Los Angeles Times

Labor agency warns clients of temp staffing agencies

- By Lydia DePillis DePillis writes for the Washington Post.

The Department of Labor thinks more companies should take responsibi­lity for their contracted workforces, and it’s just told them exactly how and when.

If there’s one trend that’s characteri­zed the changing American workforce more than any other in recent decades, it’s been the fracturing of the employment relationsh­ip, as companies focus on their “core competenci­es” and pay other businesses to do everything else.

Subcontrac­ting, outsourcin­g and the use of staffing agencies allows businesses to inexpensiv­ely scale up and scale down their labor needs, without the hassle and liability of adding payroll. It also adds another layer between workers and the bosses who call the shots, shielding managers from responsibi­lity when the labor provider doesn’t follow the law.

David Weil, director of the Department of Labor’s Wage and Hour Division, calls this trend “fissuring.”

Weil thinks a lot of those client companies should be considered “joint employers,” together with the contractor­s that sign the checks, making them liable for violations.

On Wednesday, his department issued detailed guidance drawing the categories in black and white, sending a message to employers that they had better fall on the right side.

Weil’s division has stepped up its proactive enforcemen­t of situations where companies are functional­ly controllin­g the workers they order up from labor providers — and it broadcasts its enforcemen­t of egregious violations. In October, for example, investigat­ors found that temp workers at a snack food producer in New Jersey were cheated out of overtime wages, and ordered the company to pay back wages, damages and civil penalties.

That’s the most typical form of joint employment: a “vertical” arrangemen­t, with one company hiring another, as the guidance describes. But it can also be “horizontal,” when a worker might be employed by two subsidiari­es of the same company but never get overtime because the hours are tracked separately.

The Obama administra­tion’s aggressive stance on joint employment has irritated some large industries, particular­ly the franchise industry. Before seeing the Labor Department’s new guidance, the Internatio­nal Franchise Assn. didn’t like it.

“This is just another example of regulatory fiat that raises even more questions for employers,” said Matt Haller, the group’s senior vice president. “The admin- istration should consider going through formal rulemaking instead of just issuing a ‘ guidance’ without even an outreach to targeted industries.”

Not everyone is so disturbed. The staffing industry itself, for example, says that most of its clients recognize the joint employment relationsh­ip with no adverse effects.

“This should not be of concern to staffing clients, as potential liability for temporary workers is the same as ( and in some cases less than) liability for the client’s internal employees, and can be mitigated and controlled by clients,” American Staffing Assn. general counsel Stephen Dwyer wrote in an email. To avoid costly lawsuits, he says, clients should simply select labor providers with good compliance records.

 ?? LM Otero
Associated Press ?? THE U. S. DEPARTMENT of Labor’s Wage and Hour Division has stepped up its proactive enforcemen­t of situations in which companies are functional­ly controllin­g the workers they order up from labor providers.
LM Otero Associated Press THE U. S. DEPARTMENT of Labor’s Wage and Hour Division has stepped up its proactive enforcemen­t of situations in which companies are functional­ly controllin­g the workers they order up from labor providers.

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