Temp and Other Contingent Workers—Laws Still Apply

Discrimination Laws

The Equal Employment Opportunity Commission (EEOC) Enforcement Guidance 915.002 concerning contingent workers clarifies that staffing firms and employers using contingent workers may not discriminate on the basis of race, color, religion, sex, national origin, age, or disability, nor can they ask the medical questions forbidden by the Americans with Disabilities Act (ADA).

Immigration Rules

Contingent workers who are employees must still be authorized to work in the United States. If contingent workers are obtained through an agency that employs them, the agency can be required to confirm the individual’s right to work in this country.

Wage and Hour

Under the Equal Pay Act, differences in pay and benefits between regular full-time employees and contingent employees can suggest unlawful discrimination.

Health, Pension, and Other Benefits

Most contingent employees do not receive benefits because they are not employed long enough to qualify for them. Many insurance policies have provisions limiting coverage to full-time and regular employees. Generally, employees who work 1,000 hours in a pension plan year are considered regular employees under the Employee Retirement Income Security Act (ERISA). The rules governing employee benefits can be very complex and specific, so if you use contingent workers, be sure to consult your benefits administrator about which rules apply.

FMLA

Contingent workers, other than independent contractors, may be covered under the Family and Medical Leave Act (FMLA) if they were employed for at least 12 months and if they worked for the employer for more than 1,250 hours in the previous 12-month period.

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Union Rights

The National Labor Relations Board (NLRB) has ruled that temporary workers may not join the union at the site of employment unless both the staffing agency and the employer agree (H.S. CARE, LLC, d/b/a Oakwood Care Center, 343 N.L.R.B. 659 (2004)). The NLRB reasoned that unlike permanent employees, temporary workers are employed by both the staffing agency and the employer. Therefore, both employers must consent before temporary workers can join the bargaining unit at the employer’s site.

Joint Employers

An agency and the user-employer may be considered joint employers and be held liable for an employee’s workers’ compensation, discrimination, or OSH Act claims. The definition of “joint employer” varies from state to state, but the overall test is the amount of day-to-day supervision exercised by each employer. If found to be joint employers, both may be responsible for claims filed under:

• Wage and hour laws. While the agency is usually held responsible for wage and hour issues, the FLSA imposes joint obligations if the employee works for two employers in 1 week.
• Employment taxes. The agency is responsible for deducting taxes from employees’ pay. Companies that fail to withhold from contingent workers who are actually employees may encounter problems with the Internal Revenue Service. Independent contractors are responsible for paying their own taxes.
• FMLA. The FMLA specifically applies to temporary or leased employees, stating that joint employment will typically exist in those relationships. Employees in joint employment relationships must be counted by both entities for purposes of coverage under the FMLA. Generally, however, temporary agencies and leasing firms will be regarded as the primary employers and are responsible for notifying the employee, providing leave, maintaining health benefits during leave, and restoring employment following the leave.
• ADA. Both the agency and user-employer are required to reasonably accommodate a worker with a disability.
• Workers’ compensation laws. Whether a contingent worker will be considered an employee for workers’ compensation purposes, and is, therefore, eligible for workers’ compensation, depends on state law. In a very general sense, the agency is usually the primary employer of a contingent worker and pays for and receives the benefits of workers’ compensation. However, the user-employer may also be immune from civil lawsuits resulting from accidents, and thus the employee’s remedy may be limited to workers’ compensation.

Many workers’ compensation insurance policies have an “alternate employer” endorsement that provides coverage for contingent workers, among others. Employers that make sure they are added to the agency’s policy will avoid lawsuits from leased or temporary employees injured on the job.

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Managing Contingent Employees

Contingent employees should receive the same orientation as regular full-time employees, where applicable. There should be clear communication channels to convey company policies and performance standards to contingent staff and designated contact persons for them to go to with questions in both the worker’s department and in Human Resources.

In tomorrow’s Advisor, more on contingent workers, plus an introduction to the unique self-audit guide that lets you find compensation problems before the feds do.