Staffing company’s link employers in need of extra labor with qualified workers in the community. Due to the staffing company’s intermediary position related to the client and the work staff, staffing companies often encounter many legal problems. Staffing companies must be aware of laws that are administered by multiple governing agencies in multiple career fields. They must also comply with laws regarding employee benefits, classifications and taxes. Before partnering with a staffing agency for employment services, an employer should be knowledgeable about the legalities a staffing firm confronts in everyday business.
Misclassifications of Employees. According to the American Staffing Association, the misclassification of employees is a “hot topic” regarding staffing companies due to many states that are experiencing financial difficulty and are seeking to recuperate revenue from various companies that have not properly classified workers. Many companies classify workers as independent contractors because of the reduced responsibilities and tax obligations that pertain to this category of workers. However, the government has an interest in ensuring that workers are classified properly because independent contractors are less likely to report self-employment taxes than other types of workers.
Compliance with Labor Laws. Some staffing companies may encounter problems if they preclude workers from receiving overtime pay. An agency that does not pay workers overtime pay or incorrectly classifies them as exempt employees may be a violation of the Fair Labor Standards Act
Compliance with Federal Laws. A staffing agency is expected to comply with various statutes and other laws that pertain to hiring workers in a similar manner to private businesses. The staffing agency is not permitted to discriminate based on workers’ gender, age or race. It must also comply with the Americans with Disabilities Act. The staffing agency is also required to comply with all OSHA standards that are related to the job. The staffing agency is the company from whom the employee will request unemployment compensation from and must comply with all laws related to unemployment.
Contracts. Staffing agencies must use several types of contracts to conduct their work. Disputes may arise over contracts. The staffing agency must make an agreement with the employing company which often includes a clause regarding the amount of hours a worker must work for the employer before the employer is able to hire the employee directly. Some employers bypass these clauses. The staffing agency may also confront problems if an agent of the staffing company misrepresents a potential employee in violation of the terms of the contract. The staffing agency must also prepare enforceable contracts regarding employment and nondisclosure agreements.
Interested in learning more about staffing agencies and how they can assist in filling vacancies? Check out other blog entries or contact us for a free consultation.