Temporary Workforce: Hidden Liability & Steps Your Company Can Take To Limit It

Transcription

1 Temporary Workforce: Hidden Liability & Steps Your Company Can Take To Limit It 24th Annual Labor and Employment Law Seminar May 3, 2012 Kerryann M. Haase Brian P. Paul (312) (312)

2 Overview I. Temporary Workforce Employment Liability II. Will Your Temporary Workforce Lead To A Union III. Clauses For Your Temporary Agency Contract 2

3 Different Types of Contingent Workers? In general, a contingent worker is a worker who does not have an implicit or explicit contract or expectation for ongoing employment. Types: Temporary/Leased Employees Independent Contractors Seasonal Employees Contract Employees 3

4 Temporary (Leased) Employees Workers who are hired and paid by a temporary agency and assigned by the agency to work for a particular client company. Traditionally, temporary employees are used to supplement the company s own workforce. Currently, warehouses are increasing their temporary employees in lieu of hiring full-time employees. 4

5 Are You A Joint Employer? A joint-employment relationship exists where both the temporary agency and the client company are found to have legal responsibility over the temporary employee. The Courts will examine the totality of the circumstances to determine if you are a joint employer. 5

6 The Courts Generally Will Consider the Following Factors To Determine If You Are A Joint Employer: Degree of supervision Skill needed to perform the work Materials and place of the work Duration of employment Method of payment Relationship between work done and the employer s regular business Intent of the parties with respect to the relationship Universally, the degree of control that you exercise over temporary workers will determine if you are a joint employer. 6

7 How long is too long? There is not a set time frame for how long an employer may retain a temporary employee. However, the longer a temporary employee is retained, the more likely it is a court will consider the temporary employee a regular employee. 7

8 The Microsoft Lesson In the mid 1990s, Microsoft employed independent contractors, temporary employees and full time employees who performed the same job functions in the same facility. The IRS conducted an audit of Microsoft s independent contractors and determined that they were employees. Microsoft had to pay back employment taxes for each of the independent contractors. The temporary workers, learning of the IRS determination, sued Microsoft under ERISA for failing to allow the temporary workers to participate in Microsoft s benefits plan. In 2001, Microsoft reportedly settled the case for $97 million. 8

9 Family and Medical Leave Act (FMLA) To qualify for coverage, employee must have worked for the employer for 1,250 or more hours during the past 12 months. A joint employer relationship exists for purposes of FMLA when a company has sufficient control over the work or working conditions of the temporary employee. 9

10 When a Joint-Employer Relationship Exists Under the FLMA: The primary employer is responsible for giving notices concerning FMLA leave, providing the leave, and maintaining health benefits. A joint employer will be viewed as the primary employer if it has the authority and responsibility to hire or fire, assign or place the employee, and provide pay and benefits. The primary employer is responsible for job restoration, and the secondary employer is responsible for accepting an employee returning from leave if the secondary employer continues its relationship with the placement agency and the agency chooses to return the employee to that job. The temporary agency and the client company must count the individual as an employee to determine whether the employee is eligible for FLMA leave. Client companies may not interfere with or prohibit temporary employees exercise of FMLA rights. 10

11 The Americans with Disabilities Act (ADA) Where a joint-employer relationship exists, both the temporary agency and the client company are obligated to provide a qualified individual with reasonable accommodations on the job. Employer must have notice of such need Providing the accommodation must not present an undue hardship ADA prohibits a client company from requesting only employees without a disability from a temporary agency. 11

12 Undue Hardship: Where a reasonable accommodation would involve significant expenses for both employers, despite the combined resources to the two entities, both entities can show undue hardship. Where a reasonable accommodation would have resulted in significant expense for the client company, and the company made a good faith, but unsuccessful, effort to obtain a contribution to the cost from the temporary agency, the client company may have an undue hardship defense. 12

13 Undue Hardship: Where an entity s own resources are sufficient to provide a reasonable accommodation without undue hardship, the entity must do so, even if the other entity refuses to contribute to the cost. A temporary agency or client company that refuses to contribute to the cost of a reasonable accommodation may be liable for a failure to provide an accommodation, even if the other entity provides it. 13

14 Federal Discrimination Laws Protects employees from various forms of discrimination, such as discrimination based on race, color, sex, religion, national origin and age. Where a joint-employer relationship exists, a client company may be held liable for discriminatory actions in violation of Title VII of the Civil Rights Act or the Age Discrimination in Employment Act (ADEA). 14

