Establish a Liability-Proof Contingent Workforce Program | DCR Workforce Blog

Establish a Liability-Proof Contingent Workforce Program

contingent workforce programI ran into an old colleague, who was telling me about her company’s plans to increase the component of contingent workers as a part of their talent strategy. She picked my brains on the issue of co-employment liability, its seriousness, and ways to avoid it. That interaction impelled me to write this post for others who may also be looking for similar insights.


Co-employment is when the same employee or group of employees have a legal relationship with two employers, both of whom have actual or potential legal rights and duties with regard to them. When hiring temporary workers through an agency, it is important to note that the staffing agency is the employer of record and is responsible for meeting all requirements of employment law.

The client can determine the duration of the assignment, control conditions at the workplace and supervise a contractor’s day to day work. The supplier’s obligations would include all activities will qualifying, paying and managing the performance of the worker.. It is necessary for companies to make informed decisions when engaging contractors to avoid incorrectly assuming employer responsibilities that could result in joint liability as a co-employer.

The supplier is responsible for all the following:

  • Screening candidates to ensure compliance with all job requirements
  • Negotiating pay rates, other compensation, and work schedule
  • Communicating client specific rules, hours, and job expectations and maintain personnel and time records
  • Paying the contract worker
  • Withholding the applicable taxes and other statutory deductions
  • Ensuring compliance with OSHA standards
  • Providing workers’ compensation, unemployment compensation and employers’ liability coverage

Addressing all employee performance issues as per the client’s feedback to avoid co-employment liability, we advise our clients to follow these steps:

  1. Develop specific policies for your employees’ use of contract workers.  Define appropriate and ’high risk’ interactions and conversations.
  2. Train your managers on the ‘do’s and don’ts’ of supervising contract workers.
  3. Establish documented processes with staffing agencies that clearly state which parties are responsible for which tasks.
  4. Clearly state in all contractual agreements with staffing agencies that they will be the sole employer of any contract workers retained for assignment with your company.
  5. Require each staffing company to make every contract worker sign a waiver stating that they are not entitled to and will not seek the benefits of your company,
  6. Establish a single point of contact within your company to coordinate efforts and ensure compliance with your company’s temporary worker policies, especially through the on-boarding and off-boarding of contract workers.
  7. Consider using a managed service provider who will ensure complete supplier compliance, reinforce policies, provide continuous training to your supervising managers, and provide an added level of visibility and risk mitigation.
  8. When in doubt, seek the advice of an employment attorney before a problem occurs.

You will find a lot more advise out there on this issue.  While it is impossible to be absolutely sure that there is no risk of co-employment, I personally believe that the best ways to avoid this liability is to establish clear policies supported by pragmatic processes, educate your staff and maintain impeccable documentation which ably supports and demonstrates a strict adherence to the letter of the law.

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.