co-employment 101stakeholders in a co-employment relationship. what is co-employment? in a common...

CO-EMPLOYMENT 101: Understanding Relationships, Risks & Red Tape

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Employer accountability has been a source of

pain for businesses in the United States, and

the government is making its push to address

those concerns. In order to hold employers more

accountable, government agencies have more

clearly defined the roles and responsibilities of the

stakeholders in a co-employment relationship.

WHAT IS CO-EMPLOYMENT?In a common employer-employee relationship, the employer has specific responsibilities. They must:

• Pay the employee’s wages and overtime pay

• Withhold and pay taxes on behalf of the employee

• Provide worker’s compensation and unemployment benefits

• Ensure compliance with civil rights, labor laws, and more


In co-employment, however, these obligations may be shared by two different employers – such as a staffing firm and its client.

Both parties in this arrangement make sufficient contact with the temporary employee. Both can be described as the employer. In many cases, the staffing agency is considered the primary employer – bearing the majority of employee responsibilities.

WHAT ARE EACH EMPLOYER’S RESPONSIBILITIES?Staffing Firm:

• Pay employee

• Withhold and pay payroll taxes

• Provide worker’s compensation and unemployment benefits

• Ensure civil rights compliance

• Able to hire and fire employee

• Handle complaints regarding working conditions

• Train on general safety issues

Client:

• Direct and supervise day-to-day tasks

• Manage and ensure safe working conditions at work site

• Ensure civil rights compliance by employees

• Define length of employee assignment

• Train on location specific safety issues

Temporary workers and employees are treated the same regarding OSHA record keeping.


CONCERNS WITH CO-EMPLOYMENTWhen you extend your control into the responsibilities of your staffing agency, you are taking on some of the roles of a primary employer. And this puts your company at risk.

If you can be considered your temporary worker’s primary employer, he or she will then be considered your “common law employee.” And you would be subject to greater liability. For example, you could unknowingly misclassify this worker based on the IRS’s definition. Employment taxes would be just one headache you would have to deal with.

ARE YOU A JOINT (SECONDARY) EMPLOYER?In September 2015, the National Labor Relations Board ruled that companies using temp employees are considered “joint employers.” The new ruling no longer requires you (as a joint employer) to exercise direct control over a temporary worker. The authority to manage a temp day-to-day only

qualifies you as a joint employer, not the primary employer.

So, how do you determine if you’re the primary or secondary employer? The determination is often made based on worker control, pay, and benefits. The following are seven factors used by the Wage and Hour Division of the U.S. Department of Labor to identify the primary employer:

1. Does the other employer direct, control, or supervise (even indirectly) the work?

2. Does the other employer have the power (even indirectly) to hire or fire the employee, change employment conditions, or determine the rate and method of pay?

3. How permanent or lengthy is the relationship between the employee and the other employer?

4. Does the employee perform repetitive work or work requiring little skill?

5. Is the employee’s work integral to the other employer’s business?


6. Is the work performed on the other employer’s premises?

7. Does the other employer perform functions for the employee typically performed by employers, such as handling payroll or providing tools, equipment, or workers’ compensation insurance, or, in agriculture, providing housing or transportation?

It’s important to note, though, that there are still instances in which you should treat your temporary employees virtually the same as your permanent employees. For example, temporary workers and employees are treated the same regarding OSHA record keeping.

Employees who are jointly employed are also counted toward the 50-employee thresholds of each employer (as outlined by the Family and Medical Leave Act).

REDUCE THE RISKS OF CO-EMPLOYMENTThere are several important measures you can take to minimize the risks of co-employment.

For starters, work with reputable staffing agencies you can trust and cover all of your legal bases. This includes maintaining a safe work environment and avoiding any discriminatory conduct. And if you work with a firm that’s staffed a large number of your temporary employees, a representative of the agency should provide on-site supervision

If people are working at your place of business, you need to treat them the same whether they are temporary or full time.


Below are further measures you should take to minimize your risk:

Learn What Training Your Worker Has Had Even if you’re working with a respectable staffing firm, you should ensure that a temporary worker has received proper training for specific skills, such as operating a forklift. A good staffing firm will help advise you on this process if need be. In fact, the worker’s certification as a forklift driver is nontransferable from his last company to yours so they need to be recertified before they work for you.

Train Workers On Using Specialized Equipment Your staffing firm will not be able to train workers to use your specialized equipment. It’s not that a good staffing firm doesn’t want to, it is simply because they are unable to. It is the responsibility of the company to provide any hands-on training within their facility.

Detail Your Training Agreement In Your Contract If a temporary employee is performing work on your site, you should have some base-level expectations about their training. It would be wise to confirm that they have received this basic training and then get this in writing as part of your contract with your staffing agency. A worthy staffing partner will not object to this.

Consider Each Person’s Learning Style And Needs Think about the different ways in which people learn. Some are more visual learners and some excel better by reading. It is important to adapt to each worker in order to integrate him of her into your company and ensure their safety (and that of your other employees). It wouldn’t benefit you to simply give someone a handbook and expect them to learn what he or she fully needs to know. Embrace their learning style and watch them grow.


If people are working at your place of business, you need to treat them the same whether they are temporary or full time. There are no longer any circumstances in which one stakeholder bears complete responsibility for a worker. You will have your duties, and you must accomplish them. Even as the secondary employer, there is plenty on your plate.

With the U.S. government’s focus on co-employment, you must ensure you are holding yourself accountable and addressing your responsibilities. By working with a reputable, client focused staffing firm you will be able to protect yourself from the unnecessary risks that can harm your business and ensure the employees you bring on board are properly trained, vetted and ready to help your business succeed.

The staffing agency is considered the primary employer – bearing the majority of employee responsibilities.

co-employment 101stakeholders in a co-employment relationship. what is co-employment? in a common...

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