In last week’s blog we looked at when ‘Independent Contractors’ are really ‘Employees’. Now let’s look at the rules regarding sub-contractors, temporary staffing and leased employees and what constitutes a joint employer relationship with the contractor or leasing agency and the client business.
The use of sub-contractors, temporary staffing, leased employees and independent contractors can provide employers with quick temporary staffing and reduce benefits and payroll costs. However, the employer client can be considered a joint employer with the leasing or temporary agency when they share certain key employment terms such as the ability to hire, fire or discipline the workers, affect their compensation and benefits, and direct and supervise their performance. When businesses use temporary agency, leased, or contract workers, though the employer is the temporary help, leasing, or contracting company, the client business may be regarded as a joint employer under some laws.
The Family and Medical Leave Act has specific language regarding joint employer relationships. While the leasing or temporary help agency is the primary employer, the client company may be required to place the worker in the same or comparable position upon his or her return from FMLA leave. Additionally, leased and temporary workers will count as employees of the client company for the purposes of determining whether a business is subject to the FMLA regulations.
In the Tax Equity and Fiscal Responsibility Act of 1982, leased and temporary workers are the client’s employees for the purposes of qualifying retirement plans and certain fringe benefits such as life insurance and cafeteria plans (does not apply to health insurance benefits), if the workers have been engaged with the client company on a full-time basis for a minimum of one year and the client company primarily controls or directs their work.
An employer can face a charge of discrimination under Title VII anti-discrimination legislation brought by an individual who worked for the employer under one of these leasing or sub-contractor relationships.
It has also come into question with the National Labor Relations Board (NLRB) whether leased and temporary workers must be included in collective bargaining agreements that cover the client’s regular employees.
Some states have passed legislation on joint employer liability as it pertains to workers’ compensation regulation. New York ruled that the client is the common law employer of leased employees and is therefore primarily responsible for providing workers’ compensation benefits. To date there have been no guidelines for joint employer status under OSHA or other health and safety regulations.
Employers need to be aware of and have guidelines regarding the degree of control they have over these temporary, leased and contract workers. The greater the degree of control, the greater the likelihood that the employer could be determined to be a joint employer.
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