Updated in July 2022.
The title of “joint employer” relative to temporary staffing can almost be a game of “hot potato,” depending on the situation. Companies who invite their contingent workforce to participate in company events and meetings or include them in the distribution of team wear are undoubtedly doing so to foster a sense of comradery and inclusion.
Aside from these occasional scenarios, many vertical joint employers are involved more closely with their contractors, such as providing coaching and counseling, modifying work schedules to accommodate personal needs, or even addressing compensation issues. However, when contractors approach you with issues or concerns rather than your staffing firm (a.k.a., their employer), the lines can become a bit blurry.
What Is a Vertical Joint Employer?
A vertical joint employment is when an employee is employed by one entity but is financially dependent on another entity involved in their work. One of the most common examples of this is when a company partners with a staffing agency to locate a temporary employee for their business. The staffing agency will then locate and employ that temporary talent but they will be working on your projects.
Cautions of Joint Employment
The National Labor Relations Board (NLRB) has determined that a joint employer relationship might exist between a staffing agency, its contract employee, and your company when “direct and immediate control over the essential terms and conditions of employment” is exercised by the staffing agency and your company with respect to the contract employee(s). When this occurs, it poses potential liability for both the staffing agency and your company which could include disputes over unpaid wages (think DOL governance), offers of healthcare coverage, or any labor practice viewed by any party as “unfair”.
Here is a list of what constitutes as “essential terms and conditions of employment:”
- 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 your business over your workplace with respect to your contract temporary employees, there are also certain exclusions from the list of “direct and immediate control” to support you 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
Leave It to the Staffing Firms
To minimize the perception of a joint employer scenario for your business, it is recommended that the staffing firm retain exclusive control over their assigned workers’ pay and work schedules, as well as managing any conversations around counseling or termination of the contract employee. Further, if you are approached by a staffing agency’s assigned contract worker on issues around pay, requests for modified work schedules, or notifications of upcoming personal appointments, you should redirect the assigned worker to their employer, the staffing agency.
When in doubt, you are strongly encouraged to partner with your agency representative to address any issues surrounding their assigned contract workers and to consult with their counsel regarding any practices which might appear to create a joint employer scenario.
Are you interested in bringing on contractors for upcoming projects? Contact our team at ITAC to learn more about how we can find you the best talent for your needs.