Employers Should be Aware of the Risks, as well as the Benefits, of Using Leased Workers

Posted on January 17, 2011 by Patrick Smith

An Article in Sunday’s Des Moines Register pointed to an increase in the hiring of temps as an early sign of economic recovery.    One of the benefits to employers of temporary workers, the article noted, is that they provide a company with flexibility when market conditions are uncertain. “Companies feel more comfortable using temporary work forces” in these conditions; they can better ramp up-or down-to meet production needs.  

While not disputing the benefits of leased workers, employers should also be aware of the potential downside of using temporary employees—particularly those who are employed for longer term assignments of one year or more.

First, it is critical to do due diligence on the staffing agency that is used.   Make sure the agency is financially sound and meeting its obligations for payroll withholding, workers’ compensation, and benefits. If the agency goes out of business and did not handle those issues, the employer may be responsible.   One client had a leased worker injured on the job, and it turned out the staffing agency had not procured workers’ compensation coverage for the state in which the employee worked. The employer ended up being responsible for the injury, and had no workers’ compensation coverage available to cover the costs.

A second important issue relates to employee benefits.   If a leased employee works for an employer for more than one year, that employee may have to be included in non-discrimination testing for employee benefit plans.  In addition, there are some circumstances where a long term leased employee could become eligible for benefits under the employer’s benefit plans.

Finally, using a staffing agency for hiring will not necessarily protect a company from liability under the anti-discrimination laws.    This post at the Wisconsin Labor & Employment Blog discusses certain staffing agency practices deliberately designed to avoid the anti-discrimination laws.   See paragraph above about due diligence. 

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Same Sex Marriage Ruling Impacts Iowa Employers

Posted on April 23, 2009 by Patrick Smith

Just days after the Iowa Supreme Court's ruling legalizing same sex marriage, at least one media outlet is reporting that Iowa employers are scrambling to determine whether they need to adjust their employment policies to comply with the ruling.  Of immediate concern are employee benefit programs that provide coverage for spouses, and policies governing family and medical leave.

An employee in Iowa is already protected from discrimination based upon sexual orientation or gender identity.  However, that protection did not necessarily require an employer to extend benefits to a same sex partner in the same way it would the spouse of a married employee.   The new ruling could change that requirement.  To the extent an employer grants benefits to the spouse of an employee, spouse may now include a person of the same sex.   It is important to note, however, that many employee benefits are governed by federal law, which is not necessarily impacted by the Iowa Court's ruling.

Employers should also adjust their practices concerning Family and Medical Leave Act compliance.   An covered employee under FMLA has the right to job protected leave to care for a "spouse" with a serious health condition.    FMLA itself defines "spouse" as "a husband or wife as the case may be".  However, the Department of Labor Regulations interpreting FMLA look to the law of the state where the employee resides to determine whether a person is a "spouse." 

Employers are advised to consult with counsel and with their employee benefit provider when adjusting policies and practices to comply with the Court's ruling.

 

 

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