How to Manage Co-Employment Risks When Using a Staffing Agency Opting for a co-employment relationship with a staffing agency helps in slashing down the time spent on payroll, recruitments, and other HR functions. In co-employment, the business owner(or client) and the staffing agency(or co-employer) team up to recruit employees. Additionally, by outsourcing recruitment, the business owner entrusts a significant portion of risk pertaining to the employee such as handling of wage and employment tax and worker’s compensation coverage, onto the staffing agency. Such a coalition may sometimes proves to be a serious concern. The blog discusses some effective ways to minimize the risks that crop up when using a temporary employment staffing agency.
1. Sign Contracts and Waivers with Contractual Workers Business owners need to seek legal assistance when drafting contracts and waivers. The contracts and waiver needs to state clearly that all contract workers are employees of the staffing firm and that they wouldn’t have any claim to compensation from the client. Before commencing their employment, such documents need to be signed in person by the employees to avoid any clash of interests in future.
2. Exclude Contract workers from company benefit plans IRS upholds the usage of exclusionary language in the company’s benefit plans provided it’s non-discriminatory. Companies need to exclude temporary staff and independent contractors explicitly in their benefits declaration. Alternatively, companies can have non-qualified components such as SPPs in their benefits plans, after mandatory review by legal counsel.
3. Maintain Employer Status and Control Certain Tasks The temporary employment agency needs to handle the following functionalities, with little or no client intervention-
● ● ● ● ●
Issue paychecks Withhold employment taxes Provide required insurance Set pay rates and benefits Negotiate terms such as the nature of the work, duration of the assignment, and working conditions with the client ● Maintain supervisory responsibilities such as performance, discipline, and complaints of the employees ● Evaluate performance and provide counseling to personnel ● Provide general training to the temporary workers
4. Provide On-site Contractors
Supervision
when
Hiring
The supervisory lines of control become blurred during long-term assignments. Contract workers are biased on getting training through the client and attend status meetings etc., while supervisors are more likely to give feedback directly and undertake performance reviews. To minimize this risk, the client needs to make it mandatory for the staffing firm to provide a project manager on-site to supervise the contract workers. It reinforces the fact that staffing firm is the primary employer and reduces the co-employment risk.
Last Few Words Co-employment is an imperative aspect of any temporary employment agency and client relationship. It provides tangible benefits of a workforce which are flexible and easily manageable, in long-term contractual endeavors. If not managed proactively, co-employment could cause implications and ownership issues in the long run.