(Bloomberg) -- Apple’s new campus in Cupertino, California, is a symbol of how the company views itself as an employer: simultaneously inspiring its workers with its magnificent scale while coddling them with its four-story café and 100,000-square-foot fitness center. But one group of Apple contractors finds another building, six miles away on Hammerwood Avenue in Sunnyvale, to be a more apt symbol.
This building is as bland as the main Apple campus is striking. From the outside, there appears to be a reception area, but it’s unstaffed, which makes sense given that people working in this satellite office—mostly employees of Apple contractors working on Apple Maps—use the back door. Workers say managers instructed them to walk several blocks away before calling for a ride home. Several people who worked here say it’s widely referred to within Apple as a “black site,” as in a covert ops facility.
Inside the building, say former workers, they came to expect the vending machines to be understocked, and to have to wait in line to use the men’s bathrooms. Architectural surprise and delight wasn’t a priority here; after all, the contract workers at Hammerwood almost all leave after their assignments of 12 to 15 months are up.
It’s not uncommon for workers not to make it that long. According to 14 current and former contractors employed by Apex Systems, a firm that staffs the building as well as other Apple mapping offices, they operated under the constant threat of termination. “It was made pretty plain to us that we were at-will employees and they would fire us at any time,” says one former Hammerwood contractor, who, like most of the workers interviewed for this story, spoke on condition of anonymity because he signed a nondisclosure agreement with Apex. “There was a culture of fear among the contractors which I got infected by and probably spread.”
Apex, not Apple, manages the workers it hires. Apple says it requires contracting firms to treat workers with “dignity and respect.” Following an inquiry from Bloomberg News, the company says, it conducted a surprise audit of the Hammerwood facility and found a work environment consistent with other Apple locations. “Like we do with other suppliers, we will work with Apex to review their management systems, including recruiting and termination protocols, to ensure the terms and conditions of employment are transparent and clearly communicated to workers in advance,” an Apple spokesperson says in a statement.
Buddy Omohundro, Apex’s chief services officer and general counsel, says in an email that his company strives to ensure it’s creating the best possible work experience. “Apex provides multiple avenues for employees to raise concerns, both directly and anonymously, and to have those concerns addressed,” he wrote.
Apex is one tiny part of a sprawling global network of staffing firms working with Apple; it is not even the only firm staffing the facility at Hammerwood Avenue. For Apple Maps alone, workers are spread across several locations in Silicon Valley, as well as in Austin, Texas; London; the Czech Republic; and India, according to people who worked on the project. The operation involves thousands of contractors. At Hammerwood, the population has exceeded 250 at times, although the number fluctuates and Apple declined to give a current count.
Places like Hammerwood undermine the mythology of Silicon Valley as a kind of industrial utopia where talented people work themselves to the bone in exchange for outsize salaries and stock options. A common perception in the Bay Area is that its only serious tech-labor issue is the high cost of living driven by the industry’s obscene salaries. But many of those poorer residents work in tech, too. For decades, contractors and other contingent workers have served meals, driven buses, and cleaned toilets at tech campuses. They’ve also built circuit boards and written and tested software, all in exchange for hourly wages and little or no job security.
In different forms, temporary labor as an alternative to full-time employment has grown across the U.S. economy. Companies in many industries now use staffing firms to handle work once done by full-time workers. The technology industry offers one of the starkest examples of how the groups’ fortunes have diverged. While companies aren’t required to disclose the sizes of their contingent workforces, there’s ample evidence that tech companies use large numbers of contractors and temps. Last year, Bloomberg News reported that direct employees at Alphabet Inc.’s Google accounted for less than half its workforce.
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The treatment of these workers is emerging alongside sexual harassment and military contracting as a principal target of the wave of tech worker activism that’s been building over the past two years. When Google employees staged a walkout last November, many contingent workers didn’t learn about it in advance because they don’t have access to internal mailing lists. A month later, Googlers sent an open letter to the company’s management demanding better working conditions for temporary workers, vendors, and contractors.
The Apple Maps operations staffed by Apex provide a dim view of contract work, according to current and former Apex workers. Some took jobs there with the hope of landing full-time work at Apple—a possibility they said Apex played up—only to find the chances were small. As Apple has faced headwinds in recent months, it has further reduced the practice of converting any contract workers to full-time positions, according to a person familiar with Apple’s operations.
Other Apex workers took the job just to put Apple on their resume. Even that benefit was tenuous. Apex managers initially distributed specific wording they could include on their LinkedIn profiles referring to their employer as Apple, via Apex Systems. Last summer, Apex said they had to remove the word “Apple,” describing their employer only as “A Major Tech Company Via Apex Systems,” according to two former employees.
