Category: Employment Law

Temporary Employees

Best Practices for Engaging Temporary Employees and Contract Workers

In today’s economy, businesses are always searching for an easy, yet inexpensive way to supplement their workforces as supply and demand fluctuate. One option is to use outsourced contractors–either individuals providing services as an independent contractors or temporary employees engaged through a third-party staffing agency. Many companies struggle with their legal responsibilities and risks in using contract workers. But those risks shouldn’t stand in the way of getting work done.

Co-Employment

A co-employment relationship exists where two or more companies have the right and obligation as an employer or joint employer to maintain responsibilities over the worksite, job duties, day-to-day job functions, and supervision of an individual. In a co-employment relationship both the employer of record (e.g., a staffing agency) and host employer (e.g., the staffing agency’s client) are legally responsible for complying with federal, state, and local employment laws. These include wage and hour requirements, leave entitlements, OSHA compliance, and discrimination and harassment claims.

Usually, hiring a contractor through a staffing agency to provide services as an independent contractor or temporary employee need not be any riskier than hiring an individual directly as a W-2 employee. However, if your company decides to utilize contractors, some preventative measures will better protect you and reduce the risk of future co-employment based claims.

Use a Reputable Staffing Agency

Whether you need a single person to complete one short-term project or have an ongoing need to supplement your workforce, you should adequately vet any staffing agency that you work with. The staffing agency should be financially stable, have extensive history providing services to clients in your industry that are similar in size and scope, and be able to provide reliable references. It should also have a reputation among employees and clients for always conducting business professionally.

The American Staffing Association maintains a searchable online directory of its staffing agency members.

Document the Relationship

While it is impossible to eliminate the risk of a claim arising as a result of a contractor being placed on assignment, you should have a well-drafted agreement that contains the parties’ expectations, legal responsibilities, and roles and responsibilities of each party. The contract should aim at reducing the overall risk of exposure to the company. This includes addressing indemnity obligations to apply if a claim arises.

At a minimum, the agreement should clearly define the staffing agency’s role as the employer of record and state the client company’s requirements for any contractor placed on assignment. This may include pre-employment background and drug screenings, reference checks, or credit checks. The agreement should also identify insurance coverage requirements and define the parties’ liability and indemnity obligations.

Proper Training

It is essential to educate company managers on the overall risks of co-employment. Company managers should understand that they will be responsible for the assignment of job duties and day-to-day supervision of the contractors, but the staffing agency, as the employer of record, is usually responsible for most other functions. This typically includes the recruiting, onboarding, employment, termination, payment of wages, reviews, and handling of disciplinary matters pertaining to temporary employees.

The staffing agency should review all documentation or formal communications between the company and temporary employees. It should clearly define the individual’s role as a company contractor to avoid confusion and reduce the risks of co-employment claims. This includes all company policies and procedures, training manuals, badges, company handbooks, and memos provided to the workers throughout their assignments.

It is also vital to educate company managers on the laws that pertain to joint-employer relationships. Managers need to understand that even though the contractor works directly for the staffing agency, the company still has a legal obligation to provide each contractor with a safe workplace free from discrimination and harassment. Since the company is benefiting from the services of the contractor, it is probably also jointly responsible for compliance with all applicable employment laws. Many managers will not recognize these legal responsibilities without focused training.

Disciplinary Matters Involving Temporary Employees

The procedure for handling the investigation and discipline of temporary employees can cause confusion. An improper approach can increase the risk of co-employment claims.

To the extent possible, the staffing agency (as employer of record) should handle the recruitment, onboarding, employment, and termination of contractors. Exceptions might be necessary in limited circumstances. Sometimes the host employer might have to terminate a temporary employee’s assignment immediately and even escort them out of the building. But if a situation like this arises, the staffing agency should be contacted immediately and advised of the termination. As employer of record, the agency should then contact the worker as soon as possible to follow up as appropriate.

Whenever a workplace investigation involves a temporary employee, the host employer should promptly involve the employer of record. The staffing agency should always have an agent present, either by phone or in person, for questioning of a temporary employee. A representative of the host employer will usually also be present during the interview. They might even conduct the interview. But an individual from the primary employer must be present to serve as a representation for the contractor, review the details, and be available to ask any necessary follow-up questions.  This is especially important if the investigation involves a workplace injury or a complaint that could result in an administrative claim or litigation. This approach also reduces the need for subsequent meetings between the parties to discuss what occurred and the appropriate corrective action.

Employee Benefits

Before engaging contractors, your company should review all benefit plans to confirm that they apply to direct employees only. Your plans and policies should expressly exclude workers engaged as temporary employees or independent contractors employed by a staffing agency or other third party. Address all benefits plans, including medical and dental insurance, 401(k), life insurance, workers compensation, and unemployment insurance.

