Category Archives: Joint Employment

12.18.23
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How to Handle Background Checks for Staffing Agency Workers (and Avoid a Stinky Mess)

After a stolen SUV crashed in Wisconsin and its four occupants fled, one made the unfortunate decision to hide in a golf course port-a-potty. A golfer watched the events unfold and decided to take action, flipping the port-a-potty on its side, door facing down, to trap the car thief inside. (Oh, crap!) Police then arrived on the scene and arrested the now-stink-covered occupant.

Today’s tip is to help you avoid a stinky situation when requiring vendors to background check their workers.

When working with staffing agencies or other vendors supplying labor, you’ll often want to require background checks. But you have a few competing interests, so it matters how you impose this requirement.

First, you probably don’t want to do the background check yourself. For joint employment reasons, you don’t want to play a role in hiring and selection and, for practical reasons, you don’t want to adjudicate background check results on all of the vendor’s candidates. Require them to do the initial screening.

Second, it would be easy to provide the vendor with a list of automatic exclusions, but you don’t want to go there either. Background checks laws generally require an individualized analysis to be done. Avoid creating a “no hire” matrix.

So how can you make sure the vendor conducts an appropriate review of the results and doesn’t send you a worker with a concerning criminal history?

Here’s the strategy I prefer:

1. Require the vendor/staffing agency to perform the background check.

2. Require that they adjudicate the results.

3. But, also require that if they want to place anyone with a prior conviction for theft or violence, they must first notify you and provide a copy of the report and any additional information provided by the candidate.

4. Require that the vendor/staffing agency follow all background check laws.

5. Require that the vendor/staffing agency obtain consent from each candidate to share the results of any background check with your company. They should incorporate that concept into their consent document.

Here’s why I like this process:

First, as a practical matter, a vendor with this arrangement is very unlikely to send you anyone with convictions for theft or violence. They’ll prescreen those out because they know that’s a concern for you.

Second, if the vendor wants to advance someone with one of these convictions, it means one of two things: (a) there may be mitigating factors with this candidate that would support allowing the person to work, or (b) the vendor is being lazy, sending everyone through without running the first level adjudication you’ve required.

If (a), that’s good information. Conduct a second level adjudication. Consider mitigating factors. See how the candidate responds to a pre-adverse action notice. Avoid automatic exclusions and consider whatever facts the candidate provides.

If (b), you need to have a talk with the vendor because they’re not performing the first level adjudication that you’ve required. If you didn’t have this kind of notice process, you might never have known the vendor was being lazy in the adjudication process.

There are several decision points in drafting this kind of clause, but the points listed above are the main items to cover. Variations in drafting may focus on the timing of the convictions, the types of convictions to identify, whether to include drug testing or motor vehicle records checks, and which party performs various tasks related to pre- and post-adverse action notifications.

You’ll also want your contract to make clear that any decision you make that a candidate cannot be placed at your company is not a decision about their overall employment status with the agency. The agency can do what it wants with the person’s employment. All you’re saying is that the agency can’t assign that person to work for you.

By including a process like this in your agreements with staffing agencies and other vendors that supply laborers, you can stay on the right side of the background check law, manage joint employment risks, and still have the opportunity to block candidates who have a criminal history that creates unacceptable risk.

It’s too bad that future background check results for the car thief who got stuck in the port-a-potty won’t include that level of detail. Not that it would make a difference in screening out someone who steals cars, but it would be a fun detail to know. Yuck!

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© 2023 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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11.20.23
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Tips for Avoiding Liability for Injuries by Contractor Employees, Thanks to Laura Branigan

Raise your hand if you remember songs by Laura Branigan? How about “Gloria”? Or this lyric? You take my self, you take my self control?

The song “Self Control” is about stepping into the nightlife, with a bit of seedier, seductive angle. The lyrics, though, remind us of another reason not to exert control over an independent contractor’s employees.

Suppose you retain a contractor to replace the roof on your building. The contractor has legitimate employees, and one falls through a weak spot on the roof. That’s a worker’s comp claim, and you’re not liable for some kind of premises liability claim, right?

