Industry History
Since the mid-1970s, illegal business practices have come to define the business climate of the janitorial industry. Industry structure developed with one objective: cutting costs. In the 1996 Building Owners and Managers Association (BOMA) report, “Cleaning Makes ¢ents,” 77% of building owners across the country reported contracting out janitorial services to decrease overhead. Contractors concurred and reported that they were often unfairly squeezed by customers to provide the lowest bid by any means.
The low-ball contracting model spiraled out of control, and building owners quickly lost control of standards. Contractors would often subcontract to cut costs by breaking the law. Industry standard wages and worker protections rarely met legal requirements. This placed all parties involved: janitors, subcontractors, contractors, building owners and tenants into physical and economic risk.
Aside from the overt costs of settling potential legal claims, irresponsible contractors could unfairly win bids against responsible businesses who follow the law. Responsible contractors lost almost 80% of the retail market industry to competitors who offered clients lower labor costs by breaking the law.
Illegal practices also robbed California taxpayers of millions of dollars in unpaid payroll taxes and workers compensation insurance. Taxpayers also picked up the bill at County hospitals when workers without workers compensation insurance got injured on the job.
Given the rise of unfair competition, responsible contractors saw the need to take additional steps to protect their right to a fair marketplace. In 1999, they partnered with SEIU Local 1877, the California janitors’ union, to establish the Maintenance Cooperation Trust Fund (MCTF).
Modeled after compliance programs in the construction industry, the MCTF was created to combat the underground economy and level the playing field. This focused strategic effort has facilitated enforcement activity, exposed unlawful business practices and has held industry leadership accountable for their role in awarding contracts to unscrupulous contractors.