If, alternatively, you intend to extend benefits to contract workers, carefully consider the legal ramifications. Doing so might convert the worker to direct employee status and interfere with the idea of engaging them as a contractor.

Keys to Remember

Here’s a final checklist to help you avoid co-employment claims from temporary employees and independent contractors:

  • Work with a reputable staffing agency that is familiar with your company’s industry.
  • Obtain a qualified candidate from the staffing agency.
  • Require and allow the staffing agency to manage the person properly during the assignment.
  • Proper management should include regular and consistent contact with the employee.
  • Provide co-employment training to your managers and human resources personnel involved in the day-to-day management of the temporary employees.
  • Don’t extend employee benefits to temporary employees or independent contractors.
  • Comply with all applicable employment laws regarding both direct employees and contractors.

 

Not sure whether someone working for you is an employee or independent contractor? Watch our recorded webinar for more on that issue.

Federal Overtime Rules

Federal Overtime Rules Won’t Change Much in New York

On September 24, 2019, the U.S. Department of Labor finalized long-awaited changes to the federal overtime rules. The rules increase the salary requirement for the most common overtime exemptions. The higher threshold applies throughout the United States, but it does not trump most state overtime requirements. New York already has higher salary requirements for most of its overtime exemptions. Thus, the federal changes won’t force most New York employers to raise wages.

“White Collar” Exemptions

The Fair Labor Standards Act (FLSA) is a federal law requiring employers to pay minimum wage and overtime. Most employees must receive overtime for working over 40 hours in a week. Some exceptions apply. The most prevalent ones are the “white collar” exemptions.

The “white collar” exemptions include the administrative, executive, professional, and outside sales exemptions. All but the outside sales exemption have minimum salary requirements.

To qualify for the administrative, executive, and professional exemptions, most employees must satisfy both duties and salary requirements. (There is no salary requirement for doctors, lawyers, and teachers under the FLSA professional exemption.)

2020 Federal Overtime Rules

Beginning January 1, 2020, the weekly salary requirement for the FLSA administrative, executive, and professional exemptions will increase from $455 to $684. The new threshold is slightly higher than the $679 level first proposed earlier this year. However, it is much lower than the $913 level that the DOL tried to implement under President Obama in 2016.

Nondiscretionary Bonuses and Incentive Payments

Although the salary requirement has always been measured on a weekly basis, there is now a slight exception. For the first time, the new federal overtime rules will allow employers to use nondiscretionary bonuses and incentive payments to satisfy up to 10% of the salary requirement. Employers can review compliance on an annual basis and make a year-end “catch-up” payment if necessary.

Employers can determine the relevant 52-week period (measured consecutively), but must do so in advance. Otherwise, the calendar year is the default. They must make any necessary catch-up payment within one pay period after the end of the chosen 52-week period.

The total 52-week “salary” requirement is $35,568. Of that, up to $3,556.80 could be satisfied by bonuses or other incentive compensation.

Employers may pro-rate the requirement for employees who do not work the entire 52-week period. If an employee leaves employment the employer would need to ensure compliance and make any catch-up payment within one pay period after the end of employment.

Highly Compensated Employees

The FLSA’s special “highly compensated employee” exemption currently requires that the employee receive at least $100,000 in total compensation in a year.

The new federal overtime rules increase that to $107,432 in total annual compensation. The employee must receive at least $684 in salary on a weekly basis.

Earlier this year, the U.S. DOL proposed increasing this threshold much higher to $147,414. By comparison, the 2016 rule would have required annual compensation of at least $134,004.

The “highly compensated employee” exemption applies where the employee meets the compensation threshold and also performs at least one of the duties of an exempt executive, administrative, or professional employee. Most employees who qualify for this exemption would also be eligible for the full executive, administrative, or professional exemption anyway. So there may be relatively few situations where employers really need to increase compensation to maintain this special exemption.

New York’s Overtime Exemptions

The minimum wage varies throughout New York State based on geographic location, among other factors.

Click here for complete charts on the various New York minimum wage rates and overtime exemption salary levels.

For most occupations, the current New York minimum hourly wage ranges from $11.10 for Upstate workers to $15.00 for some employees in New York City.

New York has overtime pay rules that are similar to those found in the FLSA. These include similar exemptions, such as the administrative, executive, and professional exemptions.

New York’s administrative and executive exemptions already require that employees receive a salary higher than $684 per year. However, unlike the FLSA, New York’s professional exemption does not have a salary requirement. That means that some exempt professionals might need a raise to stay exempt in 2020.

A Caveat for Public Employers in New York

Most New York employers are subject to both the federal FLSA and the similar New York State laws.

