The interplay between staffing agencies and client companies continues to be a common source of litigation, including an increase in cases under the Family and Medical Leave Act (the "FMLA"). Following on the heels of a Fifth Circuit ruling clarifying the FMLA obligations allocated to each of the staffing agency and client company, an Oklahoma district court recently evaluated a similar case. This court considered whether the hours a temp-to-hire employee worked at the client company before being directly hired from the staffing agency count towards the requirement that an eligible employee work 1,250 hours prior to FMLA leave. In Miller v. The Nordam Group, Inc., the Northern District of Oklahoma concluded that those hours must be counted, and that the contractual agreement between the client company and staffing agency could not control this issue. No. 12-CV-563 (N.D. Okla., Nov. 19, 2013).
The plaintiff, Sharon Miller, had worked as a temporary employee for Nordam for approximately ten months before being hired on directly as a Nordam employee. A few months later, Miller requested FMLA leave, and was denied. Miller took time away from work and was subsequently terminated. She ultimately filed suit; Nordam contended that she was not eligible for FMLA leave because she did not work the required hours after she was hired as a Nordam employee, urging the court to discount the hours worked as a temporary employee.
The district court roundly rejected the interpretation advanced by Nordam, finding that the hours worked for Nordam both directly and through the staffing agency must be counted. Noting this is a “typical staffing agency situation,” the client company and staffing agency are joint employers for this purpose. Most interestingly, the court rejected Nordam’s attempt to rely on a contractual provision between it and the staffing agency stating that Miller was not an employee of Nordam. The court clarified that “contractual language is generally not controlling as to the issue of joint employment” and relied upon the fact that Nordam set the work hours, supervised the day to day activities, and had the power to end the assignment to find that it was, in fact, a joint employer during Miller’s temporary employment.
The practical impact of this ruling on companies that utilize staffing agencies is that companies cannot rely on the staffing agency to insulate them fully from any potential liability. Contractual provisions purporting to determine the employment relationship will not be honored if the circumstances relating to the employment suggest a joint employment relationship and, given that the client typically directs the daily activities of the work force and can cause a worker to be removed from an assignment, the circumstances necessary are frequently found to exist. The joint employment relationship must be recognized and considered when making employment decisions.