Tag: staffing agency

May 11, 2020

New York Staffing Agencies and COVID-19

On March 20, 2020, Governor Andrew Cuomo signed an executive order that outlined New York’s 10-point Policy enacted to Assure Uniform Safety for Everyone (PAUSE). Among other things, the PAUSE order closed non-essential businesses and encouraged the residents of New York to stay at home. Some “essential businesses” could continue operating under social distancing rules, often meaning only essential personnel worked onsite. New York staffing agencies faced these restrictions as well, but often without control over the employees’ workplaces.

Under certain conditions, non-essential businesses and non-essential personnel who work for essential businesses were permitted to continue operations. Companies of all shapes and sizes and in all industries immediately scrambled to develop alternative ways to operate under the new restrictions. The most common change across all sectors in New York was a shift to a remote workforce.

Are New York Staffing Agencies “Essential Businesses”?

The COVID-19 pandemic has significantly affected business operations for New York staffing agencies. Many staffing agencies determined that their company was an “essential business,” because they provide other essential businesses with temporary contractors and assistance with direct-placement needs. These include clients throughout the health care, food service, manufacturing, and technology industries, as well as some start-up companies.

Despite being able to continue servicing these clients, some staffing agencies experienced a steady decline in revenue and the number of placements. Even “essential businesses” reduced their total headcount, including temporary workers that were previously placed on assignment. Outstanding job orders and negotiations with prospective clients were also canceled due to the economic downturn.

New York staffing agencies had to modify their business operations quickly to remain operational and survive this pandemic. These changes typically included one or more of the following:

An increase in the number of remote workers;
Permanent or temporary layoffs of direct staff and contractors;
Reduced compensation for either direct staff employees or contractors;
An immediate need to purchase equipment and technology for remote workers;
Adopting or revising company policies and procedures, employment agreements, and client contracts to address changes arising from the public health emergency.

The federal, state, and local governments are working on a plan to reopen the economy without significantly increasing the number of COVID-19 cases, hospitalizations, or deaths. President Trump announced that individual states would have the discretion to determine when and how to reopen their economies subject to some recommended prerequisites.

Recommended Federal Criteria for States to Reopen the Economy

Symptoms:

A downward trajectory of influenza-like illnesses reported within a 14-day period; AND
A downward trajectory of COVID-like syndromic cases reported within a 14-day period.

Cases:

A downward trajectory of documented cases within a 14-day period; OR
A downward Trajectory of positive tests as a percent of total tests within a 14-day period (flat or increasing volume of tests)

Hospitals:

Treat all patients without crisis care; AND
A robust testing program in place for at-risk healthcare workers, including emerging antibody testing.

New York’s Approach to Reopening

In New York, Governor Andrew Cuomo took the reins in determining how and when the State would reopen. On May 4, 2020, he announced during his daily press conference, a 4-phase plan for reopening the economy. Then on May 11, 2020, Governor Cuomo announced the creation of 10 regional Control Rooms across the state. These Control Rooms, consisting primarily of county executives, will apparently lead the reopening within their part of the State.

If the number of positive cases, hospitalizations, and deaths continues to decline, New York will begin to reopen businesses. During this transition, the State and the regional Control Rooms will carefully monitor the relevant data, including the transmission rate for COVID-19. If the transmission rate exceeds 1.1 (additional infections per infected individual), all reopening efforts may come to a screeching halt.

Prerequisites to Reopening a New York Region

So far, Governor Cuomo has indicated that before a region within New York can begin to reopen the economy, the following must occur:

There must be a 14-day drop in hospitalization and deaths;
The rate of new hospitalizations must fall below 2 per 100,000 residents across a 3-day rolling average;
At least 30% of hospital and ICU beds must be unoccupied;
At least 30 tests must be given for every 1,000 residents per month; and
Each county must retain at least 30 contact tracers per 100,000 residents.

4-Phase Approach

Before reopening, regions must meet the above prerequisites. Governor Cuomo previously mentioned a 14-day waiting period between phases to collect and review all relevant data. However, on May 11^th, he indicated the data, not a fixed timeline, would guide the transition between the phases. Relevant factors will include whether the action taken under each phase has led to an increase in the number of positive cases, hospitalizations, and deaths. Officials will also be monitoring the transmission rate and will be prepared to shut everything down if the rate meets or exceeds 1.1.

Phase 1 – Allows construction, manufacturing, wholesale suppliers, and some retailers to reopen as soon as May 15^th in regions reporting a steady decline in COVID-19 hospitalizations and deaths.