However, the New York minimum wage and overtime rules don’t apply to governmental entities in the State, with limited exceptions. But the FLSA does.

So, public employers in New York will need to review the federal overtime rules to evaluate the potential impact on their workforces. Most public employees in New York eligible for exemptions already make more than $684 per year. But some, including part-time exempt employees, do not. (The FLSA salary requirement does not decrease for part-time employees.) Preserving exemptions for part-time employees may or may not be important, depending on whether they ever work over 40 hours in a week, which would trigger FLSA overtime obligations.

Act Soon, If Necessary

If you have employees in states where the new federal salary requirement exceeds the applicable state exemption threshold, then you need to be prepared to make changes by January 1, 2020. You will either need to increase compensation or remove the exemption and pay overtime where earned.

In New York, the new federal overtime rules only affect some public employers and professional employees. Most private-sector employers, including non-profits, will just need to focus on maintaining exemptions under New York law.

 

The full notice of the new FLSA regulations is available here:

Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees

Domestic Violence Victims

New York Employers Must Give Domestic Violence Victims Time Off

On August 20, 2019, Governor Andrew Cuomo approved enhanced protections for domestic violence victims at work.  The New York Human Rights Law amendments will create additional obligations for employers to accommodate employees who have been victims of domestic violence.  The amendments take effect on November 18, 2019.

Who is a “Victim of Domestic Violence”?

These amendments modify the definition of a “victim of domestic violence” under the New York Human Rights Law.

Employees will qualify as a domestic violence victim if they or their child has been a victim of a criminal act that resulted in actual physical or emotional injury or has created a substantial risk of physical or emotional harm to such employee or their child. The criminal acts must also have been committed by a family or household member.

Family or household members include people related by blood, married to each other, living together, and others.

The law does not apply to employees younger than 16 unless they are married or have a child.

Legal Protections for Domestic Violence Victims at Work

New York employers may not discriminate against an individual because of their status as a victim of domestic violence.  This includes refusing to employ someone because they are a domestic violence victim; terminating an individual’s employment or negatively changing their compensation or other work conditions based on that status; and advertising any limitation related to employment based on such status. Harassment of an employee who has been a victim of domestic violence is also prohibited.

Plus, the Human Rights Law adds a new affirmative requirement to provide reasonable accommodations to employees who have experienced domestic violence.

What Is the Employer’s Duty to Reasonably Accommodate?

Employers in New York will be required to reasonably accommodate victims of domestic violence who need a reasonable amount of time away from work for any of the following reasons that pertain to an incident or incidents of domestic violence:

  • Seeking medical attention for injuries;
  • Obtaining services from a domestic violence shelter, program or rape crisis center;
  • Getting psychological counseling, including for a child who is a victim of domestic violence;
  • Participating in safety planning and taking other actions to increase safety from future incidents of domestic violence, which may include temporary or permanent relocation; or
  • Obtaining legal services, assisting in the prosecution of an offense, or appearing in court.

In these situations, employers must provide reasonable accommodations unless they would pose an undue hardship. The degree of hardship depends on several factors. These include the overall size of the employer’s business, the nature of the business, and the structure of its workforce.

Employee Obligations for Receiving Accommodation

An employee seeking time off as an accommodation will need to provide the employer with reasonable advance notice whenever possible.

Employers may require a certification in cases where the employee does not provide advance notice. Acceptable documentation includes:

  • A police report indicating that the employee or his or her child was a victim of domestic violence;
  • A court order protecting or separating the employee or his or her child from the perpetrator of an act of domestic violence;
  • Other evidence from the court or prosecuting attorney that the employee appeared in court; or
  • Documentation from a medical professional, domestic violence advocate, health care provider, or counselor that the employee or his or her child was undergoing counseling or treatment for physical or mental injuries or abuse resulting in victimization from an act of domestic violence.

If an employer has a policy that includes paid time off, such as vacation, it may require the employee to use earned paid time off for a protected absence. However, if the employee has no available paid time off, the employer does not have to pay the employee.

An employee who must be absent from work as a domestic violence victim accommodation has the right during the absence to continue any health insurance coverage provided by the employer.

Confidentiality

Under these amendments, employers must keep information about an employee’s status as a victim of domestic violence confidential.

The law does not expand on this obligation. Presumably, employers must be able to discuss the situation to the extent necessary to provide necessary accommodations. However, disclosure of the reason for an employee’s absence to co-workers could violate this new requirement.

What Should Employers Do Now?

You must ensure that managers recognize these new responsibilities. This especially includes both the requirement to maintain confidentiality and the obligation to allow time off from work to domestic violence victims. And be sure to take such requests seriously. Although employers might be able to deny time off in some cases, the law is intended to protect employees even if it inconveniences business operations.

 

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