Many US companies turn to temporary or contingent workers when they need additional talent for seasonal or short-term assignments. Other companies running lean from hiring freezes and layoffs are reluctant to commit to hiring regular employees in jittery economic times and are simply more comfortable with the flexibility contingent workers are perceived to provide.  

But who will be responsible for any legal liability arising out of contingent worker relationships? Contingent workers are protected under US Federal and State employment laws, including those regarding wage and hour practices, workplace harassment and discrimination, immigration and leaves of absence, provided their employers are of sufficient size. Most end user companies trust that these legal issues are not their problem simply because the workers are not their employees. Under the law, however, companies and their staffing agencies are often found to be joint or co-employers of temporary workers. The legal definition of “employer” is not based solely on who is listed on the paycheck; an employer is the person or entity who has the right to exercise control over the worker’s employment. Because the end user companies direct the activities of temporary workers, they can be deemed to have that control over people who are on paper employed only by the staffing agency. That means that they can be held jointly and severally liable for damages including lost wages, future wages as well as pain and suffering in certain employment government agency proceedings and lawsuits filed by contingent workers. As a result, the worker can look to either the end user or the staffing agency alone, or both combined, to pay any award or judgment.  

Companies using temporary workers can take steps to anticipate and minimize these risks, including:

  1. keeping an eye on when and for how long temporary workers are engaged. The company might also consider whether a waiting period between assignments to the company is appropriate. If a temporary worker is assigned to one company for an extended period of time, the person may more credibly assert that he is really an employee of that company who has been artificially misclassified as a temporary worker.
  2. training supervisors and managers to prevent and address discrimination and harassment in the workplace. The training should specifically address the complaint reporting procedures for regular employees as opposed to temporary workers. Temporary worker complaints should be elevated to the staffing agency for follow-up as appropriate i.e. specifically not treated the same way as a “normal” employee. The end user should nonetheless cooperate with the staffing agency and involve counsel as appropriate to ensure that complaints are seen to be investigated and that appropriate action against the ffending member of its staff is taken when necessary.
  3. expressly leaving disciplinary action, performance evaluations, compensation adjustments and benefits matters to the staffing agency.
  4. making sure that workers record all hours worked, do not work “off the clock” and take meal and rest periods consistent with legal requirements.
  5. remembering that temporary workers will be counted when determining company headcount for Family and Medical Leave Act purposes while understanding that requests for accommodation and leave should be directed to the staffing agency.
  6. ensuring that indemnification provisions in staffing agency agreements cover employment practices such as wage and hour and Immigration Reform and Control Act compliance. While companies are generally not responsible for the I-9 (immigration) form compliance of the staffing agencies they contract with, if the company knows that a worker is not authorized, it is nevertheless subject to liability for knowingly employing him