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Many employers have unfounded fears of “creating” a co-employment relationship with a temporary worker who was hired through a staffing agency, even though it cannot be avoided in many cases (and it doesn’t necessarily impose additional obligations on the employer). There is no single source for information on co-employment, in part because the concept applies differently depending on the relevant law. Also, the term is often used interchangeably with the concept of “joint employment.”
In most cases where a host company uses temporary workers from a staffing agency, certain co-employment obligations will automatically exist. For example:
- A temp is protected by the discrimination laws, which includes protection from actions of the host company, even if the staffing agency is the employer of record (see the EEOC guide on Application of EEO laws to contingent workers and temps).
- A temporary worker is considered a joint employee for purposes of the Family and Medical Leave Act (FMLA) (see §825.106, Joint employer coverage, noting that “joint employment will ordinarily be found to exist when a temporary placement agency supplies employees to a second employer”).
Employers cannot take any action to “avoid creating” a co-employment relationship under these laws because that relationship is assumed to exist.
Even the Fair Labor Standards Act (FLSA) recognizes joint employment where an individual works at multiple jobs for the same organization, or works to benefit more than one employer. Typically, the FLSA is concerned with overtime where an individual performs duties for multiple locations of the same employer. For example, if an individual works at two grocery stores that are owned by the same company, all hours worked at both locations must be combined for overtime.
However, the FLSA regulation is somewhat open to interpretation, stating, “Where the employee performs work which simultaneously benefits two or more employers...a joint employment relationship generally will be considered to exist” (§791.2, Joint employment).
As an example, a host employer could be liable for recordkeeping violations or back pay if it asks a temp to work without recording the hours, or denies a lunch break while still deducting 30 minutes for a meal period. The temp should report the problem to the staffing agency, but if a lawsuit arises, the host company could still face liability.
Who is the employer?
As the employer of record, the staffing agency would be responsible for tax deductions, completing a Form I-9 for new hires, and most other aspects of the employer/employee relationship. Still, any relationship where the host employer exercises some control over the temp, such directing the day-to-day tasks, may create a joint or co-employment relationship under certain laws.
Although a temp is officially employed by his or her staffing agency, the host company is usually a joint employer and can face liability for many of the same violations that result in lawsuits from regular employees.
- A temp could file a discrimination or harassment claim, or could create liability if the temp is the harasser and the employer fails to address the conduct (typically be contacting the staffing agency to let them address the problem).
- If a temp takes FMLA leave , the host employer cannot interfere with the temp’s right to restoration (although the staffing agency is responsible for sending notices, tracking leave, and otherwise administering the FMLA).
- FLSA violations could create liability if the hours worked by a temp were not properly recorded and paid, or if the temp was misclassified as exempt from overtime.
So while the staffing agency is the “employer” for purposes of many laws, the host company is automatically a joint or co-employer for many situations.