Recently, some government agencies have changed their rules to more easily find joint employment in situations where they did not find it before.

Joint employment can expose separate employers to union organizing and to increased liability for wage payment, payroll taxes, civil rights violations, workplace safety and other issues. It can also subject small employers to federal jurisdiction under laws that would otherwise exempt them.

In the past, clients needlessly imposed assignment limits following the Microsoft benefits case and are now imposing excessive coverage mandates under the Affordable Care Act. Spurred by advisors’ warnings of joint employment risk, clients may demand “solutions” to it from staffing firms.

Talking clients out of such concerns is hard, so you may want to offer some or all of these solutions. You can enhance your value to the client by showing your understanding and support:

  • Agree to retain standby labor counsel to respond quickly to joint employment issues. Ideally, counsel should be knowledgeable in staffing, employment law generally, and so-called “traditional” labor law (the law of unions and collective bargaining).
  • Pre-establish lines of communication between the client’s labor counsel and yours.
  • Reinforce your separate employer status in employee communications and teach your client to respect the distinctions between its employees and yours.
  • Offer to train the customer’s frontline supervisors in the principles of contingent employee management.
  • Agree to train your in-house staff on unfair labor practices (ULPs), since their actions can expose the client to liability and since some ULPs are counterintuitive things that no normal person would consider bad or illegal.
  • When economically feasible, maintain on-site supervision by staffing firm personnel.

Operational: The terms of the workers’ employment may also be useful for rebutting joint employment theories. The NLRB’s Kalamazoo Paper Box decision listed factors relevant to determining whether joint employees have the “community of interest” necessary for including them in a client’s union bargaining unit. For several issues, you and your client may want to maximize differences in your workforces according to these factors: method of compensation; hours of work; employee benefits; supervision; qualifications, training, and skills; job functions; working time spent away from the assignment location; infrequency or lack of contact with other employees; and lack of integration/interchange with other employees.

Note that assignment length is not on this factor list.

Contractual: Staffing agreements can contain helpful items:

  • Make the statement that the staffing firm reserves the right to control the details of the work, even though the client actually supervises the work and remains liable for it.
  • Keep the client out of the processes of recruiting, selecting, disciplining and terminating assigned employees.
  • Insulate clients from control of your pay rates and, if possible, even from knowledge of pay rates.
  • Include substantial conversion fees for client hire and workforce transfers to successor staffing firms.
  • Avoid advertising for assignments to specific clients.
  • Avoid separate definition, pricing, and administration of payrolled employees. Instead, track the frequency of client-sourced employees and, at contract renewal, take the recruiting cost savings of payrollers into account in the overall rates applicable to all temporary employees.
  • Secure the client’s promise not to seek or acquiesce in a union bargaining unit that would combine the client’s direct employees with yours.
  • Allocate the costs associated with potential labor organizing.
  • Provide for rate adjustments if collective bargaining affects wages or other labor costs.

There is no guarantee that these measures will fend off a joint employment finding by a determined court or government agency, but they should make the case harder for your opponents to win.