15 Employers can take steps to minimize and manage their potential for joint employer status by taking the following steps: Right to direct and control work of temporary employees should rest exclusively with the temporary agency On site supervision by temporary agency Disclaim company control Limit the duration of the work assignment Avoid work assignments that are integral to the business Disclaim joint employment relationship Require evidence of insurance for workers compensation, employment practice and liability insurance from temporary agency Obtain indemnification from temporary agency 15

16 Ways to Avoid a Joint-Employer Finding: Determine whether the contingent employee can perform the services away from the company s premises. If there is no intention to offer contingent employees benefits, include such provision in the company s employment policies. Do not become involved in the hiring, firing, or disciplining of contingent employees, report complaints to agency. 16

17 Ways to Avoid a Joint-Employer Finding (cont.): Do not require the temporary agency to follow specified hiring and training procedures Do not require the temporary agency to hire current employees who are being terminated and whose functions are being outsourced Provide employees with training regarding their interactions with contingent workers 17

18 Union Avoidance Concerns Traditional Concerns: Temporary employees make excellent Salts, who promote unionization throughout the company and encourage company employees to unionize. The presence of temporary employees may be used to suggest to company employees that the company is transforming into a purely contingent workforce and that the employees should bring in a union to create job protection. 18

19 Union Avoidance Concerns Will Temporary Workers Be Able To Organize Your Workforce: In 2001, the NLRB held that temporary workers should be included in the union's existing bargaining unit and therefore covered by provisions of the union contract (Tree of Life, Inc. d/b/a Gourmet Award Foods, 336 NLRB No. 77 (2001)). In 2004, the NLRB overturned that ruling and instead held that temporary employees who were jointly employed cannot be made part of a single bargaining unit without the consent of both employers (H.S. Care L.L.C., 343 NLRB No. 76 (2004)). 19

20 Union Avoidance Concerns In December 2010, the NLRB issued a decision underscoring the current Board s view that the right to organize should extend as broadly as possible (Kansas City Repertory Theatre, Inc., 356 NLRB No. 28 (2010)) The majority determined that the National Labor Relations Act does not exclude employees who only work sporadically from exercising their right to organize and bargain collectively. The Board noted that although there was no reasonable expectation of future employment, the employees worked intermittently and shared a community of interest. The Board distinguished this decision from the line of decisions excluding temporary employees from bargaining units containing regular full-time or part-time employees, but it demonstrates a direction away from the 2004 decision. 20

21 Union Avoidance Concerns How to Avoid Unionization: Maintain open communication with employees about the company s view on unions. Employers may discuss unions with employees so long as the discussion is not coercive or threatening. However, in general, an employer may not ask employees (even a good friend) questions concerning how they or others feel about a union. It is not illegal for an employer to listen to any information an employee volunteers. 21

22 Negotiating Concerns Review the contract offered by the temporary agency with legal counsel before agreeing to the contract. Structure the contract with the agency as a results-oriented agreement in order to avoid joint-employer status. Define the results to be obtained as objective measures of performance. For example, describe the work that needs to be done, not how many people should do the work. In addition, explicitly define the agency as the primary employer for purposes of FMLA liability. 22

23 Negotiating Concerns A written agreement should confirm that the temporary agency is responsible for: All aspects of hiring, placement and assignment Maintaining all personnel records, including Forms I-9 Paying wages while making appropriate deductions and paying FICA contributions Providing workers compensation insurance Supervising and coordinating the services of the employees Setting wage rates Recording and paying overtime 23

24 Negotiating Concerns Indemnification Clause Provides that the temporary agency will indemnify the company in the event an employee brings claims arising from workers compensation, wage-and-hour laws, unemployment compensation, and federal and state discrimination laws. Retain the right to select your own counsel and have the temporary agency pay your attorneys fees. 24

25 Negotiation Concerns Harassment Clause Requires the temporary agency to receive and act on all complaints of harassment by temporary employees, including reporting the complaint in its entirety to the company. Requires the temporary agency to give harassment training to temporary employees. 25

26 Negotiating Concerns ADA Clause Specify that the temporary agency will provide reasonable accommodations and will reimburse the company for any costs. In the event that a reasonable accommodation is not available to allow the temporary employee to perform the job, then the temporary agency will consider placing the temporary employee with another company as a reasonable accommodation to the employee. 26

27 Negotiating Concerns FMLA Clause The temporary agency acknowledges that it is the primary employer under the FMLA. The temporary agency acknowledges that it will administer all aspects of the FMLA. The temporary agency will indemnify and hold the company harmless in the event of a violation of the FMLA. 27

28

29 THANK YOU! Kerryann M. Haase Brian P. Paul (312) (312)