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LITTLER MENDELSON, P.C.
How to Manage Contingent Workers
Please NoteThe law can change dramatically overnight by a new court decision or statute.Laws and court decisions can be state specific or even city specific. Managers and supervisors should consult legal counsel for advice for specific situations.
What Is the “Contingent Workforce”?
It’s not a formal legal term. It covers workers who are not the traditional, directly-employed, full-time personnel of “using” organizations.
The “using” organization here is you.
Contingent workers include temporary employees, leased employees, payrolled employees, independent contractors, and consultants.
The term may sometimes include part-time or seasonal employees directly employed by the using organization, but they will not be included in what we will discuss today.
Employer Status
Many contingent employee issues call for an answer to the question, “Who is this person’s employer?”
The answer could be: the using organization, the using organization’s customers, a staffing organization, a separate workforce management company, or combinations of two or more of these potential employers.
With contingent employees, there are two employers for some purposes. This is called “co-employment.”
Why Employer Status Matters
Employers have duties to the workers and to government agencies.
When employer status is split between two or more employers, the duties may be divided up as separate responsibilities or be shared by all.
Because you represent your company in its role in connection with contingent workers, you should want to know which duties you have.
You should also want to avoid taking on the duties of another co-employer or an independent contractor.
Employer Status Depends on Facts, Context, and Legal Issues
Pay purposes – Customer liability may back up the obligations of its staffing firm
Benefits – determined by the contingent worker’s employment terms, consistent with written plan documents
Worker’s compensation – staffing firm provides coverage, but both the staffing firm and its customer are exempt from suit outside worker’s comp system
EEO and anti-discrimination laws – everyone must respect civil rights; technical employer status not key
Employer Status Depends on Facts, Context, and Legal Issues
Unemployment compensation – staffing firm handles
Labor union laws – The customer and staffing firm have duties, but workforces are separate for bargaining
Responsibility for injury to others – depends on what the customer and staffing firm knew, did, and controlled
Safety obligations – for most purposes, is the customer’s duty, because of control of the workplace
Employer Status Determinations
Although the legal tests vary, employer status tracks the employer’s knowledge, control, and economic interests.
The law imposes employer duties and liability whenever the facts and circumstances show enough connection with a worker to justify imposing a legal duty to the worker or a responsibility to others for the worker's conduct.
Courts and agencies don’t have to follow contract language that defines or limits the employment relationship. (In other words, “Saying it doesn’t make it so!”)
Co-Employment Defined
Co-employment is a situation in which an employee has an employment relationship with two or more employers with respect to the same work.
Co-employment is inherent in the relationship between a customer and its staffing firm, and it’s a good thing.
The cost, flexibility, support, and other advantages of flexible staffing outweigh any co-employment risks -which can be minimized with proper management.
How Does Co-employmentCome Up?
You can’t “commit co-employment” or be sued for co-employment.
Co-employment never travels alone. It is always attached to some other employment law issue.
A lawyer’s definition might be that co-employment is a theory used by government agencies and plaintiff’s lawyers to bring additional defendants into employment disputes.
But if you don’t have basic employment law issues, you won’t have co-employment law issues.
General Discrimination Issues
You and your staffing firm are both responsible for maintaining nondiscriminatory practices toward the entire workforce. However, some supervisors may believe that temporary employees and contractors are “fair game.” Fostering a culture of fair treatment of all workers is important.Discrimination flourishes in isolation. The additional eyes, ears, and knowledge that the staffing firm provides may protect you from some exposures. The staffing firm should work closely with its customer in the management of discrimination incidents and formal complaints.
Some Special Discrimination Issues
Sexual Harassment – You are responsible for the actions of your direct employees and for maintaining a non-hostile environment – no blaming the victim.Disabilities – Reasonable accommodation is a shared duty.Safety – You and your staffing firm have different responsibilities, but immediate safety issues trump the tradition of staffing firms counseling their assigned employees.
Managing Assignment Tasks v. Managing the Employment Relationship
Staffing firms and their customers divide co-employment duties according to their respective businesses.
When an issue of responsibility comes up, ask “Whose business is it?”
If it’s your business – the operational part of employing the contingent workforce – it’s your duty.
If the business is staffing – the HR part of employing the contingent workforce – it’s the duty of your staffing firm.
Co-employment Do’s and Don’ts
Make sure that your benefit plans, compensation plans, fringe benefits, and other policies and plans clearly distinguish your direct employees from contingent employees and that they exclude all workers except your direct employees.Foster a culture in which temporary employees are dealt with as if they had the same rights as direct employees (since, for the most part, they do.)
Co-employment Dos and Don’ts (continued)
(The following are additional co-employment factors. You don’t have to do all of these the “right” way, but exceptions should have good reasons.)– Do let the staffing firm do the recruiting,
screening, selection, and assigning. Resist the temptation to become part of the hiring process. An exception to this is “payrolling,” where by design or by circumstance you do the recruiting.
– Do let the staffing firm, as the payroll employer, determine the exact wages and benefits of the assigned workers. You and your staffing firm agree on the bill rates to be paid.
Co-employment Dos and Don’ts (continued)
Do bring performance and discipline issues to the staffing firm. Allow it to deal with contingent employees.
Do include staffing firm employees in your business and social events, except for gatherings that are specifically for your direct employees only (like benefit plan rollouts). But funnel the social invitations through the staffing firm.
Do have distinctive badging and identification for contingent workers.
Do refer separately to the contingent worker populations in announcements, memos, etc. that affect them.
Co-employment Dos and Don’ts (continued)
Don’t make contingent employees report their tardiness or absences to your supervisors. Let them call the staffing firm, who will call you and work with you on disability and family leave issues.
Don’t change a contingent employee’s overall work assignment (manager, location, job code, etc.) without consulting with the staffing firm. In addition to co-employment concerns, that creates pay/bill rate and worker’s compensation issues.
Don’t let supervisors create in contingent workers the impression or expectation of direct employment with you.
Co-employment Dos and Don’ts (continued)
Don’t present your benefit plan information to contingent workers.
Don’t reimburse expenses directly to contingent workers. Do it through the staffing firm.
Special fringe benefits, if any (like employee discounts and health facility privileges) could be “purchased” by the staffing firm for its employees rather than being made available to them directly by you.
On-site presence by a staff employee of the staffing firm is helpful.
Other Co-employment Factors(continued)
Stated end dates for assignments, when they are known, are helpful. They do not need to be iron-clad; they can be extended if necessary.Orientation brochures and other communications can disclose and reaffirm the staffing firm’s role as principal employer of the assigned employees.Written waivers of your benefits by contingent employees and contractors can help immunize you against claims for your benefits.
Independent Contractors
Independent contractors are separate businesses and not your employees, even if they consist of only one person.
They essentially employ themselves and/or others and usually promise results, instead of just selling work time managed by using organizations, as staffing firms do.
Co-employment does not exactly apply to them, but the dos and don’ts of not treating them as your employees are still a good road map for dealing with them. Some of the things that you can “do” with temporary employees are not appropriate with truly separate independent contractors serving you (such as inclusion in social events).
Additional Resources
Equal Employment Opportunity Commission’s Enforcement Guidances on Contingent Workers: In general:http://www.eeoc.gov/policy/docs/conting.htmlFor the Americans with Disabilities Act: http://www.eeoc.gov/policy/docs/guidance-contingent.htmlHandout: “Short Course in Co-employment and Independent Contractors”
Questions?
Thank Youfor your time
COPYRIGHT 2011, LITTLER MENDELSON, P.C.