Phase 2 – Finance, real estate, insurance, and other types of retail businesses could begin to reopen.

Phase 3 – Begin to open restaurants and more retail.

Phase 4 – Reopen arts, entertainment, and education.

How Should Staffing Agencies Prepare for Reopening?

Employee Screening and Testing

Staffing agencies must determine if it makes sense to perform screenings or testing on direct staff employees before they enter the workplace. These measures could include temperature screening, symptom screening, questions related to recent travel or contact with individuals who tested positive for COVID-19, and active or antibody testing for COVID-19. Agencies should develop a plan for the implementation of whatever screening and testing they decide to conduct.

The decision to screen or test contract employees is much more complicated for staffing agencies. Contract employees typically work onsite at a client location. Therefore, staffing agencies must decide if it is feasible to screen or test contract workers or whether a more practical solution would be for clients to include contract employees in their screening and testing procedures. For the latter, staffing agencies would need to contact each client to determine what policies and procedures have been implemented. They would then need to determine whether their clients could treat contract employees similarly. Agencies should review the client procedures to determine if they comply with local, state, and federal law and whether the clients will conduct them in a non-discriminatory manner.

Return-to-Work Protocol

Each staffing agency should be developing a detailed plan to handle employees that test positive for COVID-19, are symptomatic, or must quarantine or isolate because of potential exposure to the coronavirus. The plan should include procedures for both direct staff and temporary contract employees. For example, will the employee need to provide medical documentation before returning to work?

Sanitizing and Disinfecting

Before reopening, staffing agencies should develop policies and procedures for disinfecting workstations, office equipment, and common areas such as lunchrooms, break rooms, and restrooms. They should provide employees access to sanitizer and tools to clean their workstations regularly and personal protective equipment, such as face masks and gloves, where possible.

Modifications to the Office

New York staffing agencies should consider making necessary changes to the physical workspace to optimize social distancing. Possible approaches include maintaining or increasing the number of employees that have permission to work remotely and staggering in-office workdays, shifts, or hours to reduce the number of employees present in the office. Agencies should implement policies to reduce the number of employees allowed in the breakroom, lunchroom, or restrooms at one time.

Staffing agencies should inform employees about the steps taken to educate, train, prepare, and protect its workforce and clients during this pandemic and reduce the risk of exposure or transfer of the COVID-19 virus to others. Agencies should also take the time to notify their clients of the steps taken to maintain or increase the level of customer service, to address client needs during this public health crisis, and to educate and equip staff and contractors with the tools necessary to perform their job duties safely and successfully.

It is also critical for staffing agencies to request that all clients provide information about all changes to their worksites, workstations, job duties, and policies and procedures that would affect their contract employees. This information is necessary for staffing companies to determine if the proper health and safety protocols are in place to protect their contract employees while on assignment. Since a staffing agency generally does not control the office space, worksite, schedules, safety protocols, and job duties for contract employees, an agency needs that information to assess the overall health and safety risks to its contractors and reduce its future liability. This information will allow staffing agencies to determine the risk level associated with the temporary placement and whether it makes sense to remove the contractor from the position given potential exposure.

Additional Considerations for New York Staffing Agencies

For New York staffing agencies to remain in business and be successful, they must review their current business operations and determine what changes to make and how to improve operations and customer service moving forward. Communication is key. As with any business, staffing agencies must communicate effectively with both employees and clients about how they’re managing these circumstances.

Due to the economic downturn caused by the pandemic, businesses will be looking to reduce costs wherever possible. It is prudent for staffing agencies to find ways to remain relevant during this time. These measures may include providing contractors with equipment or technology that would enable them to work from home and give clients peace of mind about security and privacy, as well as productivity. Staffing agencies should also review existing contract terms. They need to ensure that all terms can still be met under the circumstances. They should also consider future modifications that would help reduce or eliminate any obstacles encountered during or following this pandemic.

We expect rapid development on these issues over the following months. For more updates, subscribe to our email newsletter and follow Horton Law on LinkedIn.

March 6, 2020

NLRB Finalizes New Joint Employer Standard

On February 26, 2020, the National Labor Relations Board (NLRB) published its final rule on a new joint employer standard. The new rule will take effect beginning April 27, 2020. NLRB Chair John Ring proclaimed, “This final rule gives our joint-employer standard the clarity, stability, and predictability that is essential to any successful labor-management relationship and vital to our national economy.”

