Tag Archives: Staffing Agencies

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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05.22.23
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Today’s Riddle: Should I Cap a Temp’s Service at 6 months? 12 months?

I like riddles. How could you not? Here are two. Answers are at the bottom of the post:

1. What has to be broken before you can use it?
2. I’m tall when I’m young, and I’m short when I’m old. What am I?

Getting back to business, here’s a question I have been asked many times. It seems a bit like a riddle, with no clear answer and requiring careful thought. But I’m going to declare No Riddle. That’s because I think there’s a straightforward answer, and it might not be what you were thinking.

Here’s the question (in case you are among the 0% of today’s readers who skipped this post’s headline):

Should we cap a temp’s assignment at 6 months? 12 months?

To answer today’s question, I’m going to have to ask you two questions. (Sorry, that’s how we play this game.)

Question 1: As temps, my assumption is that they are intermingled with the company’s employee workforce, doing the same thing as employees, working side by side with employees, and reporting to the company’s supervisors. Is that accurate?

Question 2: Are they employed by a staffing agency and treated by that staffing agency as its W2 employees?

If you answered yes to both, then the amount of time temps are assigned to the company will almost certainly have no bearing on their status. They will be employees of the agency and probably also joint employees of the company. There are various joint employment tests, and we can go through them (fun!) but it would be largely an academic exercise.

From a practical business standpoint, we should assume that any time the answer to my two questions are yes, these two conclusions will follow:

First, The entity receiving the services is likely to be a joint employer under the FLSA, NLRA, anti-discrimination law, and state laws, regardless of whether the temp is assigned for five months or five years. When temps are intermingled with employees in a staff aug situation, there is very likely joint employment, regardless of which test is applied. Arguments could be made under some tests that there is no joint employment, but for purposes of trying to answer the question above in a practical business-oriented way, I would assume there’s going to be joint employment.

Second, joint employment in this scenario is a risk inherent in working with temp staffing agencies. But that’s not necessarily a problem. Joint employment is not unlawful and, with one exception, joint employment only becomes a problem if the staffing agency/primary employer fails to do something it is legally required to do, such as pay overtime or minimum wage. In that event, both companies would be jointly liable if there is a joint employment relationship.

The one exception is the NLRA. If the company is a joint employer, then the various protections of the NLRA start to cross over the temp employee and direct employee populations, such that if the agency workers were to organize, the company might have to bargain with them; or there could be a mixed unit; or if agency workers picketed the company, it would not be illegal secondary picketing.

So, if the answer to both of my questions is yes, then I would not be concerned with the duration of assignment. The company is very likely a joint employer already.

Some companies have a practice of not engaging temps for more than six months or year before deciding either they don’t fit or they should be hired directly. But there is no rule of thumb, and this sort of practice is often implemented based on the misunderstanding that capping a temp’s service time would reduce the risk of joint employment in a staff aug situation.

In reality, it’s unlikely to make any difference. In a staff aug situation, once you’re in the swimming pool of joint employment, you’re wet. It doesn’t matter if you’re on the top step or in the deep end. And once you’re a joint employer, you might as well exercise as much control as you want. You can embrace it at that point.

The best way to protect the company against the risks and consequences of joint employment is in the contract with the staffing agency. Here are Ten Things That Should Be in Your Staffing Agency Agreement But Probably Aren’t.

On the other hand, if you would answer no to either of my two questions, then limiting the duration of the assignment could be helpful in reducing the risk of independent contractor misclassification, especially if the workers are 1099 contractors.

If the answer to either of the questions is no, then we’d have to dive deeper into the facts to be able to say whether limiting the duration of the assignment would make any difference at all.

So, did you get the answer to the two riddles? Scroll down to see the answers.

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1. An egg
2. A candle

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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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03.13.23
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Ten Things That Should Be In Your Staffing Agency Agreements But Probably Aren’t

As promised during the Master Class session last week, here are Ten Things That Should Be in Your Staffing Agency Agreements But Probably Aren’t.

