Could You be Liable for the Sins of Your Staffing Agency?
By Jonathan R. Sigel, Mirick, O’Connell, DeMallie & Lougee, LLP
Businesses use staffng agencies to supplement their workforce with temporary workers, which saves money when meeting fluctuating production and staffng needs. However, companies can be held liable for the agencies’ violations of law (e.g. wage & hour laws) if the entities are found to be ‘joint employers’ – even when unaware of the violations!
While determination of joint employment is not automatic, companies are wise to proceed under the assumption that they may be held jointly liable.
You should always obtain references and find out whether the agency has been involved in any litigation. Furthermore, there should be a formal written agreement which covers not only items such as rates, ‘temp-to-hire requirements and termination provisions, but also requires the agency to take very specific measures to comply with laws concerning the payment of wages, illegal harassment and discrimination, workers’ compensations, and employment taxes, to name a few. The agreement should also contain an indemnification clause. In addition, after engaging the staffng agency, your company should periodically conduct an ‘audit’ to monitor and help to ensure legal compliance.
In short, while staffng agencies can provide a vital source of workers for your business, contracting with them can also expose your company to a host of legal consequences, even when you are completely unaware of the existence of violations. Thus, taking some basic preventative measures can go a long way in preventing or mitigating those risks.
Jonathan R. SigelMirick, O’Connell, DeMallie & Lougee, LLP, Boston, MA, USA
T: +1 508 860 1474
Mirick O’Connell is a full-service business law firm with offices in Worcester, Westborough and Boston, Massachusetts, USA. Excellence in our work. Excellence in client service. Excellence in value.
Jonathan Sigel advises clients on a broad range of employment issues, including employment and severance agreements, handbooks and policies, and terminations and layoffs. He also advises management on proper wage and hour classification and has extensive experience representing management in the negotiation and litigation of employment-related disputes, including discrimination claims.
Published: Winter 2017 l Photo: YakobchukOlena - Fotolia.com