Have you ever been tempted to use a “temp agency”? An increasing number of businesses are now using a temporary employee agency to fill company positions. Business owners are drawn to the many benefits these agencies can provide such as payroll, worker’s compensation benefits and screening of potential employees. But, what are the legal responsibilities for these temporary staff members? Have you ever suspected that there might be pitfalls that businesses should be aware of?
Only some of these possible drawbacks are legal. However, let’s address the potential legal snags. Attorney Cal Keith at Perkins Coie, LLP has consented to respond to the technical aspects of a decision to use a temp agency.. Remember, this isn’t a substitute for paid legal advice, but simply the observations of a legal mind that has been involved with this issue. According to Attorney Keith, because these services are now used by so many employers and because there is confusion concerning the distribution of legal responsibilities and obligations between the employer and the temporary agency, employers seriously need to focus their attention on the legal concerns involving temporary employees and agencies that provide them.
First of all, let’s get one thing straight: Your use of temporary employees does not make you immune from wrongful employment claims or lawsuits filed by those employees. You can be sued for discrimination, wage/hour violation, or any employment law issues by a temporary employee just as you can be sued by one of your regular employees. In situations involving temporary employees, both the employer and the temporary agency are subject to the employment laws. Why? Because both parties exercise sufficient control over the employee that he or she is considered an employee of both under the law. For example, the agency typically pays the employees’ withholding taxes, provides unemployment and worker’s compensation coverage, assigns the employee to job sites, and is able to fire the employee. At the same time, the employer directs the temporary employee’s daily activities, supervises the employees work, controls working conditions, and determines the length of the employee’s workday. Both the employer and the temporary agency can be responsible for complying with employment laws, such as discrimination and wage/hour regulations, and if there is a violation, both will be liable. Then there is the issue of job injuries.
On the matter of comp insurance for temps, David Stephenson, legislative analyst for the National Federation of Independent Business has been quoted as saying, “The onus should fall mostly on the temp agency to carry comp insurance for its workers, but the NFIB recommends all employers carry comp coverage, even the smaller ones exempted by state law.” The bottom line is that if you use temporary employees, you need to be as sure as you can that the agency is complying with all State and Federal employment laws. If you have a contract with the agency, make sure it includes the agency’s agreement to comply with laws that cover issues such as discrimination and wage/hour regulations. Make sure that a temporary employee’s overtime is accurately reported to the agency and that any employment problems are well documented.
Does this mean you shouldn’t use temporary employees? Not necessarily; the advantages of doing so should be obvious. The question is whether or not the additional liability is worth the cost savings. In the long term, a wise entrepreneur will analyze the true benefits and costs, including in the calculation his or her possible exposure to loss.
To get information on workshop and confidential, no-cost business advising for your business call the Business Development Center at383-7290 Central Oregon Community College.
