Recommendations for Employers and Employment Agencies

(1) Select the temporary services provider carefully

Talk with business associates and get their recommendations for an established, reputable and qualified temporary services agency for your particular needs. Some agencies have specialties in providing a certain type of employee. Examine the agency’s familiarity with issues of joint employment and ask how the agency has handled joint employment questions when they have arisen previously.

Audit the agency’s employment policies; consider how carefully the agency screens potential employees and what training, if any, it provides for them. Although cost is certainly a factor, try to resist the urge to simply go with the cheapest provider, particularly if you require skilled labor. Remember, if the agency acts illegally toward an employee placed at your company, your company will almost certainly be sued as a joint employer. Thus, auditing your temporary agency’s policies is equally as important as auditing your own policies.

(2) Structure the relationship with the provider clearly.

If the principal goal of retaining a temporary employee provider is to distance the company from the potential liabilities associated with hiring employees directly, the company should require the temporary agency to assume most of the supervisory and fiscal responsibility for its temporary employees.

The provider should be the party to process applications, screen, test and hire applicants and should – to the extent possible – establish the terms and conditions of employment, including wages and benefits. Moreover, the provider should be the one to evaluate, reward, promote, discipline and discharge temporary employees. This requires a careful balancing of the employer’s needs and the potential for joint liability.

Unfortunately, an arrangement that best insulates an employer is not always the arrangement that best promotes business objectives. Employers should not be overzealous in drafting an agreement with a temporary service provider which may insulate it from joint liability if the cost is an unacceptable loss of operational control.

Generally speaking, the greater control the employer retains over the temporary employees, the greater his potential for liability will be. A conscious decision should be made regarding the appropriate balance between maintaining control and avoiding joint employment liability, and this decision should be memorialized by a written agreement.

(3) Monitor the relationship with the temporary employees

Ensure that both the temporary agency and the employee comply with employer policies expressed in handbooks, printed notices or memos.  Once the temporary employees arrive on site, consider the possibility of requesting that the employment agency provide them with their own supervisor to direct and oversee their work. This, of course, depends on the nature of the work and the number of temporary employees retained.

Employers with a unionized workforce and those concerned about accepting employees into an existing bargaining unit should minimize interaction between temporary employees and full-time employees so that all the employees will not be found to share a “community of interest” as defined by the NLRA, and thus be included in a collective bargaining unit.

Delineate the boundaries clearly. Distinguish temporary employees by giving them different name badges, a reduced number of company perks and restricted access to confidential company information or sites. They should also be paid from a source other than regular employee payroll. Do not interfere with a temporary employee’s opportunities for other employment if they arise.

(4) Scrutinize temporary employment relationships carefully.

Examine job classifications predominantly held by temporary employees for adverse impact on protected groups. Seek counsel regarding potential Social Security, tax and welfare benefits contributions due. Understand the potential liability existing in temporary service arrangements before entering one.

Establishing independent contractor relationships with temporary employees will not necessarily save the employer from liability. Many relationships that employers believe to be independent contractor relationships are actually employer-employee relationships. Consult the Internal Revenue Service’s new Worker Classification Manual for guidance in making the correct classification. Written independent contractor agreements are not dispositive of the nature of the relationship. Employers should ensure that the intent to create an independent contractor arrangement with an employee manifests itself in more than a label and an understanding.

(5) Audit company policies to ensure intended coverage.

Employers should carefully review their policies, particularly benefit policies, to ensure only those employees who are the intended beneficiaries are included. Many such policies are vague on the issue of employee coverage, and even vagueness will almost certainly be resolved in favor of the employees.

(6) Employment agencies should insist on a written contract

Employers may not demand a written agreement, but agencies should insist on one. Aside from assisting an agency to prepare an adequate defense in the event that an employee sues, written agreements bolster business by increasing the agency’s professional image and delineating agency and client-employer obligations and expectations.

Agencies should resist client-employer interference in employment matters, particularly where the client-employer has ceded control of the leased workforce to the agency. Apprising client-employers of the consequences of interference may be one effective way to maintain autonomy in decision making.

Finally, temporary service providers should carefully screen potential client-employers and resist accepting liability risks without first evaluating a client’s employment policies and procedures and obtaining written guarantees that the client has mandated nondiscrimination policies and employment at-will language in place.

Even if an agency’s policies and practices are above reproach, the agency may be jointly liable for the client-employer’s misconduct. The best way to handle such potential liability is to (1) make every reasonable effort to avoid the possibility of incurring it; and (2) have a clear agreement in place in which the parties agree to apportion the potential liability and defense costs in a mutually acceptable manner.


Andrews Sexual Harassment Litigation Reporter, March, 1997, Brent Giddens

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