Despite the fact that using contingent workers provides many benefits for your company, the issue of co-employment often arises. Although the staffing firm is typically considered the primary employer, co-employment issues come up when the client company exerts more behavioral and financial control over the contingent worker. Learn how to avoid taking on characteristics of the of the primary employer and protect your company’s bottom line.

  • Co-employment Factors

Co-employment was brought to the attention of many employers in the case of Vizcaino vs. Microsoft Corp. Independent contractors and staffing agency employees filed a class action lawsuit resulting in the software company paying a $97 million settlement for benefits liability. Microsoft’s wording in its employee stock purchase plan program offered benefits to “common law employees” and didn’t exclude any specific groups of workers. The court maintained that because of the wording in the stock purchase plan, Microsoft considered independent contractors as common law employees. For staffing agency employees, the court utilized a five-factor test to decide common-law employee status involving recruitment, training, employment duration, right to assign additional work, and control over the relationship between worker and agency. Had Microsoft made clear in the stock purchase plan the program was available for certain employees, it may have won the case.

  • Avoid Legal Issues

You can protect your company from similar legal issues by following a few simple guidelines. Use an experienced staffing agency such as Innovative Employee Solutions that clearly understands co-employment issues and how to prevent legal liabilities. Have contingent workers sign contracts and waivers stating they’re staffing company employees and waive claims to benefits and other compensation. Create benefit plans that exclude contract and temporary workers. Let the staffing agency control the hiring process, setting pay rates, disciplinary actions, performance evaluations, and other tasks for contingent workers. Consider allowing the staffing company onsite supervision for their workforce so you can keep your contact with contingent workers to a minimum.

An experienced employer of record can help you avoid expensive co-employment issues that may arise with your contract or contingent workers. Reach out to the friendly experts at Innovative Employee Solutions for further assistance today!   

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