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A Manager’s Guide to Understanding Co-employment

We all know the cradle-to-grave work model that once dominated the American workforce has nearly disappeared. Today, individuals frequently change jobs (and sometimes careers) during their lifetime. A huge segment of U.S. workers—nearly 33 percent according to a 2015 report by the U.S. Government Accountability Office—are now part of the contingent workforce, and this trend is only expected to grow. By 2020, experts predict between 40 to 50 percent of the U.S. workforce—more than 65 million people—will be composed of contingent workers.

This growing trend toward contingent workers mirrors the rate of change sparked by individuals who change jobs of their own volition more frequently. According the U.S. Bureau of Labor Statistics, the average tenure of a U.S. worker is 4.6 years—a trend that spans nearly every age and gender category, although experts agree Millennials change jobs more frequently at a rate of every 2.6 years. Our affinity for job change is also reflected in a longitudinal study the Bureau released in March 2015—“Number of Jobs Held, Labor Market Activity, and Earnings Growth Among the Youngest Baby Boomers.” According to the study, the youngest members of the Baby Boomer generation (those born from 1957 to 1964) have held an average of 11.7 jobs between the ages of 18 to 48.

More and more companies are embracing contingent workers, too—entering into co-employment relationships with human capital management and staffing firms to facilitate the model. What is co-employment? It is a legal relationship between two companies—one that needs employees (the client) and a staffing firm that provides employees.

By partnering together in a co-employment relationship, both entities have distinct and separate legal responsibilities and duties as employers. When both parties clearly understand the scope of their responsibilities, the relationship works well. However, liability issues can arise when the client performs a duty the staffing firm (as the ‘real employer”) should perform.

Here is a brief overview of the responsibilities for each:

Client Responsibilities
A client typically only has three primary obligations regarding temporary workers:

  • Supervise and direct day to day work
  • Control work site conditions
  • Determine the length of the assignment

Staffing Firm Responsibilities
Staffing firms handle the lion’s share of responsibilities in the co-employment arrangement, including:

  • Secure work authorizations (I-9 and e-Verify checks)
  • Conduct pre-screenings, reference and background checks, behavioral assessments and drug screenings
  • Hire and fire workers as needed
  • Establishing pay rates
  • Providing workers’ compensation and unemployment coverage
  • Assigning and reassigning worker to jobs
  • Ensure Compliance with wage and hour laws and other employment regulations

To insulate your business from unnecessary liability, your partner will also:

  • Obtain job descriptions and select qualified candidates
  • Maintain regular contact and provide performance feedback to the employees
  • Provide employees with performance feedback
  • Handle all personnel issue so that you do not keep “personnel files”
  • Manage all employees’ problems or concerns directly
  • Visit the work sites to ensure that all employees are properly trained, if necessary.

Co-employment provides companies with the flexibility to secure skilled and experienced contingent workers on an as-needed, just-in-time basis—helping control workforce costs and profit margins while reducing liability.

With the contingent workforce projected to continue its growth trajectory, employers simply need to educate themselves on the issues and rules that surround this new hiring dynamic. There are many laws governing co-employment, so it is imperative that you choose an experienced and reputable staffing firm as your partner. As a trusted staffing solutions providers for more than six decades, Snelling takes great care to limit our clients’ co-employment risks. Talk with one of our representative to learn more about the benefits and rewards of co-employment.

*Disclaimer: This article is for informational purposes only and is not intended to replace consultation with and advice from competent legal counsel.