There are still four Master Class sessions to go. The next one will be Tuesday at 2pm ET, covering the NLRB and the Uncertain State of Labor Law. There is no charge to participate. CLE and HR credits are available. You can register here.

ten-things-that-should-be-in-your-staffing-agency-agreements-3.2023Download

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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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02.27.23
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Airbag Jeans? Why You Should Address Disability Accommodations in Your Staffing Agency Agreements

Photo: Mo’cycle

A Swedish company has constructed airbag jeans for motorcyclists, designed to inflate for protection in the event of a crash. The denim-like fabric is water-repellent and abrasion-resistant. You can learn more here.

When riding a motorcycle, it’s smart to anticipate the possibility of injury. The same is true when engaging temps from a staffing agency.

Here’s what I mean. At some point, you’ll have a temp who requires reasonable accommodations for disabilities. The expense to accommodate might be small. But it might not be. Who pays for it, you or the staffing agency?

Last week, the EEOC announced a $119,000 settlement with a staffing company that rejected an applicant because of disabilities. The applicant, who is deaf, had been placed at a client. Before the applicant was to appear for work, a manager at the staffing agency cancelled the assignment, informing the applicant that the client did not have sign language interpreters available. The client, incidentally, was ready and willing to employ the applicant.

The EEOC’s news release doesn’t say whether the applicant actually needed an ASL interpreter or whether the client was planning to pay for one. But providing an ASL interpreter can be a reasonable accommodation. In a staffing agency relationship, who pays for reasonable accommodations needed by temps?

The best advice here is to plan ahead and put on those airbag jeans. Your contract with the staffing agency can address who pays for reasonable accommodations. All it takes is a short clause in the agreement. If the agency is paying, make sure there’s no markup on those expenses. Few staffing agency agreements address who pays for reasonable accommodations. But they should.

If you add a clause, differentiate between Title I and Title III obligations. Title I of the Americans with Disabilities Act (ADA) prohibits disability discrimination in employment. That’s the one you want to focus on. Title III of the ADA addresses public accessibility. You’ll pay for the wheelchair ramps and accessible doorways at your facility (Title III), but you may be able to shift the expenses of Title I compliance to the agency.

It’s also a good idea to make sure managers know to involve HR if disability or accommodation issues arise. You don’t want a manager saying “we can’t accommodate that” and ending a temp’s assignment.

Airbag jeans will be sold for $499 a pair. Reasonable accommodations may cost more. Either way, it’s smart to plan ahead and build protections in to your staffing agency agreement.

On March 7, I’ll be speaking at the 10th Annual Labor Relations and Employment Law Master Class Series, addressing recent developments in the contingent workforce area. I’ll be addressing joint employment and staffing agency relationships, and I plan to offer a list of ten items that should be in your staffing agency agreements but probably aren’t

Sign up here to learn more. There is no charge to attend the webinar.

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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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02.20.23
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Lost Your Bill of Rights? Here’s a New One for New Jersey Temp Workers

What Companies Using Temps In New Jersey Need to Know

According to the National Constitution Center, there were 14 original copies of the Bill of Rights, with one sent to each of the 13 states and another kept by the federal government. The Center also reports, however, that four of the states — Georgia, Maryland, New York, and Pennsylvania — lost their copies. North Carolina’s was stolen by a Union soldier during the Civil War but recovered in 2002 through an FBI sting. (“Hey buddy, I’m lookin’ to buy a Bill of Rights. Ya know anyone?”)

New Jersey kept its copy, but also just added some new stuff. Sort of.

This month, New Jersey passed the Temporary Workers Bill of Rights. It’s less sweeping than the original 1791 Bill of Rights, but it co-opts the important sounding name to get everyone’s attention and to show constituents that the lawmakers are doing really important things that warrant re-election, financial support, the undying love of chatbots, etc.

New Jersey lawmakers love the “Bill of Rights” tag, by the way, having also recently passed a Siblings’ Bill of Rights, a Property Taxpayers’ Bill of Rights, and a Nursing Home Residents’ Bill of Rights.

The Temporary Workers’ Bill of Rights imposes new burdens on staffing agencies and the companies using temp workers. This post will focus on the obligations imposed by the companies using the temp workers.

Does the Bill apply to your industry?

The Bill applies to temp workers assigned by a temp staffing firm to work in any of the following industries, using Bureau of Labor Statistics (BLS) designations:

  • 33-90000 Other Protective Service Workers
  • 35-0000 Food Preparation and Serving Related Occupations
  • 37-0000 Building and Grounds Cleaning and Maintenance Occupations
  • 39-0000 Personal Care and Service Occupations
  • 47-2060 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

If you’re not in one of these industries, stop reading and get on with your day.