The answer may depend on whether you’ve exerted control over the contractor’s employees.

Let’s look at California law, but the same principle can often be applied elsewhere. (Check your state’s law.) Under the Privette doctrine, a property owner who hires an independent contractor is liable to the contractor’s employee for injuries sustained on the job only if (1) the owner exercises control over any part of the contractor’s work in a manner that affirmatively contributes to the worker’s injuries, or (2) the employee is injured by a concealed hazard that is unknown and not reasonably ascertainable by the contractor.

The keys points in avoiding premises liability claims are, therefore:

  • Don’t exert control over how your contractors’ employees do their job, and
  • Make sure any hazards are marked or disclosed.

You could have other problems if the contractor misclassifies its workers and treats them as individual subcontractors. But avoiding control can also help you avoid joint employer liability in that situation.

The bottom line here when dealing with contractors’ employees is to avoid Laura Branigan’s idea of the nightlife: Don’t take their self, don’t take their self-control.

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© 2023 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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11.13.23
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No Unions? No Escape: NLRB’s Joint Employer Rule Imposes New Risks on Businesses Without Unions

TikTok star Matthew Lani earned a substantial following as a 27-year old medical prodigy, having graduated high school at age 16 before becoming a doctor. He posted videos of himself walking through a South African hospital, dishing out medical advice to his followers or selling them medication.

Lani, however, turns out not to be a doctor at all. When the ruse was uncovered and authorities went to arrest him, he said he had to pee and then tried to escape through a bathroom window. TikTok later banned his account.

The NLRB’s new joint employer rule has many employers trying to figure out whether they need a doctor or whether they can avoid the rule’s reach by escaping through a bathroom window.

Today we’ll answer questions about how the new joint employer rule affects non-union businesses.

We have no unions. Does the rule apply to me?

Yes, 100% yes. In fact, companies without unions may be most at risk here. If your business has vendors, suppliers, business partners, or even customers with employees, pay attention.

The point of the rule is that if your business exerts any control over any of the listed seven terms or conditions of employment, you’re a joint employer. In fact, the rule makes you a joint employer even if you merely have the right to exert control over one of these seven terms, even if you never do.

The listed terms and conditions are broader than the usual suspects, and they include control over health and safety matters.

If the other company’s workers are ever in your building while doing their jobs, you might be exercising control over their terms and conditions of employment without realizing it. Read more here.

What if the vendor’s employees don’t have a union?

Still yes. The rule may still directly affect your business’s rights and legal obligations.

What happens if I have no unions but am deemed a joint employer of someone else’s employees?

If you are a joint employer under the new rule, here’s what that means:

(1) If the other company’s employees form a union, your business would be required to participate in the collective bargaining process.

You’d be required to bargain regarding any term or condition that you have the authority to control. That could include your site-wide health and safety rules.

(2) If the other company’s employees have complaints about terms or conditions that your business can control, you cannot retaliate against them for raising these concerns.

Under federal labor law, all employees — including those not in unions — have the right to engage in protected concerted activity without being retaliated against.

Protected concerted activity can mean just about anything that involves more than one employee, including actions by one employee that are intended to seek support from other employees. Like an Instagram post or a Glassdoor review. Ending their assignment or asking the vendor to remove them from the project could be considered unlawful retaliation.

But these are not my employees? Why would I have to do these things?

Because joint employment.

The concept of joint employment is that more than one person can be the employer. If your business is deemed a joint employer of another company’s employees, then under the National Labor Relations Act (NLRA), you’re also their employer.

What about wage and hour law, unemployment compensation, and workers comp? Would I be a joint employer under those laws too?

No. The new NLRB joint employer rule applies only to the NLRA. Other laws have other tests for determining who is a joint employer.

You can be a joint employer under the NLRA and not a joint employer under other laws. But a finding of joint employment under one law could make it more likely that your business is deemed a joint employer under other laws — particularly if you comply with the new NLRB rule by, let’s say, participating in collective bargaining.

Do I need a real doctor, or will a TikTok doctor be good enough?

