Don’t Let A Joint Employer Relationship Sink Your Staffing Firm

As most of the RBC community knows, I like to scavenge the internet for random articles of recruiting interest. Among my travels I came across this gem that all staffing agencies need to know. Attorneys Jason Kim and Sonya Rosenberg contributed to an interesting article on entitled - Legal considerations to avoid disaster when hiring summer temps.


I found this nugget of interest:


A joint employer relationship between an employer and its staffing agency can have a number of important consequences. For example, both the employer and the staffing agency may incur liability related to temporary workers under federal and state anti-discrimination laws, a state’s workers’ compensation statute, federal immigration laws, and minimum wage and overtime laws.

Thus, an employer should never simply assume that the responsibilities owed to temporary workers have been fulfilled by a staffing agency. Instead, prior to engaging an agency, the employer should do its due diligence and check available records to ensure that the agency is a responsible company, and also require the agency’s appropriate written assurances of compliance and indemnification for non-compliance.

If feasible for the employer’s business, the following tips should help minimize potential exposure from contracting with staffing agencies for temporary workers:

  • Do not direct or control the temporary workers; the agency should retain that exclusive right. Relatedly, consider having the agency provide its own on site supervisor to oversee the temporary employees’ work.

  • Do not directly negotiate temporary workers’ wages or time off. Rather, work through the agency.

  • Do not routinely include temporary workers in the functions, perks, or facilities intended for employees only.

  • Limit the duration of a temporary worker’s assignment.

  • Do not directly terminate a temporary worker. Request that the agency handle any disciplinary issues with the temporary staff.

  • Before entering into a contract with the agency, review the agency’s anti-discrimination and anti-harassment policy and complaint procedures.

  • Verify the agency’s compliance with laws relating to payroll taxes, income taxes, and immigration. Include a clause in the contract allowing the employer to terminate the relationship if the agency violates these or other laws.

  • Verify that the agency conducts appropriate criminal background checks before assigning its workers.

  • Include a contract clause disclaiming the employer’s control of the temporary workers and disclaiming the existence of a joint employment relationship, and impose the obligation to indemnify and defend so that the agency pays the employer’s legal costs stemming from the agency’s noncompliance.

  • Conduct periodic internal audits of agency contracts to ensure these properly define the employer’s relationships with staffing agencies.

  • Be mindful of state laws that impose additional requirements on companies utilizing staffing agency workers. In some states, companies can be held jointly responsible for an agency’s failure to pay wages to its temporary workers.

Have any RBC members that have been part of a temp staffing agency been burned by this? Where a miss communication along these lines got your firm in hot water? What are some of the things as a recruiter working on temporary placements that you make a must before engaging with a new client?

Here is the link to the full article. I would be interested in hearing what other think on this topic.

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