What obligations does the Bill impose on the users of temp labor?

1. Equal Pay. This sounds fair but may be problematic in practice. Temp workers must be paid “not less than the average rate of pay and average cost of benefits, or the cash equivalent thereof” of the user’s similarly situated employees.

I see two immediate problems here.

First, one of the benefits of using a staffing agency is the ability to pay the temps less until they prove themselves and earn an offer of direct hire. No longer. Now you’ll have to pay the same amount as you pay your regular workers, plus the markup.

Second, how is the staffing agency going to know the wages paid to your similarly situated regular workers and the value of the benefits package you provide them? Presumably you’ll have to tell the staffing agency.

But the staffing agency is not your confidant or fiduciary. It has multiple clients, probably including your competitors. Do you really want the staffing agency to know what your cost of insurance is, or what you pay your regular workers, or the full suite of benefits you offer? The staffing agency will have to adjust what it charges you — and your competitors — based on what each of its clients pay their similarly situated worker. That sounds like a pretty useful set of data for anyone wanting to know what competitors are doing.

You can (and should) designate this information as confidential when disclosing it to a staffing agency, and you should make sure your staffing agency agreement includes an obligation to protect confidential information. But is the information really that safe from prying eyes? If a competitor or temp worker is involved in litigation, couldn’t this information be subject to subpoena? Once you reveal this information, you lose a good bit of control over it.

2. Freedom to direct hire. Under the new law, temp workers must be free to accept offers of direct hire. Staffing agencies cannot restrict the workers’ ability to accept offers of direct hire. The agency can impose a “placement fee” on its client (you), but the amount is limited by statute.

The amount of the placement fee cannot exceed “the equivalent of the total daily commission rate the temporary help service firm would have received over a 60-day period, reduced by the equivalent of the daily commission rate the temporary help service firm would have received for each day the temporary laborer has performed work for the temporary help service firm in the preceding 12 months.”

For purposes of contracting, any provisions prohibiting direct hire for limited periods of time need to be removed. Instead, staffing contracts (in NJ, for these job classifications) should permit direct hire but may charge a permitted placement fee.

3. Reimbursement of tax obligations. The user of services is required to reimburse the temp agency for wages and “related payroll taxes.” Presumably this is already basked into the markup, but now it’s required.

4. Joint and several liability. The law imposes joint liability for any violations of the equal pay or direct hire provisions. Consider what that means for equal pay. You might have to disclose to the temp agency what you pay your similarly situated employees, but you don’t control the temp agency’s payroll practices. If they mess up and pay the temp worker less than the law requires, the law says you’ll be jointly liable.

Who said anything about fair?

Be sure your staffing agency agreement includes robust indemnity provisions. The agreement should also create a contractual obligation for the temp agency to pay workers all amounts they are due under the law so that, if the agency fails to do so, you can point to a breach of contract when seeking indemnity. Indemnity claims based purely on the law could be subject to challenge since the law also says there is joint liability.

Conclusions

This Temporary Workers’ Bill of Rights applies only to certain industries in New Jersey but, for users of temps in these industries, the law creates important new obligations.

For violations, the law allows for a private right of action and carries a six-year statute of limitations.

If you use temp labor in New Jersey in one of the covered industries, be sure you understand the new requirements. This would be a good time to go back and revisit your staffing agency agreements. They may need some tidying up.

Also consider requiring temp workers to sign individual arbitration agreements as a condition of being placed at your worksite. This strategy can help insulate you from a class action filed against both the temp agency and your company. Class actions against both entities are a particular concern, given the joint liability section of the new law.

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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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12.12.22
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Horizontal Risk: Criminal Case Moves Forward on No-Poach Agreement Among Competitors

Christian Encarnacion-Strand presents an unusual problem for the Cincinnati Reds. His name is too long to fit horizontally across the back of his uniform. The Reds are taking an upside-down-horseshoe approach to this problem, and if this minor league third baseman makes the big league club this year, his 18-character surname (with hyphen) would win the award (there’s no award) for most characters in a major league surname.

