Do you use contractors and sub-contractors or staffing agencies to augment your workforce? Suppose one of those contractors’ employees is mistreated or perceives s/he was mistreated by you or one of your employees? What if s/he was not paid all of his/her wages? Is s/he entitled to benefits? Was s/he denied FMLA leave or a reasonable accommodation under the ADA? What if s/he engages in misconduct that results in harm to another? What does that matter to you? They’re not your employees, and so these issues are not your responsibility right? Not so fast! You may in fact have some responsibility here. Welcome to the wonderful world of co-employment! Join The Emplawyerologist after the jump as we begin the first installment on this new and often confusing topic!
How can someone have more than one employer? If more than one person or entity can be an employer to the same person or group of people how does one determine who is responsible or liable in different scenarios? Is your head spinning yet? In this post we will begin answering these questions. Let’s first define co-employment and look at some of the common misconceptions about co-employment. In upcoming posts we will get a taste of when co-employment issues may arise and how courts have looked at these issues, and, of course, discuss some practical steps you can take to minimize your exposure.
So, what in the world is co-employment? Who is a co or joint employer? Co-employment is a relationship between two or more companies, in which both have rights and obligations as an employer. It arises when a worker has two or more supervisors who exercise real or potential control over a worker’s manner of performance and workplace activities. Co-employment liability, is in essence, liability of one co-employer for the actions or omissions of another. Situations in which co-employment can arise include without limitation : a) between parent and subsidiary companies; b) between contractors and sub-contractors; c) between staffing companies and their clients. (This one is probably the most common.) and d) between Professional Employer Organizations (PEO’s) and their clients .
The concept of co-employment is at best poorly understood, even by attorneys and those in the staffing and PEO sectors. Myths and misconceptions abound! Here are five of the most common myths:
Co-Employment Increases the Risk of Litigation: The truth is hiring temporary employees or sharing employees with a parent, subsidiary, contractor or sub-contractor is no more risky than hiring additional direct employees that are not also employed by another person or entity. Access to courts is a reality, regardless of the specific employment arrangement, and employers will not avoid lawsuits entirely. The key is minimizing losses. Companies do not lose lawsuits solely because they are co-employers. Companies lose employment cases when they base their decisions on illegal criteria. The key then, is ensuring proper decision-making, which we will see in upcoming posts.
- Using temporary workers or a variant, automatically creates a co-employment arrangement: In reality, use of temporary workers or a variant, in and of itself does not create co-employment. Exercising sufficient control over the workers triggers co-employment. (More on this in upcoming posts.)
- Being declared a co-employer automatically means damages: The fact is that damages are triggered by decisions that are based on illegal criteria or by negligent or willful misconduct. When joint employers work together to ensure appropriate decision-making and conduct, damages cannot be awarded.
- Imposing assignment term limits will prevent a finding of co-employment: The truth is that length of assignments are only one of several factors in determining whether there is a co-employment arrangement.
- All companies using contingent (temporary) work staff are at risk of a Microsoft –type situation: In reality, Microsoft failed to think about exactly how it was using its contingent workers and failed to review its benefits plan. Had it been proactive in these areas the case very likely would have ended much differently.
Whether or not you are a co-employer will be determined largely by whether you exercise control over the employee(s) in question, and if so, how much. If you use a staffing agency, and the temporary employees work on your premises under your or your company’s supervision, direction and control, you are likely a co-employer. If so, you and the staffing company can be liable for certain violations. Similarly, in the case of a parent and subsidiary company, when the parent “loans” an employee to a subsidiary, both may have employment liability toward the “loaned” employee. Why should more than one person or company be “on the hook”? The rationale is that one who exercise rights or privileges of an employer must also shoulder responsibilities of an employer.
What type of co-employment issues can arise? Truthfully there are many, but here are some of the more common ones:
- Discrimination (race, gender, religion, disability, sexual orientation, harassment);
- Wage and hour;
- Workers’ Compensation;
- Workplace Safety;
- Property or other damage allegedly caused by temps;
- Employee benefits;
- Family and Medical Leave;
- I-9 issues;
- Background Checks.
- Collective Bargaining
The Emplawyerologist will be exploring some of these issues in upcoming posts, so c’mon back next week to learn more!
On a totally different note, remember our recent wage and hour foray–specifically discussion of “donning and doffing” cases? (Click here for review). At the time of writing that post, we were awaiting a decision from the US Supreme Court in Sandifer v. US Steel. The Supreme Court handed down a decision this past Monday, ruling that donning and doffing time was not compensable. Since it has held previously that such time is, what was different here? The FLSA allows for exclusion of time spent changing clothes when a collective bargaining agreement is in place. The employees argued that the items in question were not “clothes”. The Supreme Court wasn’t having any of that and decided that the gear and items worn were clothes that the activities were “changing clothes” and because there was a collective bargaining agreement that excluded time spent changing clothes, donning and doffing time, under these facts was not compensable. Click here if you wish to read the opinion.
That’s all folks! “See” you next week!
Disclaimer: This post’s contents are for informational purposes only, are not legal advice and do not create an attorney-client relationship. Always consult with competent local employment counsel on any issues discussed here.
Click here to learn more about Janette Levey Frisch, author of The Emplawyerologist.
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