All businesses should pay attention to the new NLRB joint employer rule, even if you don’t have unions.

Proactively evaluate your risk of joint employment under the new rule. The whole point of the law is that you may be an employer of other workers without realizing it.

And you can’t escape the reach of the rule by climbing through a bathroom window.

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© 2023 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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11.06.23
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This Will Not Do! Health and Safety Rules May Create Joint Employment under New NLRB Rule

Ginsberg’s Theorem is a parody of the laws of thermodynamics. Generally attributed to the poet Allen Ginsberg, it goes like this:

  1. There is a game.
  2. You can’t win.
  3. You can’t break even.
  4. You can’t even get out of the game.

That’s the conundrum businesses now face when trying to comply with both the NLRB’s new joint employer rule and OSHA requirements (or general safe workplace practices).

Last week we looked at the new NLRB rule on joint employment. This week I want to focus on the most troubling part of that rule — the NLRB’s decision to include “Working conditions related to the safety and health of employees” as an “essential term and condition of employment” for purposes of determining joint employer status.

Businesses often have site-wide, plant-wide, or company-wide health and safety requirements. If you enter this building, you must follow the health and safety rules that apply in this building. For example, you must wear steel-toed shoes to enter the manufacturing floor. Or, you must not enter this high-voltage area without permission. Or, you must walk only on designated pathways to avoid the risk of being hit by a forklift.

Some of these rules are driven by OSHA compliance, some by other governmental regulations, and some by a general desire not to cause grievous injury to other human beings.

Those motivations may now cause your business to be joint employer. The reasoning goes like this:

  1. You have a site-wide safety rule, and anyone in the facility must comply.
  2. Employees of vendors work onsite.
  3. Employees of vendors must comply.

Under the new NLRB joint employer rule, the exercise of control over “working conditions related to the safety and health” of a vendor’s employees would automatically create a joint employment relationship.

More absurd, merely reserving the right to exert control over health and safety conditions would create a joint employer relationship, even if such control is never actually exercised. In other words telling a vendor, if your employees enter our facility, they will will have to follow our site safety rules, would also seem to make you a joint employer.

The NLRB’s position ignores reality and creates a conundrum for businesses: If you comply with health and safety laws, or if you take steps to protect human beings from injury, and those humans are not your employees, the NLRB would now apparently say you’re a joint employer. Beware of showing feelings, showing feelings of an almost human nature.

Queue Pink Floyd “The Trial” from The Wall:

Good morning, Worm your honor
The crown will plainly show
The prisoner who now stands before you
Was caught red-handed showing feelings
Showing feelings of an almost human nature
This will not do
Call the schoolmaster

What to do?

Could the NLRB and OSHA be teaming up to jointly enforce this conundrum? Well, yes.

It just so happens that the NLRB and OSHA have teamed up, and on October 31 — less than a week after the NLRB released its final rule on joint employment — the two agencies jointly released a Memorandum of Understanding (MOU). In the MOU, the agencies commit to sharing information and working together to enforce their respective laws, including notifying workers who make OSHA complaints of their NLRA rights, and notifying workers who make NLRA complaints about health and safety of their OSHA rights.

So what are businesses to do?

The answer can’t be to ignore health and safety rules or to waive these rules for non-employees. But the NLRB needs to recognize that exercising control over health and safety conditions does not — or should not — convert a company into a joint employer. Certainly this aspect of the rule will be tested in court, as it seems to go well beyond the bounds of the common law definition of joint employment, and the common law test is supposed to be the joint employer test under the NLRA.

One option for businesses to consider is to tie site-wide health and safety rules to legal requirements whenever possible. Compliance with the law is not supposed to be the type of control that is taken into account under the common law joint employer test. But that approach creates a conundrum too. Be careful that you don’t go too far and say that the law requires something when, in reality, it doesn’t.

Another option might be to revise how site-wide health and safety rules are drafted. Try to try to thread the needle, protecting everyone onsite, but not explicitly setting working conditions for vendor’s employees. It might be possible to draft this way; it might not be. But it’s worth looking at your policy language.