The current honor lies with Simeon Woods Richardson, a pitcher for the Twins, whose unhyphenated surname stretches 16 characters (including the space). The Twins applied more of a 3/4 circle strategy, which I think is less visually appealing than the Reds’ approach.

When it comes to horizontal challenges, placing letters on a uniform falls in the category of very low risk. The twitter community may have strong opinions, but there’s no real implication to either approach.

But when it comes to horizontal relationships among companies competing for talent, it’s much more important to get things right. No poaching agreements can lead to criminal charges — as we can see from a case making its way through the federal district court in Connecticut.

In the pending case, Company A outsourced engineering projects to companies B through F, all of whom compete for engineering talent. Companies B through F also compete with each other for projects from Company A.

Between 2011 and 2019, Companies A through F allegedly agreed to restrict the hiring and recruiting of engineers and other skilled-labor employees between them. All of the companies allegedly agreed to (1) not hire employees of Companies B through F and (2) not proactively contact, interview, and recruit applicants who were employed by another one of the companies. Company A allegedly policed and enforced the agreement.

This arrangement led to a criminal indictment, charging that these no-poaching agreements were a conspiracy in restrain of trade, in violation of the Sherman Act. The indictment alleges that the companies engaged in illegal market allocation, which suppressed competition for talent and wages.

The defendants filed a motion to dismiss the indictment. Because this issue potentially affects staffing and franchise relationships, the American Staffing Association, the Society for Human Resource Management, and others filed amicus briefs in support of the motion to dismiss.

On December 2, 2022, the district court denied the motion to dismiss. The opinion evaluates the arguments on both sides and considers how this arrangement compares to others where no-poach agreements have been held to be permitted. For example, the court considered whether the agreed-upon restraint was “ancillary to a legitimate business collaboration.” If yes, that could support an exception to the legal prohibition on restraints of trade. But the court ruled that the relationship here was competitive, not collaborative, because Companies B through F were competing for outsourcing work from Company A.

From a procedural standpoint, this decision does not make any findings about whether the arrangement actually did violate the law. This ruling is just the denial of a motion to dismiss, which means the case can move forward.

But the opinion should provide a wake up call to the staffing industry, the franchise industry, and other organizations where a small identifiable number of companies are competing for talent and for engagements.

The federal government has made it a priority to minimize restraints of trade and has shown a willingness to issue criminal indictments against companies (and individuals) who enter into unlawful agreements that restrict labor mobility.

That is not to say that all no-poach agreements are unlawful. In many situations they are appropriate. But companies in horizontal competition with each other need to tread very carefully, and any no-poach agreement among horizontal competitors may create significant legal problems, including potential criminal liability.

For baseball uniforms, horizontal challenges can be addressed with the upside-down horseshoe or 3/4 circle strategy (preferably the former!). But these simple solutions are not available in the business world, where companies compete for talent and engagements. As of now, there is no upside-down horseshoe exception to the Sherman Act.

Amicus briefs were file

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© 2022 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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10.31.22
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Green or Yellow: What’s the Difference Between Co-Employment and Joint Employment?

There’s an ongoing debate in my family over whether tennis balls are green or yellow. I sit firmly in the green camp and can’t see the yellow. My family thinks I am an idiot.

Turns out we’re both right. (Read into that as you wish.)

Tennis balls are officially Optic Yellow, but on the color wheel, that’s the same color as Electric Lime. There’s been some serious investigative journalism devoted to this topic, and the debate rages on. See here and here.

While Optic Yellow and Electric Lime may be the same, co-employment and joint employment are definitely not the same. Here’s today’s explainer.

In both co-employment and joint employment, there are two employers. For our purposes, the secondary employer is the one that benefits from the workers’ services. The primary employer is the one that pays them.

Co-employment is a voluntary arrangement in which one entity (often a Professional Employer Organization, or PEO) agrees to perform administrative/HR tasks for another entity, usually including providing benefits, HR services, and taking on the obligations of an employer in each jurisdiction where the workers will be.

The company that will benefit from the workers’ services selects them, determines their pay, determines their schedules, terminates them, and generally decides on all terms and conditions of employment. The company then sends them to the co-employer (PEO) to be hired and onboarded for the sole purpose of providing services to the secondary employer.

