Space Needle board member Craig Tall was a Vice Chair of Corporate Development at defunct Washington Mutual. As the director in charge of mergers and acquisitions, Tall pushed for WaMu’s entry into subprime lending through its acquisition of established bad-actor Long Beach.

According to The Lost Bank: The Story of Washington Mutual – the Biggest Bank Failure in American History, by Kirsten Grind:

As soon as Tall raised the possibility of buying Long Beach at the executive retreat, Lee Lannoye objected…He believed that acquiring Long Beach would turn Washington Mutual into a predatory lender. If subprime loans were more profitable, wouldn’t there be a misguided incentive to keep making those loans over others? And if that happened, wouldn’t borrowers who could have qualified for a regular loan get stuck with a subprime loan instead?…”Minority borrowers with good credit might just be charged higher rates,” Lannoye argued. The Department of Justice had just accused Long Beach of this very practice: charging higher rates to minorities.

According to a 2009 Puget Sound Business Journal article also by Grind, “The $350 million deal was twice raised in executive-team meetings in 1998 and twice rejected. Lannoye said he campaigned against it, arguing that Long Beach charged much higher loan rates and fees than WaMu typically would, and could bring discrimination suits, since many of its borrowers were minorities. But shortly after those meetings, Lannoye retired and [Kerry] Killinger restructured his team. The deal went ahead in 1999. It marked the start of WaMu’s fateful foray into subprime loans, and its rapid, unchecked advance into risky mortgage lending—ultimately the chief cause of its collapse.”

Despite his role in WaMu’s decline, Tall now serves in an advisory capacity for Cascadia Capital Partners and also operates CET Capital Partners. Through CET Capital Partners, Tall is an investor and director of University of Washington biotech spinoff BEAT BioTherapeutics.

Tall was also a board member of failed educational microloan non-profit Vittana.

Craig Tall served on the Board of Directors of Tacoma-based temporary staffing behemoth TrueBlue.

TrueBlue

TrueBlue owns Labor Ready, a temp agency that supplies temporary labor to businesses across the US and Canada. Craig Tall is a board member. UNITE HERE Local 8 has been in a labor dispute with Mr. Tall for four years because of his position on the board of the Space Needle.

Working Conditions at Labor Ready

UNITE HERE Local 8 has spoken with over 50 Labor Ready workers regarding conditions at Labor Ready. Multiple workers we spoke with either were homeless or had been homeless in the last two years while working for Labor Ready.

One worker slipped on ice while working in a freezer unit this spring. He believed the fall could have been prevented if the company had salted the floor. He also talked about stepping on nails that went straight through his boots at construction sites. He noted that Labor Ready recently stopped providing steel toe boots.

After all these experiences, Labor Ready workers consistently named wage issues as their primary concern with the agency. One worker said that Labor Ready misplaced his completed work ticket, and he had to drive to a separate Labor Ready location the following week to get paid. Another worker reported never receiving pay for some job assignments.

Labor Ready Risks

Labor Ready’s parent company, TrueBlue, tells their shareholders in their form 10Q, “Our results of operations could materially deteriorate if we fail to attract, develop and retain qualified employees.” The form explains, “We have in the past experienced shortages of qualified candidates and we may experience such shortages in the future,” citing that “Attracting qualified candidates depends on factors such as desirability of the assignment, location, and the associated wages and other benefits.” What is Labor Ready doing to make this work desirable for candidates who will be dispatched to the properties of businesses across the country?

Furthermore, the form states, “Our business involves the use, storage, and transmission of information about applicants, candidates, contingent workers, permanent placements, our employees, and customers. Additionally, our employees may have access or exposure to confidential customer information about applicants, candidates, contingent workers, permanent placements, other employees, and customers.” Continued, “It is possible that our security controls over sensitive or confidential data and other practices we and our third-party vendors follow may not prevent the improper access to, disclosure of, or loss of such information, resulting in increased costs or loss of revenue.” But Labor Ready deals with this by making day laborers agree that customers’ information is “confidential or a trade secret and [I] am prohibited from using such information for the gain of any person.” Presumably these marginal workers could be sued for redress of violations.

All of this information is available to shareholders. However, it is possible that True Blue and Labor Ready customers may be concerned with these issues as well. In light of our investigation of worker issues at Labor Ready, the information revealed in the form 10Q, and the longstanding dispute with Space Needle board member Craig Tall, we are asking customers to cancel their business relationship with Labor Ready and require any contractors or subcontractors to end their relationships as well. Please contact abby@8.unitehere.org to confirm your cancelation of business with Labor Ready.

