Preventing Co-Employment and Misclassification

Preventing Co-Employment and Misclassification


        Risks of Co-Employment

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There are several ways that you can try to avoid the problem of co-employment and misclassification. You should draft a very specific employment agreement for all temporary workers to sign. Also, modify any existing service agreements and company documents relating to temporary workers, to be sure the language in no way implies that temporary workers are eligible for the benefits of permanent employees. You may want to have an attorney review these documents to ensure they are legally sound.

In addition, it is important to be mindful of your precarious relationship with the staffing companies you work with. Make sure they are handling their responsibilities regarding their temporary workers, so that your relationship does not cross the line into employer-employee. Also, remain aware of your treatment of employees compared to temporary workers. Though it is important to be respectful of temporary workers and provide a positive work environment, you must keep the distinction as clear as possible. Temporary workers should have distinct name badges, business cards and letterhead. Also, any communications should be channeled through the staffing company, and temporary workers should not be included in company training or events, whenever possible.

There should be no mistaking a temporary worker for a permanent employee in any written form or communication. Any such document could be used as evidence of misclassification and make you liable for the penalties described above. For example, Microsoft® was recently held liable for retroactive employee benefits for temporary workers because they had inadvertently offered the workers discounted Microsoft stock—a benefit normally reserved for permanent employees. Diligence regarding your temporary workers can help your company avoid stiff penalties.

Hiring independent contractors or temporary workers may be a smart business decision in certain circumstances, but it also poses significant risks—namely, the possibility of co-employment and misclassification of workers. Though it can be a tricky situation to navigate, employers should mitigate their risk by being diligent and preemptive in their handling of temporary workers.

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