Cost-conscious employers often call on staffing agencies to fulfill workforce needs and to handle aspects of the administrative side of employee relations.
But employers should be aware that the use of temporary workers can pose a number of unanticipated difficulties. Temporary workers can misunderstand that the worker’s actual “employer” is the staffing agency, not the employer using the services. Employers also may think that they can avoid anti-discrimination laws by using indirect hiring through staffing agencies, but they may still face legal exposure as a “co-employer.”
Here are five tips to help employers avoid potential pitfalls while they navigate this tricky terrain.
1. Work only with reputable staffing firms. These firms will understand the nuances of co-employer relationships, and will appropriately classify employees under the Fair Labor Standards Act for the purposes of paying overtime.
2. Document your agreement with the staffing agency through a written contract. The written contract should identify who is responsible for various aspects of the employment relationship, including unemployment taxes, Medicare contributions and compliance with various laws, including the Fair Labor Standards Act, which governs overtime payments.
3. Ensure that the staffing agency controls all aspects of the employment relationship with temporary workers. The staffing agency should set the hours of work, provide training, negotiate pay rates, address disciplinary issues that may arise and terminate the worker when necessary.
4. Do not treat temporary workers as “employees” of the company. Do not provide them with business cards, employee ID badges, employee handbooks, access to corporate facilities (such as gyms) or other materials provided to employees.
5. Assume that you have to comply with anti-discrimination and similar laws with respect to everyone — even temporary workers. All employment decisions relating to all workers — including temporary workers — should be entirely unrelated to race, gender, religion or other protected classification. Similarly, if the staffing agency bills you for overtime worked by a temporary employee, make sure that the staffing agency actually pays its workers, and consult your written agreement to determine if the overtime was billed appropriately.