Published in the Union Leader (10/10/2016)
Q. My small business is experiencing growth and is considering whether to use a staffing agency to fill open positions. What are the benefits and risks involved when contracting for such a service?
A. As the economy rebounds, more and more businesses are turning to staffing agencies to fill open positions. Generally, staffing agencies can help a company find a variety of workers to meet the needs of its business, including: (1) temporary workers for a defined period of time; (2) temp-to-hire workers, wherein temporary workers who have performed well are hired at the end of the period; and (3) permanent employees.
Staffing agencies can be a useful resource for any business, including small businesses like yours that may be short on time and people. Staffing agencies can assume many responsibilities in the employment process, such as payroll, benefits, hiring, interviewing, reference checks, background checks, negotiating salaries, terminations, unemployment benefits, and workers’ compensation.
Because they often have access to a broader pool of candidates, staffing agencies can reduce the time it takes to find a good candidate for a particular position, which subsequently can help overall productivity and decrease turnover. During especially busy times, staffing agencies can find temporary workers to relieve permanent workers from getting burned out.
The above are just some of the services offered by these types of organizations. Before reaching out to such an agency, however, it is important to determine the functions your company is looking for assistance with in the staffing context. This will allow your company to get the help it needs, without paying for services it does not need.
It is also important for your company to understand the responsibilities that it still has as to its contracted workforce. One misconception is that staffing agencies will shield a company from liability that can arise from an employment relationship. This is not accurate as the scope of joint employer liability continues to broaden and must be a serious consideration when contracting with a staffing agency. For example, under a joint employment scenario, both the staffing agency and the company that contracts with it for workers, may be liable for compliance with the Fair Labor Standards Act (FLSA). Earlier this year, the U.S. Department of Labor issued detailed guidance on liability in the joint employment context – when an employee has two or more employers who are both responsible for compliance under the law. Given this recent emphasis, it is advisable to have legal counsel review any proposed contracts with a staffing agency to ensure compliance with all applicable laws and regulations.
Lindsay can be reached at lindsay.nadeau@mclane.com.
Know the Law is a bi-weekly column sponsored by McLane Middleton, Professional Association. We invite your questions of business law. Questions and ideas for future columns should be addressed to: McLane Middleton, 900 Elm Street, Manchester, NH 03101 or emailed to knowthelaw@mclane.com. Know the Law provides general legal information, not legal advice. We recommend that you consult a lawyer for guidance specific to your particular situation.