Contingent Workers: Yours, Mine and Ours | DCR Workforce Blog

Contingent Workers: Yours, Mine and Ours

Recently, DCR began working with a new client whose business employs thousands of contingent workers each year. As we began to review their business practices, a number of issues surfaced. Susan (not her real name), the Human Resources Director, proudly stated that her team establishes strong working relationships with the temp workers. She went on to say that they personally verify all employment and educational credentials. They directly extend offers to successful candidates. They include the contingents in employee reward and recognition programs. The client was truly astonished when we expressed concerns about the client being vulnerable to claims of co-employment and violations of other employment regulations.

The Law of Unintended Consequences certainly is at play here. In an attempt to foster a strong work environment in which they source the best workers, maximize productivity and minimize unplanned attrition, the client took actions that could result in fines and penalties.

In this blog, we will review who should be responsible for what when a company retains a staffing agency to source and place contingent workers.

Contingent Workers

Roles and responsibilities, as indicated above, are governed by a number of Federal and State laws:

  • Co-Employment regulations determined by the Internal Revenue Service address the issue of what is meant by an employer. The employer should conduct all screening, onboarding, payroll, and performance management and termination activities. Since the Staffing Agency that supplied the contingent worker is the Employer of Record, the supplier should solely perform these tasks. When the client takes on these roles, the worker can then claim employment status and be eligible for all benefits offered by that client to its permanent employees.
  • Managing Leave as per the Family and Medical Leave Act (FMLA) is a shared activity.
  • Compliance with the Fair Labor Standards Act (FLSA) and its regulations covering exemptions from overtime pay is the responsibility of the Staffing Agency, serving as the Employer of Record.
  • I-9 documentation under the Immigration Reform and Control Act (IRCA) should be verified by the staffing agency. This also extends to compliance with immigration regulations as per the Illegal Immigration Reform and Immigrant Responsibility Act
  • Accommodations under Americans with Disabilities Act and the Amended Act (ADAA) is a shared responsibility.
  • Meeting the stipulations of the Affordable Care Act on providing Health Insurance falls to the staffing agency, but the client should verify that each supplier is in conformance with this new legislation.
  • Protection of worker rights as per the National Labor Relations Board (NLRB) is a shared responsibility.

As the number of contingent workers is growing by leaps and bounds, the need to ensure regulatory control is also growing equally fast. Ensure that the contract with each staffing supplier clearly articulates and assigns the responsibilities for each aspect of the use of contingent workers.

Now, back to Susan. To assure her team that candidates were properly vetted, DCR revised staffing agency contracts to specify screening requirements and indicated penalties for non-compliance. Our VMS system indicates mandatory questions that must be answered prior to candidate submission, then captures the results of all screening and onboarding actions. Supporting documentation allows Susan and team to be confident that the same level or rigor applied by her team is in place today. We help Susan regularly revisit roles and responsibilities with all supervisors and functions using temporary labor. Her well-informed supervisors establish a highly effective work environment without increasing the risk of regulatory non-compliance. Susan is able to audit all contingent worker related transactions. In her company, the differences between yours, mine and ours is now clear.

The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.