Unlike an employee leasing or staffing agency relationship, when a co-employment relations ends, the employees stay with the secondary employer. They don’t go back into a pool.

In co-employment, the employees and all parties acknowledge up front that this is a co-employment relationship, with the terms and conditions of employment dictated by the secondary employer. The offer letter and employee handbook will generally explain to the new hire the nature of the co-employment relationship.

No one worries about being deemed in a co-employment relationship because co-employment is an intentional choice. It’s not something that a court declares.

Joint employment, on the other hand, is a legal conclusion, often not a relationship that is acknowledged by the parties. The most common scenario for joint employment is when a staffing agency provides workers for staff augmentation, with the workers fully integrated into the secondary employer’s workforce and supervised by the secondary employer’s managers.

Joint employment can arise when labor services are provided by a staffing agency, a subcontractor, or a consulting firm. In a joint employment situation, there are two distinct employers. The staffing agency, subcontractor, or consulting firm is the primary employer and, if there’s not joint employment, then it’s the sole employer.

The primary employer determines wages and benefits and often selects the workers to be hired. Those workers often provide services for multiple companies, either sequentially or simultaneously.

If a secondary employer terminates a worker’s assignment, the worker stays with the primary employer. The primary employer can reassign the worker to another job site or make its own determination whether to keep the worker employed. You’ll want your staffing agency agreement to make clear that you can end a worker’s assignment but that you have no right to control the worker’s employment status with the agency.

There is a contractual relationship between the two companies that one will provide services for the other. But joint employment is not a foregone conclusion. Joint employment can exist, for example, if the secondary company makes decisions about the workers’ wages, working conditions, schedules, training, etc. To oversimplify a bit, joint employment is somewhat likely in a staffing services situation; less likely when retaining professional outside consultants.

Unlike with co-employment, joint employment does not involve a trilateral understanding among the worker and the two companies that the worker is employed by both.

Generally, the secondary company will argue that it does not control wages and working conditions, is therefore not a joint employer, and is therefore is not liable for any employment-related errors by the primary employer. The determination of whether joint employment exists is a legal determination, not based on an agreement among the parties and the worker.

What you’re worried about, therefore, is a finding of joint employment. Joint employment is not unlawful, but it creates unplanned risks and liabilities for the secondary employer. For example, if a staffing agency fails to pay its employees as required by law, the secondary employer is fully liable for the underpayment and the other legal consequences, even though it had no control over the primary employer’s payroll practices.

For more fun facts about joint employment, choose the Joint Employment category of posts in the blog. But be mindful of the date of the post. In the world of joint employment and determine when joint employment exists, the rules are always changing. So that’s fun, right?

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© 2022 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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09.13.22
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NLRB’s Proposed New Joint Employment Rule: Same But Different

[Reposting with revised link to the article, not behind paywall]

When I was 5 years old, and my sister was 3, the rule was that we had to be in our rooms by 8 p.m.

We followed that rule, but in our own way. We’d put on our pajamas, say good night and go into our rooms. But then we would lie down on the carpet at the very edge of our rooms, with our bodies still in the room and our heads in the hallway so we could talk.

In the strictest sense, we followed the rule. But we did it in our own way, to serve our own purposes. In essence, we chose to define what it means to be in our rooms.

The same sort of rulemaking is happening at the National Labor Relations Board on the subject of defining joint employment.

Click here to read the rest of this article, published 9/12/2022 in Law360.

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© 2022 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved. This article originally published on Law360, 9/12/2022.

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06.27.22
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Strap Yourself In: NLRB’s Joint Employer Rule is About to Change Again

Strap yourself in. It’s going to be a bumpy ride.

I drove behind this band of safety-conscious paddle boarders near Chicago recently. The guy in back is secured in by bungy cord. At least he looks comfortable.

The NLRB is about to make things a lot more uncomfortable for businesses concerned about joint employment.

As discussed here, the NLRB made clear earlier this year that it wants to revamp the independent contractor vs. employee test under the National Labor Relations Act.

Expect a new rule on joint employment to drop any day. The NLRB indicated several months ago that the joint employment rule was a target in its rulemaking agenda, and the expected release date is July 00, 2022.