Joint Employer Implications

The question of joint employment status under the National Labor Relations Act affects employee rights and employer obligations for private sector companies. Employers found to be joint employers:

must bargain with a union that represents any jointly employed workers,
face potential liability for unfair labor practices that the other employer committed, and
could be subject to union picketing or other economic pressure.

New NLRB Joint Employer Standard

Under the new standard, the NLRB will only find joint employment where a business possesses and exercises substantial direct and immediate control over one or more essential terms and conditions of employment of another employer’s employees.

The rule further defines the operative terms of the new standard.

“Essential terms and conditions of employment” means “wages, benefits, hours of work, hiring, discharge, discipline, supervision and direction.”

“Substantial direct and immediate control” means “regular or continuous consequential effects”. The rule clarifies that any direct control that is “sporadic, isolated, or de minimis” will not be enough to warrant a finding of joint employment.

The rule contains additional analysis regarding “direct and immediate control” for each of the eight “essential terms and conditions of employment”. For example, “An entity exercises direct and immediate control over wages if it actually determines the wage rates, salary or other rate of pay that is paid to another employer’s individual employees or job classifications.”

History of the NLRB’s Joint Employer Doctrine

Browning-Ferris

The NLRB had relied on a similar employer-friendly joint employment standard for decades until 2015. Then, in a case involving Browning-Ferris Industries of California, a pro-labor NLRB took a more expansive view of the joint employer relationship. In Browning-Ferris, the Board found two businesses to be joint employers where they both met the common law definition of employer and shared or codetermined matters governing the essential terms and conditions of employment. Under Browning-Ferris, an entity could become a joint employer even without actually exercising control over another employer’s employees. It was sufficient that the entity reserved the right to exercise control over the terms and conditions of employment of another employer’s employee.

The International Franchise Association and the U.S. Chamber of Commerce conducted a study on the financial impact of the Browning-Ferris decision on the American economy. They reported that the Browning-Ferris joint employer standard cost the U.S. economy $33.3 billion per year, considering lost jobs, stunting of job growth, and a significant increase in litigation involving franchise businesses.

Hy-Brand

On December 14, 2017, the NLRB issued a unanimous decision in a case involving Hy-Brand Industrial Contractors, Ltd. that overruled the Browning-Ferris joint employer test. The Hy-Brand decision reverted to the pre-Browning-Ferris joint employer standard. However, the NLRB vacated its decision in Hy-Brand after ethics concerns arose regarding Board Member Bill Emanuel’s participation in the case. Member Emanuel had worked for the Littler Mendelson firm when it represented a party that had been involved in the Browning-Ferris case that Hy-Brand reversed. Emanuel explained that he had not known of his firm’s past involvement in that previous case.

Response to the New Joint Employer Rule

Worker Advocate groups and unions strongly opposed the new joint employer standard. They argue that it hurts low-wage, African American, and Hispanic employees and incentivizes businesses that mistreat workers to continuing doing so. Given the strong opposition, legal challenges to the rule are likely.

However, other groups emphasize that the new rule will allow businesses to contract with third parties for the supply of temporary employees with confidence that they will not be responsible for the other employer’s employment violations. This should provide an overall boost to the economy.

Sean P. Redmond, Executive Director of Labor Policy for the U.S. Chamber of Commerce, commented, “the new rule restoring common sense is cause for celebration, to be sure.”

Why Rulemaking?

As in Browning-Ferris and Hy-Brand, the NLRB has historically interpreted the National Labor Relations Act by adjudicating actual controversies between parties. The NLRB took the rulemaking approach here in an attempt to lock the joint employer rule in place and make it less vulnerable to future changes without warning.

The proposed joint employer rule appeared in the Federal Register on September 13, 2018. The NLRB received and considered approximately 29,000 comments from employee rights advocates and businesses.

What This Means for Companies with “Shared” Workforces

The new rule should come as a big relief for franchisors. But it still leaves a gray area in other contexts.

If your company participates in potential joint employer arrangements either through the supply of labor or as the recipient of the services of another employer’s employees, you should review the relevant contractual terms in light of the NLRB’s new standard. You should also reevaluate the policies and procedures governing your company’s relationship with other employer’s employees. Give particular attention to the “essential terms and conditions of employment”: wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction.

Generally, placement and temporary employment agencies should make the employment decisions in these areas. This will help to reduce joint employer claims against both parties, allocating the legal responsibility as usually intended—with the agency taking the role of employer and easing its client’s concerns of joint employer liability.

While this rule is good news for employers, it is critical to watch out for future developments. Beyond the anticipated legal attacks to the rule, a change in NLRB composition could again result in a policy reversal.

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October 31, 2019

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.