In the meantime, let’s keep an eye on how this new factor is interpreted by administrative law judges and the Board when actual disputes are adjudicated. Let’s also see if court challenges to the new joint employer rule will knock out this troubling provision.

This will not do. Call the schoolmaster!

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© 2023 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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11.06.23
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This Will Not Do! Health and Safety Rules May Create Joint Employment under New NLRB Rule

Ginsberg’s Theorem is a parody of the laws of thermodynamics. Generally attributed to the poet Allen Ginsberg, it goes like this:

  1. There is a game.
  2. You can’t win.
  3. You can’t break even.
  4. You can’t even get out of the game.

That’s the conundrum businesses now face when trying to comply with both the NLRB’s new joint employer rule and OSHA requirements (or general safe workplace practices).

Last week we looked at the new NLRB rule on joint employment. This week I want to focus on the most troubling part of that rule — the NLRB’s decision to include “Working conditions related to the safety and health of employees” as an “essential term and condition of employment” for purposes of determining joint employer status.

Businesses often have site-wide, plant-wide, or company-wide health and safety requirements. If you enter this building, you must follow the health and safety rules that apply in this building. For example, you must wear steel-toed shoes to enter the manufacturing floor. Or, you must not enter this high-voltage area without permission. Or, you must walk only on designated pathways to avoid the risk of being hit by a forklift.

Some of these rules are driven by OSHA compliance, some by other governmental regulations, and some by a general desire not to cause grievous injury to other human beings.

Those motivations may now cause your business to be joint employer. The reasoning goes like this:

  1. You have a site-wide safety rule, and anyone in the facility must comply.
  2. Employees of vendors work onsite.
  3. Employees of vendors must comply.

Under the new NLRB joint employer rule, the exercise of control over “working conditions related to the safety and health” of a vendor’s employees would automatically create a joint employment relationship.

More absurd, merely reserving the right to exert control over health and safety conditions would create a joint employer relationship, even if such control is never actually exercised. In other words telling a vendor, if your employees enter our facility, they will will have to follow our site safety rules, would also seem to make you a joint employer.

The NLRB’s position ignores reality and creates a conundrum for businesses: If you comply with health and safety laws, or if you take steps to protect human beings from injury, and those humans are not your employees, the NLRB would now apparently say you’re a joint employer. Beware of showing feelings, showing feelings of an almost human nature.

Queue Pink Floyd “The Trial” from The Wall:

Good morning, Worm your honor
The crown will plainly show
The prisoner who now stands before you
Was caught red-handed showing feelings
Showing feelings of an almost human nature
This will not do
Call the schoolmaster

What to do?

Could the NLRB and OSHA be teaming up to jointly enforce this conundrum? Well, yes.

It just so happens that the NLRB and OSHA have teamed up, and on October 31 — less than a week after the NLRB released its final rule on joint employment — the two agencies jointly released a Memorandum of Understanding (MOU). In the MOU, the agencies commit to sharing information and working together to enforce their respective laws, including notifying workers who make OSHA complaints of their NLRA rights, and notifying workers who make NLRA complaints about health and safety of their OSHA rights.

So what are businesses to do?

The answer can’t be to ignore health and safety rules or to waive these rules for non-employees. But the NLRB needs to recognize that exercising control over health and safety conditions does not — or should not — convert a company into a joint employer. Certainly this aspect of the rule will be tested in court, as it seems to go well beyond the bounds of the common law definition of joint employment, and the common law test is supposed to be the joint employer test under the NLRA.

One option for businesses to consider is to tie site-wide health and safety rules to legal requirements whenever possible. Compliance with the law is not supposed to be the type of control that is taken into account under the common law joint employer test. But that approach creates a conundrum too. Be careful that you don’t go too far and say that the law requires something when, in reality, it doesn’t.

Another option might be to revise how site-wide health and safety rules are drafted. Try to try to thread the needle, protecting everyone onsite, but not explicitly setting working conditions for vendor’s employees. It might be possible to draft this way; it might not be. But it’s worth looking at your policy language.

