Screen the Staffing Agency: Liability When Hiring Temporary Workers

Posted by BAS - 26 May, 2016

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After a Department of Labor investigation, two companies based in Philadelphia, PA were fined for minimum wage violations. The fines resulted from the use of staffing agency temporary workers. The staffing agency didn’t pay workers at the proper federal minimum wage rate, didn’t pay overtime at the appropriately calculated rate (or at all in some instances), and paid workers in cash. The companies agreed to pay nearly $763,000 in back wages and other damages.

Many companies today engage staffing firms to manage fluctuating staffing needs or to preview workers before hiring.  While there are benefits to companies for using staffing agencies, there are also risks, liabilities, and potential costs that should be considered.

Employers are responsible for ensuring a work environment free from harassment and discrimination, even for temporary workers.  Because a staffing worker is at the employer’s worksite, using the employer’s supplies and working for the employer, many federal laws apply.  The EEOC has stated that there is a shared liability between the employer and the staffing agency for compliance with EEOC rules. 

Utilizing temporary workers can also impact whether an employer is subject to Family and Medical Leave Act requirements. While employers don’t have to grant FMLA leave to temporary workers, they do have to count the temporary workers among their headcount when determining if they meet the 50 or more threshold for compliance with FMLA. The National Labor Relations Board, (NLRB) considers employers and staffing agencies to be joint employers under the National Labor Relations Act, which means that employers can be held liable for unfair labor practices committed by the staffing agency towards the temporary workers the employer has engaged for services.

When considering whether or not to utilize a staffing agency, employers should consider their employment environment and legal liabilities. Employers will also need to ensure they take the extra time to properly vet their contractors and ask questions about how they conduct business. Do they comply with all Federal, State, and local employment laws? Are staffing agencies members of the American Staffing Association? Do they carry workers compensation insurance? The last thing you want is to suffer a hit to your bottom line because you didn’t take the extra time to screen the screeners.

Litigation across the country has set precedent and legislation continues to change the employment dynamic, which varies from state-to-state. In California for example, employers can be considered liable for labor code violations committed by their labor contractors, regardless of whether or not they participated in the violation or have direct control over those actions.


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