2  FM quick reads on coemployment

1. The Benefits of Co-Employment

Using temps and part-time workers from a staffing agency is one way for facility managers to tap an external resource pool. Successful co-employment requires navigating some specific laws and regulations, but it's not all downside of course. Stormy Friday, president of The Friday Group points out the following positive aspects of co-employment arrangements:

  • Workers' compensation. It is through state workers' compensation laws that employees accidentally injured on the job are awarded benefits on a no-fault basis and are prohibited from suing employers for further damages. Most courts have said that under a co-employment provision, the customer organization is a "special employer" covered under workers' compensation laws in the same manner as other employers.
  • Employment status verification (I-9). The temporary staffing firm is entirely responsible for verifying the status of individuals hired for temporary work. It is also up to the temporary staffing firm to ensure that information they obtain on employment status in not used to discriminate.
  • Employment taxes. The Internal Revenue Service is clear (and court cases have upheld the regulations) that temporary staffing firms act as the sole employer with respect to withholding employment-related taxes.
Friday recommends the following steps to make certain that co-employment arrangements run smoothly and that the temporary staffing company retains and maintains the employer-of-record status.
  • Clear, written policies and procedures should be developed regarding use of temporary staff and the relationship between the FM department and the staffing firm. These documents should cover length of stay of temporary staff, safety on the job, wages and hours worked, civil rights, testing for pension plan inclusion, workers' compensation, verification of employment status and employment taxes.
  • It is important to have a well-articulated contract with the temporary staffing firm to ensure the temporary staffing firm maintains its employer status. The scope of work should include issuing paychecks; withholding taxes; providing required insurance, interviewing, assigning and reassigning work; setting pay rates and benefits; maintaining supervisory responsibilities; and evaluating staff performance.
  • Although training might be a standard component of the FM department's staffing plan, it is important not to extend training opportunities to temporary staff. With the exception of basic instructions on how to perform the work assigned through the temporary staffing firm, temporary staff should not be involved in any FM-department-supported training.
  • FM departments need to be careful that they do not provide job coaching or counseling to temporary staff. They also need to be certain that they don't discuss job vacancies within the organization. When this occurs, it creates the appearance that the temporary employee is being treated like a permanent employee.
  • Finally, while it may be common practice to include contractors in employee functions to foster partnership, facility managers should not include temporary staff in FM staff functions. Similarly, FM departments should not extend privileges such as use of the health club or tickets to events to temporary staff.

Be Careful with Co-employment Arrangements

Using temps and part-time workers from a staffing agency is one way for facility managers to tap an external resource pool. Co-employment arrangements make sense and can be a fairly straight-forward staffing solution, but there are many nuances to the laws and regulations that are important in co-employment but do not have to be considered in outsourcing arrangements.

Here are some aspects of co-employment to carefully consider, as discussed by Stormy Friday, president of The Friday Group.

  • Length of time as temporary employee. The primary issue surrounding co-employment status is the length of time the temporary staff person is on site with the client organization. It's easier to keep a temporary employee who is working well than constantly have to change individuals. However, legal experts recommend restricting temporary staff to 1,000 to 1,500 hours per year and establishing a mandatory 90-day break in service before an employee is allowed to return. This policy makes it clear to temporary staff that they are not "permanent" employees of the organization.
  • Safety on the job. In a co-employment situation, the FM department needs to maintain records of illnesses and injuries of any temporary staff the department has supervised in the same way it does for permanent staff. Failure to maintain these records opens the door to a potential OSHA violation because the party in direct control of the workplace is responsible for worker safety. The temporary staffing firm will only be in violation if it knew the job site was unsafe before the individual was placed.
  • Wages and hours worked. The Department of Labor has held that a temporary staffing firm has prime responsibility for tracking hours their staff work and paying the proper overtime. With co-employment, however, workers are considered joint employees of both the firm and the client, so clients may be liable for overtime pay.
  • Worker civil rights. Co-employment provides the same worker civil rights coverage for temporary staff as for permanent employees. Customer organizations are not exempt from civil rights compliance that extends to prohibition of discrimination under measures such as the Americans with Disabilities Act.
  • Testing for pension plan tax qualification. Although temporary staff provided through a co-employment arrangement are not entitled to employee benefits, they must be counted for coverage testing purposes if they perform more than 1,500 hours of service in a given year.


coemployment , OSHA , laws , regulations

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