In the meantime, let’s keep an eye on how this new factor is interpreted by administrative law judges and the Board when actual disputes are adjudicated. Let’s also see if court challenges to the new joint employer rule will knock out this troubling provision.

This will not do. Call the schoolmaster!

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© 2023 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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10.29.23
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Feeling At Risk? You Might Be, Now That NLRB Issued New Joint Employer Rule

I took this picture on Friday of a window washer at the Hilton across the street.

Late last week, the NLRB issued its new joint employer rule. I’ve listed three takeways below. Don’t be left hanging. Click here for the full Alert.

1) The National Labor Relations Board has issued a Final Rule that changes the test for determining who is a joint employer.

2) The Final Rule rescinds the Rule enacted in 2020 and adopts a test that will vastly expand the circumstances under which a company is a joint employer of the employees of another company.

3) The new rule may cause absurd results, including creating joint employment from the application of worksite safety rules to everyone onsite, including a vendor’s employees. The new rule requires joint employers to participate in the collective bargaining process.

The full Alert explains in more detail. If you are not subscribed to BakerHostetler employment law alerts, let me know and I’ll add you to the distribution list.

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© 2023 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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10.23.23
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It’s Not Lemon Juice: Here’s the One Key Ingredient Missing from Your Staffing Agency Agreements

In 1995, a man robbed two Pittsburgh banks during the day. He wore no disguise and was easily identified by surveillance cameras and arrested. This surprised the man.

The man was surprised because he had covered himself in lemon juice, and he believed that lemon juice made him invisible to video cameras. Obviously, it doesn’t and it didn’t. Lemon juice does not prevent a person from being seen.

Now let’s talk about staffing agency temps and being seen. If your temps are integrated into your workforce, there is a high likelihood you are a joint employer.

If your staffing agency temp improperly pays your temp, and the temp files a wage and hour claim, you can’t just drench yourself in lemon juice and hope not to be seen. Chances are, you’ll be sued too.

If you are a joint employer, you are likely liable for wage and hour violations by the staffing agency, even though you had no control over the staffing agency‘s pay practices. For liability purposes, their mistake is your mistake.

One of the best ways to avoid getting drawn into a class action filed by an agency temp is to require, in your staffing agency agreements, that all temps sign an individual arbitration agreement. All temps should be required, as a condition of being placed at your company, to agree that any claims they have against your company will be resolved in arbitration, on an individual basis, not through a class action.

How do you do this? In three parts.

First, insert in your staffing agency agreement a clause requiring that all temps placed at your facility must first signed an arbitration agreement, a copy of which will be attached to the staffing agency agreement.

Second, draft the individual arbitration agreement exactly the way you want it, and attach it to the staffing agency agreement as an exhibit. Include a class waiver. Consider allowing small claims to be carved out and resolved in small claims court. Consider omitting AAA or JAMS as a designated arbitration administrator, to reduce the risk of mass arbitration filings. You can require arbitration without designating any agency to administer it. The agencies charge high fees, which creates the leverage that makes mass arbitration an effective tool of the plaintiffs’ bar. No arbitration agency = no administrative fees = probably no mass arbitration.

Third, require the agency to maintain copies of these agreements. You want the ability to audit compliance. You can also require the agency to show you a copy of each signed agreement before each temp begins an assignment.

It is frustrating to think that your business could be jointly liable for wage and hour violations by a staffing agency when you have no control over how they pay their employees. But with joint employment, that risk is a reality. You need to prepare for that possibility well in advance.

The staffing agency agreement provides you an ideal opportunity to plan ahead and protect yourself against this possibility.

Lemon juice might be a nice addition to iced tea, but it does not provide any protection against security cameras or class action lawsuits. You’ll need arbitration agreements for that.

Click here for more tips about what should be in your staffing agency agreements.

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© 2023 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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08.07.23
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Unintended Consequences: NJ Temporary Worker Law May Cause Companies to Stop Using Temporary Workers

Postcard available for purchase!

