Policies, procedures and practices on this topic can vary from business to business. All content provided is for informational purposes only.
The title of “Employer” relative to temporary staffing can almost be a game of “Hot Potato” contingent upon the situation. Clients who invite their contingent/temporary workforce to participate in company events and meetings or include them in the distribution of teamwear (sometimes considered employment perks) are undoubtedly doing so to foster a sense of team and inclusion. Aside from these occasional scenarios, many clients are involved more-closely with their contingent team members, providing coaching and counseling, modifying work schedules to accommodate personal needs, or even addressing compensation issues. However, when contingent workers approach clients with issues or concerns rather than their staffing firm (a.k.a., their employer), the lines can become a bit blurry.
Recently the National Labor Relations Board (NLRB) issued a final rule on Joint Employer criteria following a January 12th separate final rule issued by the Department of Labor (DOL) under the Fair Labor Standards Act (FLSA). With the issuance of this final ruling and a narrower definition of the term under the DOL, there’s no better time to remind any “buyer” of contract or temporary staffing services about some of the benefits of letting their staffing agency partner function wholly as the employer for its contract or temporary consultants.
The NLRB has determined that a Joint Employer relationship might exist between a staffing agency, its contract or temporary employee, and its client when “direct and immediate control over the essential terms and conditions of employment” is exercised by the staffing agency AND its client with respect to the contract or temporary employee(s). When this occurs, it poses potential liability for both the staffing agency and their client which could include disputes over unpaid wages (think DOL governance), offers of healthcare coverage, or any labor practice viewed by any party as “unfair”.
So what constitutes “essential terms and conditions of employment”? Here’s a list offered by SHRM (Society for Human Resource Management) in its February 25, 2020 article, “NLRB Issues new Definition of ‘Joint Employer’”.
- Hiring and Firing
- Supervises or controls work schedules
- Sets pay rates
In determining whether or not businesses share liability for federal FLSA violations, the Department of Labor outlined a streamlined “four-factor balancing test” comprised of the first four bulleted items above. Despite what might appear to be very limiting influence by a client over their workplace with respect to its contract or temporary employees, there are also certain exclusions from the list of “direct and immediate control” to support staffing agency customers in operating their businesses including:
- Setting minimal hiring standards.
- Setting minimal standards of performance or conduct.
- Bringing misconduct or poor performance to another employer’s attention.
- Establishing an enterprise’s operating hours.
- Setting deadlines for services.
- Refusing to allow another employer’s work to continue performing work under a contract.
- Maintaining standards that are required by government regulation.
To minimize the perception of a joint employer scenario for staffing agency customers, it is recommended that the staffing agency retain exclusive control over their assigned workers’ pay and work schedules, as well as managing any conversations around counseling or termination of the temporary/contract employee. Further, when approached by a staffing agency’s assigned temporary/contract worker on issues around pay, requests for modified work schedules, or notifications of upcoming personal appointments, staffing agency customers should redirect the assigned worker to their employer, the staffing agency. When in doubt, staffing agency customers are strongly encouraged to partner with their agency representative to address any issues surrounding their assigned temporary/contract workers and to consult with their counsel regarding any practices which might appear to create a joint employer scenario.