Sharing employee responsibilities can become a challenge when using temporary or contract employees. Mismanagement creates a co-employment situation, which then creates co-employment liability and risk. There are five fundamental things employers can do to keep the employer relationship clear and thus, reduce the risk associated with co-employment.
Co-employment is an important topic for any company who uses long-term contractors or flexible workers. In 2000, Microsoft’s settled a classic, well-publicized lawsuit for $97 million due to being liable for benefits for their contract workforce. More recently, the California Labor Commissioner’s Office said that a driver for the ride-hailing service Uber should be classified as an employee, not an independent contractor. This complex case addresses issues faced by many companies who are creating “virtual workplaces” using independent contractors but still providing them with office supplies (such as mobile phones) and determining their work schedules, two actions that blur the line between independent contractors and employees.
These two landmark cases address the “independent contractor vs employee” debate. When it comes to client companies and staffing agencies, co-employment is “the relationship between a staffing firm and its client in which each has legal rights and duties with respect to the temporary and contract employees that the staffing firm assigns to the client” (source: American Staffing Association).
Sharing employee responsibilities can become a challenge when using temporary or contract employees. A client company will believe that the staffing agency is the sole employer of the temporary/contract workers but the client company might be managing them on a daily basis, providing direction, feedback, and discussing employment issues such as schedule, compensation, etc. This creates a co-employment situation, which then creates co-employment liability and risk.
There are five fundamental things employers can do to keep the employer relationship clear and thus, reduce the risk associated with co-employment:
Companies who adhere to these steps will maintain stronger clarity in the employer/employee relationship with temporary/contract workers, which reduces their co-employment risk and liability.
Co-employment is a complex topic; to learn more and discover the path to a successful flexible workforce, download The Modern Manager's Guide to A Flexible Workforce: Create Fast, Nimble Team Through a Talent-On-Demand Approach.