Safeguard Yourself from Joint Employment Liability | DCR Workforce Blog

Safeguard Yourself from Joint Employment Liability

complianceThere are many ways in which an employer could face liability for an employee’s workplace experience. Safety issues, discrimination, and equal pay immediately come to mind.  It is equally likely that an employer will be ensnared in the ‘co-employment trap’. These are situations in which two employers can be held equally liable for the welfare of the same employee due to a loophole in the terms of their contract with another or in the manner in which the worker is managed.

Factors that may be deemed to create a joint employer relationship:

  1. Authority to hire and fire employees, promulgate work rules and assignments, and determine compensation and benefits,
  2. Day-to-day supervision of employees that goes beyond oversight of the completion of work to include  employee discipline
  3. Control of employee records, including information about payroll, insurance, taxes, etc.

Apart from these, the agreement between the two parties could also specifically set out the contractual relationship as a joint employment agreement. This would make both parties liable for any contravention of regulations – in the wage and hour matters as well as for discrimination.

Safeguard Yourself:

When evaluating potential co-employment situations, the FLSA considers “economic reality rather than technical concepts to be the test of employment.”  To avoid co-employment claims, clarify the agreement in writing and then train supervisors on the ‘do’s and don’ts’ when dealing with contract workers:

  • Establish clear contractual terms which indemnify you in the event of any worker violation.
  • Document your instructions to the supplier, obtaining an acknowledgement.  Define clear processes, ensuring that the supplier is solely responsible for candidate screening, negotiating the offer, onboarding and offboarding the worker, and dealing with any performance issues.
  • Audit supplier onboarding and contractor performance procedures to verify compliance with your processes. Make sure that the agency can be held responsible for failing to meet the various employer obligations, like worker’s compensation insurance and the misclassification of workers, if any.
  • Make sure that you share copies of the company’s non-discrimination policy, an affirmative action plan, and a sexual harassment policy, making them applicable to all employees – whether permanent or temporary – against signed acknowledgement.
  • Educate all employees on how to register any potential issue with harassment or discrimination Post notices around the office education of employees of their issues and
  • Let all employees know whom to approach if issues occur.
  • As a condition of assignment commencement, suppliers should have workers acknowledge in writing that the supplier is the sole employer of record.
  • Ensure that the offer to the contractor specifies an estimated end date for the assignment.
  • Train your employees, highlighting the types of interactions and conversations that are appropriate to have with your contract employees and those that open up the company to co-employment risks.

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.