Today we offer some fun facts about New Jersey. Raise your hand if you knew these things, but only if you are working from home because otherwise it would be weird:

  • The Lambert Castle Museum in Paterson has a spoon exhibit with over 5,400 spoons from every state and almost every country in the world.
  • The Passaic River in Paterson was the site of the first submarine ride in 1878 by its inventor John P. Holland.
  • New Jersey’s capital city, Trenton, was once the capital of the United States – but only for about eight weeks in 1784.

A less fun fact about New Jersey is that this past weekend, the NJ Temporary Workers’ Bill of Rights went into effect. It is a well-intentioned law that will have loads of unintended consequences. Rather than helping temp workers, the law’s requirements seem more likely to cause companies to stop using temp workers entirely.

The law’s requirements have been discussed elsewhere, and you can check out the BakerHostetler blog, The Bargaining Table, for a more complete discussion. But I want to focus on one aspect of the law that I think is particularly dumb and poorly drafted.

Section 7(b) requires that temp workers “shall not be paid less than the average rate of pay and average cost of benefits, or the cash equivalent thereof, of employees of the third party client performing the same or substantially similar work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions for the third party client at the time the temporary laborer is assigned to work at the third party client. Each violation of this subsection for each affected temporary laborer shall constitute a separate violation….”

Take a minute to digest that. It requires that temps are paid at least as much as similarly situated regular employees, but not just in wages. You also have to add in the cost of benefits. The cash value of benefits is often around a third of total compensation.

Suppose you have full time maintenance employees who average $20/hour plus benefits. If the cash value of benefits are one-third of the worker’s compensation package, then the temp worker “shall not be paid less than” $26.67/hour. And that’s before the staffing agency takes its markup of, maybe, 35%. You’d have to pay $36/hour for a temp maintenance worker, and the temp worker’s take home pay will be 33% higher (because of the cash value of benefits) than your comparable maintenance employee.

What if the temp agency provides benefits? Unclear. Poorly drafted. The law sets the temp worker’s minimum wage based on the cash value of the benefits the similarly situated employees receive. Maybe if the temp worker gets benefits, then the temp’s hourly wage floor would be $20, not $26.67, but that’s not clear.

Not only does the law greatly increase the cost of using temp labor, it also requires the company using the staffing agency’s services to disclose to the staffing agency the average wages and cost of benefits it provides to its similarly situated employees. If your company didn’t disclose this information, the staffing agency wouldn’t be able to comply with the pay floor requirement.

A failure to comply results in joint liability. So now you need to make sure the staffing agency pays its temps a particular wage, calculated based on the wages your company pays its employees. In your staffing agency agreement, you’ll need to require the agency to pay a particular wage to ensure compliance.

Here’s where things get tricky. An indemnity provision might not be sufficient to shift liability because the law says both parties are liable. So you need a breach of contract claim to rely on instead.

To build a potential breach of contract claim, the company will want to contractually require the agency to pay the workers a wage that is not less than the average cost of the company’s wages and cost of benefits. But directing and controlling wages is a strong indicator of joint employment under other laws. The act of complying with the NJ law could turn companies into joint employers. The wording in any staffing agreement, therefore, needs to thread the needle.

The text in a staffing agency agreement (or amendment) will need to be carefully drafted so that the company is requiring only that the agency comply with NJ law with respect to wages and benefits and is not directing or controlling the wages and benefits that the agency pays its temps.

Something like this might work: “If required under N.J.S.A. [insert citation], but only to the extent required by such statute, Agency shall pay the temporary workers at a rate not less than the average rate of pay and average cost of benefits, or the cash equivalent thereof, of employees of the company performing the same or substantially similar work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions for the company at the time the temporary laborer is assigned to work at the company.”

I don’t like telling the agency what it must pay its workers, but you’ll want a breach of contract claim available to you if the agency fails to comply and your company is jointly liable under the NJ law. An amendment to your staffing agency agreement is appropriate, but it needs to be carefully drafted.

And here’s another possible unintended consequence. How will your maintenance employees like being paid less than the maintenance temps? Maybe we need a union in here to get us a fair wage! I could see things going in that direction. If a temp can take home $26.67/hour, we want $26.67/hour too, not $20!

