August 2025 Volume 7

OPERATIONS & MANAGEMENT

TEMPORARY OR CONTRACT WORKERS ARE NOT MY EMPLOYEES, SO I DON’T HAVE TO WORRY, RIGHT? NOT NECESSARILY. By Johanna Fabrizio Parker

M any employers supplement their regular staff with temporary or contract workers. The specifics of each arrangement can vary, but often, these individuals are employed and paid by a separate entity but perform all their “work” at your facility. Sometimes, there can be a representative of the other entity on site too, but even with this resource, the staff of the employer where the work is being performed – so your managers and supervisors – generally have some role in directing the work. In short, the lines between your employees and their employees may not be so bright and distinguishable. We employment lawyers refer to this as being “joint-employers.” It comes up in various legal contexts and considers a number of factors but the general inquiry centers on who controls the work. If you are directing employees in their day-to-day activities – even if they are technically employed and paid by another entity – you can have legal obligations to these individuals. The specifics have to be evaluated both for your particular circumstances and the legal context. For example, the current test under the National Labor Relations Act (NLRA) is whether the entity “possess[es] and exercise[s] such substantial direct and immediate control over one or more essential terms or conditions of their employment as would warrant finding that the entity meaningfully affects matters relating to the employment relationship with those employees.” 29 CFR Part 103.40(a). But for purposes of the Family Medical Leave Act (FMLA), as another example, the regulations provide that “joint employment will ordinarily be found to exist when a temporary placement agency supplies employees to a second employer.” 29 CFR 825.106(b)(1).

So, what does all this mean for you, practically speaking? First, I think about the contracts you may have with an entity providing for temporary employees. What, specifically, do they say about the following issues: • Who is the employer? (This does not definitively decide the issue, but it is very helpful to an argument that you are not the employer if the agency is identified as the employer.) • What are the obligations of that employer, e.g., timely pay employees, verify time records, ensure that all employees are eligible to work? Sometimes, the agency says that they will pay but payment is based on the time records you provide (and therefore you are responsible for any errors in timekeeping). • What happens if you do not want one of their employees to return? Will they place him/her elsewhere? If they terminate the assignment, will they say that they are doing so solely because of you? • Who is responsible when an employee files a claim against one or both of you? And are there any limits to that responsibility? These can include actual dollar limits, and well as a duty to defend any claim. For the latter, how much “say so” do you want and/or can you require? Do you want to be able to direct your own defense (including choice of counsel) and have them pay for it? Or do you want the other entity to be able to make all these decisions?

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