Handle With Care

Shielding Your Business

The best way to insulate your company from liability in this area involves the worst business practice: avoiding control of temporary employees. Ultimately, this includes requiring the employment agency to screen and hire applicants, evaluate and discipline them, and even supervise daily work through on-site supervisors employed by the agency. To avoid your being construed as their employer, temporary workers must not be subject to your company's policies.

"Unfortunately, an arrangement that best insulates an employer is not always the arrangement that best promotes business objectives," Giddens says. "You can't let potential legal liability be the tail that wags the dog." Most companies want to retain the right to supervise their employees--even if they're temporary--and to have some options if things aren't going well. The trade-off is being considered a joint employer.

While it's difficult to avoid being declared a joint employer, you can minimize your chances of having to defend your company against a lawsuit brought by temporary employees. Consider the following guidelines:

  • Choose your temp agency with care. Get recommendations from others in your industry for an established, reliable temporary employment agency. This company will screen people who may be sent to your work site, so find out about the company's screening process and hiring criteria. The more capable the workers, the less likely you'll have trouble that leads to lawsuits. Also find out how the agency treats its employees because the organization's mismanagement could drag you into a lawsuit as a joint employer. Don't forget to ask how the agency would protect you in the event of a lawsuit. Some agencies make it a priority to get the client company removed from the lawsuit.
  • Draw up an agreement. Most companies don't bother with a written contract, Giddens says, but it can save finger-pointing and expense in case of a lawsuit. The agreement should specify which party is responsible for which aspects of the worker's employment and should allocate responsibility for any future employment claim. It should also specify which party will foot the bill for legal defense. Have the agency prepare the contract, then have your lawyer look it over. (You can use the same contract for all temps sent by the agency.) "The agreement is an acknowledgment of joint employer status," Giddens warns. But rather than spend months in court with both parties denying responsibility, it allows you to get on with how to defend your company against the claim.
  • Remember that temps are human beings. Too often, temporary employees are treated as an easily replaceable commodity. If one complains about poor treatment, the employer is likely to call the agency and ask for a replacement. "The single biggest factor in whether someone files a lawsuit is whether they feel they've been treated fairly," Giddens says. If you treat temporary workers with respect and take the same care to avoid discrimination and investigate complaints as you would for a permanent employee, you reduce your chances of being named in a lawsuit.

Steven C. Bahls, dean of Capital University Law School in Columbus, Ohio, teaches entrepreneurship law. Freelance writer Jane Easter Bahls specializes in business and legal topics.

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This article was originally published in the March 1999 print edition of Entrepreneur with the headline: Handle With Care.

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