The NJ law does not apply to all temps. It applies to temps in these “occupational categories as designated by the Bureau of Labor Statistics of the United States Department of Labor:

  • 33-90000 Other Protective Service Workers;
  • 35-0000 Food Preparation and Serving Related Occupations;
  • 37-35 0000 Building and Grounds Cleaning and Maintenance Occupations;
  • 39-0000 Personal Care and Service Occupations;
  • 47-37 2060 Construction Laborers;
  • 47-30000 Helpers, Construction Trades;
  • 49-0000 Installation, Maintenance, and Repair Occupations;
  • 51-0000 Production Occupations;
  • 53-0000 Transportation and Material Moving Occupations; or
  • any successor categories as the Bureau of Labor Statistics may designate.”

If all of this makes you want to take a long walk and get away, then fun fact: New Jersey has more than 4,000 miles of trails!

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© 2023 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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06.12.23
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What Is a “Borrowed Employee” (and Should You Run Runaway)?

The album Old New Borrowed and Blue was released in 1974 by the British rock band Slade. It reached No. 1 on the UK albums chart. Slade recorded the album shortly after a near-fatal car crash involving drummer Don Powell, who played drums on the album despite walking with a cane and needing to be lifted onto his drum stool.

For whatever reason, Slade doesn’t get much air play on classic rock stations in the US. I remember the songs “Run Runaway” and “My Oh My,” both released in 1984, but I don’t remember hearing much more from Slade.

Getting back to Old New Borrowed and Blue, the “Borrowed” portion of the title refers to the fact that at least one song, “Just Want a Little Bit,” was a cover. It wasn’t Slade’s song, until it was. They borrowed it and made it their own.

Can the same thing happen in employment settings? Yes, it can.

We often consider the concept of joint employment, but did you know there’s also a doctrine called the “borrowed employee” doctrine?

What is a “borrowed employee,” and why does it matter?

The concept of “borrowed employee” arises in negligence cases involving vicarious liability. The “borrowed employee” doctrine is a defense that can be asserted if an injured employee at one company alleges that an employee of another company negligently caused the injury. If your employees ever provide services for another company, pay attention.

We saw this doctrine in action earlier this month, in a case before the New Jersey Supreme Court. Pantano v. New York Shipping Association.

Philip Pantano, a mechanic employed by Container Services of New Jersey (CSNJ) had his foot crushed and amputated following a workplace accident. Pantano alleged that an employee of a different company, Marine Transport (MT), was negligent and caused the injury. Pantano claimed that MT was vicariously liable for that employee’s negligence and should have to pay for the damages. A jury agreed and awarded Pantano $861,000, on top of his workers’ compensation recovery.

The issue that went before the New Jersey Supreme Court centered around whether MT could be held vicariously liable for its employee’s negligence. The answer would depend on whether the MT employee who caused the accident was deemed a “borrowed employee” of CSNJ when the accident occurred. If MT could prove that the MT employee who caused the injury was a borrowed employee of CSNJ at the time of the accident, then MT is not vicariously liable, even though the worker was being paid by MT and was MT’s W2 employee.

The borrowed employee doctrine is a creation of state law. In New Jersey, there’s a two-part multi-factor test to determine whether someone is a “borrowed employee” for purposes of vicarious liability.

The first part of the test looks at control, which can be demonstrated through “direct evidence of on-spot control” or broad control based on method of payment, furnishing equipment, or having the right of termination. If the primary employer has control over the worker, then we go to part two of the test.

The second part of the test is the “business furtherance” prong. If the worker was furthering the primary employer’s business when committing the negligent act, then the primary employer is vicariously liable. “Business furtherance” is established under NJ law if (1) the work being done is within “the general contemplation” of the primary employer’s business, and (2) the primary employer derives economic benefit by loaning its employee.

Applying the test, a jury is supposed to determine whether the employee was acting on behalf of the primary employer, or was acting as a borrowed employee of the secondary employer, or if both are responsible.

