Recruiters, Keep the Door to Co-Employment SHUT

If you outsource the back office for your contract placements, you probably do so in part to reduce your employment liability. But is your recruitment back office really doing everything it can to protect you from co-employment?

In general, co-employment is when more than one entity shares potential or actual employer responsibilities for an employee. All parties deemed to be co-employers of the contractor could share liability.

In a contract staffing situation, YOU could be considered to be a co-employer if the relationship between you, your back office, your client, and your candidate is not properly established.

The back office should become the legal W-2 employer of your contractors and assume ALL employment responsibility and liability. To ensure this, the back office should have contractual documents in place with both the end client and the candidate (contractor).

If not, they could be leaving the door to co-employment issues wide open.

Employment and back office duties

The master agreement between the back office and the end client should explicitly state that the back office is the legal employer of the contractor. It should spell out the responsibilities the back office will assume, such as the following:

• Payroll, including withholding and paying all applicable taxes
• Complying with all federal, state, and local laws, including:
  • Title VII of the Civil Rights Act of 1964
  • The Civil Rights Act of 1966
  • The Equal Pay Act
  • The Americans with Disabilities Act of 1990 (ADA)
  • The Occupational Safety and Health Act (OSHA)
  • Wage and hour laws
  • Family and medical leave laws
  • Military leave laws
  • Immigration and naturalization laws
• Offering Affordable Care Act-compliant benefits
• Carrying the proper insurance policies (Commercial General Liability, Professional Liability, etc.)
• Workers’ Compensation

Without this, the contractor’s employment could be left in question. You do NOT want a government agency or court to consider YOU to be the employer or a co-employer.

It is also important for the back office to have an employment agreement with the candidate/contractor. The contractor should acknowledge within the agreement that they are not, under any circumstance, the employee of the end client. The agreement should have them waive any right or claim to the end client’s benefits or compensation plans.

If you have any questions about co-employment or back office issues, give us a call at 888.627.3678.