True Blue and the Small Business Administration

Despite its size, TrueBlue subsidiaries are both direct and indirect beneficiaries of U.S. Small Business contracts.

Founded in 1987, TrueBlue is now, by its own description, “the nation’s largest industrial staffing company and a leading supplier of specialized workforce solutions.” TrueBlue’s wholly-owned subsidiary companies include Labor Ready, Spartan, CLP, Centerline, and TrueBlue Energy & Industrial. In FY 2014, TrueBlue reported $2.2 billion in revenue and employed 750,000 workers in service of 135,000 customers. TrueBlue is publically traded on the New York Stock Exchange. Last year, the company claimed $12 million in federal tax credits, accounting for a reduction in their effective tax rate of 15%.

Recent reports from the SBA Office of the Inspector General highlight ongoing issues with large businesses obtaining preferential contracting treatment and other supports designed to target emerging small businesses.  According to the October 15, 2014 report, “Procurement flaws allow large firms to obtain small business awards, and for agencies to count contracts performed by large firms towards their small business goals.” The report states, “Previous OIG audits and other government studies have shown widespread misreporting by procuring agencies, since many contracts that were reported as having gone to small firms have actually been performed by larger companies. While some contractors may misrepresent or erroneously calculate their size, most of the incorrect reporting results from errors made by Government contracting personnel, including misapplication of small business contracting rules.”

The cumulative impact of these errors is significant, and means not only that the federal government is over-reporting its support to small businesses, but also that preferential access to government resources is being directed in part towards established and highly profitable large businesses instead of small businesses in genuine need of additional support.

TrueBlue pursues small business contracts through subsidiaries PlaneTechs and CLP. On its corporate website, PlaneTechs advertises that it is rated as a small business for DOD and Government opportunities under NAICS 336411 (airline manufacturing), where the size threshold is 1,500 employees.  Yet PlaneTechs boasts a network of more than 120,000 aviation mechanics and technicians, claiming “PlaneTechs is backed by the resources of one of the best known staffing corporations in the world.” PlaneTechs says it “provides more people working on more platforms, in more places than any other contractor company in the U.S.” Simply put, PlaneTechs is not a small business.

But PlaneTechs’ treatment as a small business under NAICS Code 336411 is not the only way in which TrueBlue profits from the SBA’s support for small businesses. TrueBlue’s skilled trades staffing arm CLP claims that it has received “confirmation from the U.S. Small Business Administration that Section (8)a contractors can fulfil the ‘self performance’ requirement of their contracts when they partner with CLP, and use our skilled tradespeople on their jobsites.” They also claim “confirmation that a May 2010 SBA regulation change confers HUBZone eligibility for employees obtained through temporary staffing firms.”

According to CLP: “SBA has provided us with a detailed opinion letter regarding Business Development Procedural Notice No. 8000-63. It states that, ‘The employees of the 8(a) BD participant that are co-employed by a PEO (Professional Employer Organization) arrangement will be deemed employees of the participant for the purposes of applying subcontractor limitations,” with the caveat that  “the following information is not legal advice. It is for informational purposes only and intended to convey information received by CLP from the SBA. Please seek the advice of counsel and/or guidance from your local SBA office to determine the applicability of the SBA opinion letter to your individual situation, before acting or relying on any statement contained herein.”

Troublingly, the SBA could not provide Local 8 with either the detailed opinion letter or Business Development Procedural Notice No. 8000-63, noting that the stated procedural notice did not follow SBA’s numbering convention and could not be located under any predictable numeric variation. SBA Program Analyst Melinda Edwards provided written confirmation that “After extensive research, there are no records found on any such Procedural Notice.”

Whether or not the cited procedural notice and related opinion letter were ever provided to CLP, the company is clearly marketing itself to take advantage of small business contracting opportunities. As outlined by CLP, small businesses can claim CLP employees as their own for the purposes of fulfilling SBA requirements (8(a) and HUBZone). Despite this, CLP is not considered the recipient or even a joint recipient of the contract. Thus, the totality of CLP’s employee count does not disqualify the small business customer from receiving the contract.

Under this construction, otherwise small businesses that partner with CLP are having it both ways: avoiding the costs of hiring their own employees and taking advantage of the resources of a much larger company without the total employment of this larger company coming to bear on its size status determination. But who really profits is TrueBlue, an already successful large business.

Either CLP employees should not count towards self-performance or HUBZone requirements for small businesses, or the use of such employees must disqualify these small businesses from SBA contracts due to the joint nature of employment between the small business and CLP. It is worth noting that a recent NLRB decision has established much broader definitions of joint employment than had previously been in practice. SBA’s policies, opinion letters, and practices may need to be updated to reflect this evolving definition of joint employment.