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Insight from the McDonald Hopkins Labor and Employment Practice

You may have more workers

than you think: Considerations for temporary workers

By David Schelberg

McDonald Hopkins PLC Associate Labor and Employment Practice

Temporary workers have steadily become more prevalent among automotive suppliers. The benefits of maintaining a flexible, cost-conscious workforce through a contract agency are many, particularly when facing inflation, labor shortages, supply chain disruptions, frequent employee absences due to illness, and other recent challenges. However, there are some risks.

1. Temporary workers may legally be your employees.

Companies who bring in temporary staff often forget these workers may technically be viewed as their employees, from a legal perspective. While companies may not directly pay temporary workers, they generally perform many of the functions that are viewed as creating an employment relationship, such as direct day-to-day job duties, have discretion on pay, and have sole authority to end the assignments of these workers. In these situations, many courts and administrative agencies (such as the Equal Employment Opportunity Commission and the National Labor Relations Board) will consider both the company using the temps and the staffing agency as “joint employers.” This means that your company, and possibly your managers and other direct-hire employees, may be subject to liability for employment-related claims brought by temporary workers.

2. Protect yourself and your employees.

Your company should always have written agreements that include indemnification clauses with staffing agencies that provide temporary workers. The indemnification clauses ensure the staffing agency agrees to pay your company’s legal fees, liability costs, and other expenses in the event a temporary worker brings a claim against your company. Indemnification clauses may vary in scope and the circumstances to which they apply. If you do not currently have indemnification agreements in place, or you would like to review existing agreements, you should contact an attorney who can assess your company’s particular needs and develop appropriate contractual language.

3. Make sure temporary staff know and understand who employs them.

Often during disputes temporary workers have no idea who actually employs them. By the time an agency complaint or lawsuit is filed, it is too late. For example, your company may request temporary workers from a staffing agency to perform a certain assignment. These workers may not realize the business relationship between your company and the agency. Further, the staffing agency may not have informed the workers about the circumstances of their assignment. In turn, the workers may presume they now work directly for your company. Confusion among temporary workers can be problematic. In particular, temporary workers are often subject to different terms of employment compared to direct-hire staff, such as compensation, benefits, work hours, job duties, seniority, eligibility for promotions and advancement, and standards for evaluating work performance. These differences may be tied to their temporary status, but if workers do not understand these circumstances, they may perceive different treatment as being discriminatory or retaliatory. To avoid these issues, make sure staffing agencies keep their workers informed about your company and the terms of their assignments. Your company should also take steps to make sure temporary workers understand the nature of their positions and their interrelationships with your direct-hire workforce.

4. Implement well-defined procedures for communication

and complaints. Many disputes related to temporary workers stem from miscommunication. For example, if temporary workers believe they are being harassed or treated unfairly by their supervisor, who is employed directly by your company, they need to know who to contact and how, whether that is your company’s HR department or higher-level management. If workers complain to the staffing agency and they never relay the complaint or, even worse, the worker never makes a complaint, this opens the door to liability for your company and hinders your ability to investigate and address potentially unlawful activities. To prevent miscommunication issues, make temporary workers aware of your company’s relevant employee polices, including procedures for reporting concerns and making complaints. Contact information for your HR department and your employee hotline should also be made available to them. Further, it is important to work with staffing agencies to make sure they have effective procedures for handling complaints made about your company by temporary workers.

5. Train your employees and managers regarding temporary staff.

Finally, a reasonable change in perception among your direct-hire staff may go a long way towards preventing disputes with temporary workers. Employees, even managers, often carry a belief that temporary workers are just that – temporary, and therefore, expendable. However, your direct-hire staff should be aware that temporary workers have most of the same rights as traditional employees. Training on these matters may be a simple way to avoid exposure. Temp workers can be a valuable resource – particularly in a tight labor market. Any organization using temp workers should take appropriate steps to ensure that valuable resource does not become a liability.

mcdonaldhopkins.com 39533 Woodward Avenue, Suite 318, Bloomfield Hills, Michigan 48304

This content (©2022 McDonald Hopkins PLC All Rights Reserved) is designed to provide current information regarding important legal developments. The foregoing discussion is general information rather than specific legal advice. Because it is necessary to apply legal principles to specific facts, always consult your legal advisor before using this discussion as a basis for a specific action. This material is not intended to create, and your receipt of it does not constitute, an attorney-client relationship with McDonald Hopkins.

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