The restrictions were just one of many reminders of the contractors’ inferior status, right down to the apple design on their ID badges. For direct employees, the apples were multi-colored; contractors got what one described as “sad grey.” It’s common for companies to distribute different badges to contractors, a practice that discontented workers across the industry have seized on as evidence of a caste system. Amber Lutsko, who worked for Apple through Apex in 2017 and 2018, described an opening-day pep talk that aimed to make her feel both honored and excluded. “‘You work at Apple now! You have made it!’” she recalls being told. “‘You’re not allowed to use the gym.’”
The companies of Silicon Valley have created vast fortunes with far fewer employees than the corporate behemoths that came before them. In part, this is because you can replicate software infinitely in a way you can’t with, say, a Model T. But the tech industry was also an early adopter of offloading core functions to contract workers. Tech was quick to embrace contractors because of rapid advancements requiring constant adjustments in the composition of the workforce, according to Louis Hyman, author of the 2018 book “Temp.” All those changes helped nurture Silicon Valley’s ideology of flexibility and speed, first in hardware, then in software and business operations. Hyman quotes a 1993 issue of Apple’s internal magazine that describes the transition away from direct employees to contractors and outsourcing firms as both a “predictable evolution” and “the future.”
Conflict is inevitable in a two-tiered workforce. As far back as the 1990s, Microsoft Corp. contractors challenged their employment status in court and attempted to unionize. In 2014 a group of Microsoft bug-testers won the right to bargain with their employer, a staffing agency called Lionbridge Technologies Inc. Within a few years, Lionsbridge had eliminated all their jobs.
Apple, which has about 130,000 full-time employees, also accepts workers from about three dozen staffing firms, according to OnContracting, a website providing market information to staffing companies. Contracting firms work on iTunes and server infrastructure, handle customer support, and select articles for Apple News. Apex, the largest division of ASGN, a staffing company based in suburban Los Angeles, has provided Apple with a steady stream of mapping technicians, whose jobs consist of checking to make sure that Apple’s software is drawing roads in the right places, or responding to reports of inaccuracies in existing maps.
They’re largely in their early- to mid-20s, and have often just graduated from college. Wages are generally about $25 an hour, which some workers consider generous and others see as stingy. According to the Bureau of Labor Statistics, the 2017 median hourly wage for mapping technicians nationwide was $20.84, while the median per-hour rate for the same jobs in California was $30.61.
Apex employees have access to health insurance, although the premiums are high enough that some people opt not to take it. Because the workforce is young, Apex workers often stay on their parents’ health insurance rather than figure things out on their own.
Apex has also changed aspects of employment suddenly. In November, it cut the maximum amount of paid sick time employees could take annually from 48 hours to 24 hours, saying the policy would go into effect in two days, according to two current employees and an internal email viewed by Bloomberg. The email, which Apex workers received on a Thursday afternoon, inspired a rare moment of collective action. A group of over a dozen workers said they had suddenly fallen ill, and left, according to one current Apex employee who participated in the protest.
“At all times, Apex has provided as much paid sick leave as required by applicable law,” says Omohundro, adding that the company worked to find exceptions in individual cases.
Many Apex employees first heard about the company through LinkedIn. The company trawls the website for people with proficiency in skills for mapmaking like geographic information systems or geography, then messages them repeatedly. Lutsko had worked as an archaeologist and was in between jobs in 2017 when, as she describes it, she basically gave in. “They’re pretty aggressive, so it was easy to take the job,” she says.
At the beginning of the interview process, Apex doesn’t mention the company where people will work. But the revelation can tip wavering candidates over the edge. “They said it was with Apple—they were super hush-hush originally—and I was like, ‘Oh my God!’” says a former Apex worker who started in 2017. “‘That will be on my resume? Bang!’”
The secrecy just made the job seem sexier. Many Apex workers assumed discretion was required because Hammerwood had some connection to self-driving cars. Their own work turned out to be drudgery. Still, they gossiped about the mysterious group of direct Apple employees who also worked on the site. They never knew for sure what those people were up to, since they say managers at Apex kept them from communicating with Apple employees unless it was necessary to do their immediate jobs. One former Apex worker says the contractors weren’t allowed to use the bathrooms on the direct employees’ side of the building.
Complaints about the bathrooms were common. Lines formed outside the men’s rooms, especially around lunchtime, according to former employees. (Because the workforce was predominantly male, the women’s rooms had ample capacity.) Anonymous complaints about inadequate facilities were scrawled on white boards around the office. Twice in 2017, Hammerwood workers filed complaints against Apple with the state’s Occupational Safety and Health Administration, Cal/OSHA. Apple told Cal/OSHA it had examined the situation and determined it was in compliance with the law. There was no mention of Apex workers being discouraged from using certain bathrooms, according to records obtained by Bloomberg News through a public records request. The agency did not pursue the issue.
