Who is Responsible?
This article was published on “The Staffing Stream,” an online blog sponsored by Staffing Industry Analysts. To read this article and more on their site, click the link offered below the article.
Who’s the boss? And who is liable in the event there is an issue? Employers and courts have been mulling through this problem. However it all comes down to the control that the employer has over its workers.
Last month, the need for some type of written agreement between customers and their staffing vendors defining their relationship may have just become clearer when the U.S. Court of Appeals for the 3rd Circuit issued its decision on joint employer liability on June 28, in the case of In Re: Enterprise Rent-A-Car Wage and Hour Employment Practices Litigation.
While the case looks at the liability of a parent company for the Fair Labor Standards Act violations of its subsidiaries, the Court, which covers Delaware, New Jersey and the Eastern, Western and Middle Districts of Pennsylvania, enunciated criteria, the “Enterprise” test, melding standards established by other Circuits into a clear four-criteria inquiry. The Court suggested that when faced with the question of potential joint employer liability, lower courts consider the following four points:
- Authority to hire and fire the relevant employees;
- Authority to promulgate work rules and assignments, and to set the employee’s conditions of employment: compensation, benefits, and work schedules including the rate and method of payment;
- Involvement in the day to day employee supervision including employee discipline; and
- Actual control of employee records, such as payroll, insurance or taxes.
The Court cautioned that lower courts should not blindly apply these standards and are to consider economic concerns of the real world.
However, the bottom line is that users of contingent labor should dust off those contracts, terms and conditions and timesheets and set and maintain the employer indicia of discipline, setting pay rates, setting and paying wages and limiting clients’ access to records of temporary employees.