Tip: It is in a primary employer’s interest to show that its loaned employee was acting as a “borrowed employee” of the other company at the time of the accident, if the injured employee was also employed by that other company.

Here’s why. If the employee who caused the accident was acting as a “borrowed employee” of the company that employed the injured worker, then the injured worker’s remedy is limited to workers’ compensation law. But if the accident was caused by the negligence of another company’s employee (and the worker is nit a “borrowed employee”), then the injured worker can bring a negligence claim against that other company.

If all of this is making your head hurt, remember a few things here:

1) When you lend an employee, make sure there’s worker’s compensation coverage all around.

2) When you lend an employee, make sure you have a well drafted agreement between the two companies. Allocation of risk should be addressed in advance.

Borrowing employees is commonplace. If you plan in advance, the arrangement can work well for both companies, and there’s no need to Run Runaway.

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© 2023 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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05.30.23
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In the Staffing World, What Is MSP and VMS, and How Can they Help?

In 1979, my sister and I watched a kids’ movie called C.H.O.M.P.S., a “comic science fiction family film” (according to Wikipedia), which featured a Benji-lookalike border terrier named CHOMPS. Except the dog wasn’t really a terrier, and wasn’t even really a dog.

C.H.O.M.P.S. was an acronym for Canine Home Protection System, and the terrier was a robot [insert plot of every children’s movie here] invented by a brilliant kid, who then outsmarts bumbling adults who try to kidnap the dog but prove inept and not nearly as clever as our young hero.

The movie scores an abysmal 29% on Rotten Tomatoes and I don’t remember much about it, except that my sister and I still talk about it.

Although we’re all grown up now, we’re still overrun with acronyms. Two acronyms often appear in the context of retaining contingent labor, and if your company makes frequent use of temp staffing or other contingent workers, these may be good to know.

First, there’s MSP. An MSP is a Managed Service Provider. MSPs can manage many different things, but in the context of employment law and the contingent workforce, they can manage temporary staffing needs for a business. Generally, they will contract directly with multiple staffing agencies and taking the laboring oar in overseeing those relationships. MSPs can also identify and retain independent contractors. They will monitor spend and can produce all sorts of nifty reports. If your business uses an MSP, then when you need temp labor or other contingent workers, you tell the MSP what you’re looking for, and the MSP does the rest.

Next, there’s VMS. VMS stands for Vendor Management System. It is an online portal through which contingent workforce staffing needs can be arranged and managed. MSPs generally use VMSs, but a company can also use a VMS without an MSP.

When beginning a relationship with an MSP, sophisticated businesses will take a hand-on approach in negotiating the terms of service with the MSP, as well as negotiating (or providing) the form agreements that the MSP will enter into with staffing agencies and independent contractors. Your company is not a direct party to those agreements but, rather, is a third party beneficiary.

Those staffing agency agreements should generally include the same protections against joint employer liability that you’d include if you contracted with the staffing agency directly. Click here for Ten Things That Should Be in your Staffing Agency Agreements But Probably Aren’t.

You’ll also probably want all contingent workers retained through the MSP to sign arbitration agreements with classs action waivers, as well as individual agreements addressing the protection of your confidential information and ownership of any IP created during the assignment.

Bonus tip: Be careful not to say that all deliverables are “works made for hire.” Under some laws, including in California, declaring deliverables to be “works made for hire” automatically converts the relationship into employment. Bummer. Use assignment instead. You can read more about that topic here.

For companies that make frequent use of contingent labor, MSPs and VMSs can save a lot of time and aggravation. When engaging MSPs, it’s worth the up-front investment to renegotiate and modify the template agreements that the MSP will use on your company’s behalf.

If you’re later alleged to be a direct or joint employer of the contingent workers, well-drafted agreements will provide vital home protection — even better than you could get from C.H.O.M.P.S.

Bonus Fun Fact: Red Buttons was in this movie. It’s fun to say Red Buttons. Try it. Really. Say it aloud. But say it quietly in case someone is listening. You’ll like it and will probably keep saying it quietly to yourself all day, with a slight smile, because no one else is in on your little secret.

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© 2023 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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