The working environment was uncomfortable in other ways, according to current and former contractors. Apex managers sometimes broke up unauthorized water-cooler socializing. Several workers say their managers would get notifications if their workstations were idle for too long. “Being monitored like that is super dehumanizing and terrifying,” says one former Apex mapping technician.
If Apex seemed not to trust its workers, the feeling was mutual. They described a hiring process that was misleading in several ways. For one, Apex failed to explain the one-year assignments started with several weeks of training followed by a test, many say. Anyone who didn’t pass was terminated immediately. The company recruited nationwide, so some workers showed up in California, signed leases in one of the most expensive housing markets in the country, and lost their only source of income within a matter of weeks.
There are no reliable numbers on how common such firings were; Omohundro says the “vast majority” of employees complete their assignments. But they loomed large even for those who passed the test. Lutsko says watching colleagues suddenly lose their jobs soured her on her new employer. “I couldn’t handle the arbitrariness of everything,” she says. “The starry-eyed kids straight off the bus from Iowa thinking they’d made it in Silicon Valley straight out of college. The bait-and-switch. The, ‘Oh you didn’t make it through training, please give us your badge now.’”
Lutsko quit before her contract was up. The LinkedIn messages from Apex recruiters persisted. This was common. Two people who Apex had fired said the company periodically pitches them on jobs. “You got rid of me because of my quote-unquote performance, and every three months I get these emails,” says one of them. “It’s insulting, honestly.”
Like any group of people in shared circumstance, workers at Hammerwood bonded. Several former contractors say it was fun to be around with people their own age, and say the odd atmosphere only made them closer. Because many of them were young, new to the area, and not making enough money to live on their own, they ended up pooling resources to rent apartments or houses nearby.
Many people simply moved to similar contracting jobs with other tech firms once their positions at Apple end, so their homes ended up having a mixture of Facebook, Google, and Uber contractors. Several people described the geographic information systems contracting workforce almost as if it were a resource the big tech companies shared. People who left Apple would join the GIS staff at another company and find it was staffed primarily by Apex veterans.
Those who left Apple often say their lives improved. Facebook’s management put signs up around campus reading “Contractors Are People Too,” and contingent workers participated in on-campus arts and crafts activities. Google paid more than competitors and let everyone use the gym, says Nick Wilson, who worked at Apple through Apex, then worked at Facebook, and is now a contractor doing mapping work at Google.
Moving between companies didn’t feel like advancement, says Wilson. “None of the skills I learned at Apple could be carried over,” he says, adding that his managers were indifferent to any attempts by employees to distinguish themselves. “There were many people who took initiative and made things, increased the efficiency. They weren’t rewarded in any way,” he says. “There were people who had abandoned any hope. They’d come in late, leave early, and just do nothing all day. They were treated the same as everyone else.” (Both Lutsko and Wilson declined to discuss the exact nature of their jobs or the building at which they worked, citing their nondisclosure agreements.)
The mood at Hammerwood dimmed late last year, after the changes in benefits and after Apex suddenly fired about two dozen people, according to two current Apex employees. One described the workplace as depressing and quiet, with everyone on edge. “I’m afraid of being too social because they might see that as not working hard enough,” he says. “Apex handles all terminations in a sensitive and confidential manner,” says Omohundro. “The company does not share the details of employee terminations, regardless of whether they are for cause or not for cause.”
Activists associated with the burgeoning labor movement in the tech industry say the contracting workforce is ripe for organization, but acknowledge it’s been challenging to organize white-collar workers. “It’s a new concept,” says Yana Calou, an organizer at Coworker.org. Information workers have been more reticent than security guards and cafeteria workers to confront tech companies because they’re angling for full-time work, says Calou. “I think there’s the tiny idea of, ‘I’ll be the exception that squeezes through.’ ”
That feeling eventually wears off. One former Apex worker, a 32-year-old who lives in the maid’s quarters of a house with eight roommates, says years of uncertainty have left him worn out. “How are you supposed to plan for your future if your job has an expiration date?” he says. He’s a California native who moved to San Francisco over a decade ago, got a master’s degree, and internalized Silicon Valley’s brand of optimism. But that evaporated at Apple’s so-called black site. “It sounds good when you say you work at Apple, but when you’re not being paid the same amount, and you’re not treated the same way, it gets old quickly,” he says. “I don’t see why they don’t just hire someone and give them a stake in the company.”
—With assistance from Josh Eidelson and Mark Gurman
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