	Ask your AI vendors who labels, evaluates, and moderates the data and systems behind the tools you buy, and under what conditions. Human labor should not become invisible simply because it sits behind technology.
Conversion paths	For long-tenured contractors and temps performing on-going roles, periodically examine whether the employment model stil makes organizational and economic sense rather than relying automatically on rotation or replacement.
Governance	Identify external workforces and capabilities that are material to strategy, operations, reputation, risk, and social issues. Determine who in management owns those relationships and what visibility senior leadership and the board needs.

Forty years of fissuring taught companies to separate the work from the worker. In doing so, some organizations may have also separated themselves from a clear view of the human capital on which their businesses depend. The law will continue to debate where employment responsibility begins and ends. Organizations do not have to wait for Washington to answer a more fundamental question: Who actually does the work that creates our value - and what responsibility do we have for understanding, managing, and investing in them? 

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This is the September 2026 installment of "What Have We Learned?", a monthly series for HR leaders on the history of the employer-worker compact.