Like most of you, I switched from the Julian calendar to the Gregorian calendar in 1752. While the changeover caused 11 days in September 1752 to be lost, I missed the memo about inserting a 0th day in July, starting 270 years later. Since I could find no way to mark the expected release date in my iPhone, I’ll give the NRLB the benefit of doubt and assume the date is a placeholder for “sometime in July.”

On Friday, it will be “sometime in July.” So get your bungy cord ready. You may need to take steps to better protect your business against joint employment risks.

The new rule will displace the current Trump-era regulation, which currently requires direct and substantial control over essential terms and conditions of employment before joint employment can be found.

Expect the new rule to track the Browning-Ferris standard imposed by the Board in 2015. Under Browning-Ferris, when one company has the right to control aspects of the work, joint employment exists — regardless of whether control is actually exerted, and regardless of whether the control is over wages, hours, scheduling or anything else that fits within the meaning of essential terms and conditions.

Joint employment under the NLRA can have several effects:

1. It can force you to the bargaining table for matters involving workers you did not consider to be your employees.

2. It can open the door to bargaining units that include workers you didn’t think were your employees.

3. It can open another door to bring union organizing activity into your business – through non-employee workers.

4. It can convert illegal secondary picketing into lawful primary picketing. If another company’s employees picket your site but the workers turn out to be your joint employees, they have the right to be there.

5. Each business that is a joint employer may be found jointly and severally liable for the other’s unfair labor practices.

When the new rule is posted, we’ll discuss what employers should do in response. Until then, enjoy the summer and try paddle boarding. But try to use a car with enough seats.

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© 2022 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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02.07.22
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Iguanas with Jackets: Here’s One Exhibit to Include with Every Staffing Agency Agreement

I met this little guy in Costa Rica, 2017

It happens every year.

When the temperature in Florida drops into the 30s, the iguanas freeze. Unable to regulate their body temperature, they drop out of trees, landing on sidewalks and in yards like solid rubber toy animals.

The freeze doesn’t kill them though. It just stuns them for a while, then they eventually warm up, reanimate, and go about their daily iguana business.

Getting stunned like this can’t be avoided for the iguanas. Amazon is not yet selling iguana jackets, and online delivery to lizards is notoriously complicated. (Note to self: Business opportunity?)

But unlike iguanas, businesses can reduce their chances at getting stunned — at least when it comes to avoiding lawsuits from staffing agency workers.

When staffing agency workers file wage and hour lawsuits, they often sue both the staffing agency and the business where they worked. The workers allege that both are joint employers, often bringing class claims or a collective action.

Businesses that carefully draft their staffing agency agreements will have some natural defenses against these claims. I’ve written about that here. I call this strategy The Monster with Three Eyes.

But there’s a fourth strategy too. Force individual staffing agency workers to arbitrate these claims instead of pursuing them in court, and include class action waivers with the agreement to arbitrate.

There are two ways to introduce arbitration agreements with class waivers in your staffing agency agreements.

First, you can mandate that staffing agencies sign arbitration agreements with their own employees. Some courts have found that arbitration agreements between a staffing agency and its employee protect the third party business too, even if the third party hasn’t signed the agreement.

But that approach carries risk. The agency’s arbitration agreement might be poorly written, or it might include terms that make it unenforceable. Your protection is only as good as whatever form agreement the agency presents to their workers.

There’s a second approach I like better. It goes like this:

  • Draft your own individual arbitration agreement (with class waiver) for staffing agency workers to sign, requiring them to arbitrate any claims against you. Make it mutual, of course.
  • Append it to the staffing agency agreement as an exhibit.
  • Include a clause in the staffing agency agreement requiring the agency not to assign anyone to your business unless they’ve first signed this agreement.

The agreement will be short. No more than two pages. It can also include an agreement by the agency worker to protect your confidential information and assign inventions.

If the document is properly characterized as an offer by your business, accepted by the worker, you have offer plus acceptance equals contract — even if your business doesn’t sign it. There is specific language you can include that can make that work.

So if you use staffing agency workers, don’t assume you won’t get sued as a joint employer. You particularly want to avoid class and collective actions, and this type of arbitration agreement will do the trick.

Plan for bad weather in advance. Include this layer of protection with your staffing agency agreements. Consider it your own little iguana jacket.

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© 2022 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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