Companies should not assume they can avoid liability for workplace issues by using a staffing agency, and in today’s complex, ever-changing legal environment, using one can actually create additional liabilities if you’re not careful.

Engaging a staffing agency provides no protection against employment liability. In some circumstances, the temporary worker may seek to hold the client to be just as liable as the staffing firm. Under the joint employer theory, employment laws can be applied directly to the client firm the same as if it had hired the temporary worker directly, warns attorney Zoe J. Bekas of the Akerman law firm.

Joint employer liability arises in a number of contexts, including wage and hour, harassment, discrimination and retaliation laws. “Tests for determining joint employment vary by statute and jurisdiction and are often in flux. Various federal agencies use differing tests, and even those are in play,” Bekas observes.

Agencies such as the Occupational Safety and Health Administration and U.S. Department of Labor have had joint employer criteria in place regarding such things as safety and wage laws.
The National Labor Relations Board saga regarding joint employer status is ongoing and became even more confused following a federal appeals court decision earlier this month (See article on Page 3).

Bekas says companies that are looking at using staffing agencies should consider taking steps to limit their liability under the raft of different laws that apply to the relationship.

Review the Contracts. The contract between the staffing agency and the client should provide that the agency will defend and indemnify the client for losses, penalties and attorneys’ fees that arise in connection with the staffing agency’s employees, including wage-related claims.

Further, the contract should contain assurances that the staffing agency will completely perform all of its legal duties to its employees, including the individuals the agency sends to the client’s premises, and promise that it will remain in compliance with all applicable laws in relation to those employees.

Exercise Due Diligence. Clients should research staffing agencies before engaging their services, including the location of their business operations, the number of clients they service and how long they have been in business.

Clients should also request references, and speak to current staffing agency clients. Bekas adds that it also may be prudent to conduct a litigation search to learn if the staffing agency has a history of litigation in regard to its employees and business practices.

Require Proof of Insurance. Clients should require proof of workers’ compensation insurance coverage before engaging a staffing agency, as well as require verification on frequent intervals. Ideally, the staffing agency will maintain Employment Practices Liability Insurance (EPLI), naming the client as an additional insured.

While the client may want to exercise some oversight of the staffing agency’s compliance, such involvement is a double-edged sword, Bekas stresses. “By becoming more involved in the day-to-day practices, the client makes it more likely that it will be deemed a ‘joint employer’ of the temporary workers retained through the agency.”

Bekas also points out that staffing agencies must take their own precautions. Agencies are often named as defendants in harassment and discrimination lawsuits for alleged wrongful conduct that occurred on a client’s premises.

Staffing agencies, among other things, should ensure that their clients have compliant anti-discrimination and harassment policies and practices in place, she says.