Using A Temp Agency May Not Keep You Off The Hook

joint-employersAccording to the US Department of Labor’s Wage & Hour Division (WHD), more than 160 workers at a Philadelphia direct mail and printing company will receive $1.45 million in back wages and damages after a federal investigation found their employer and a staffing agency failed to pay overtime wages.

The back story

The WHD investigated direct mail processor ICS Corp. and two staffing companies it retained, New Century Integrity Corp. (and its owner Hokkito Teddy) and Richy Services Inc. Richy failed to produce any payroll or time records, so it’s unclear if they actually supplied any workers at all. New Century, however definitely did supply temporary employees to ICS. And that’s where the trouble started…

According to the WHD, New Century would supply workers who were paid for 40 hours of work on paychecks issued by ICS. If they worked more than 40 hours, they would receive the pay for the additional hours in cash from New Century — but instead of time-and-a-half, they’d be paid at a lower rate of pay than their regular hours. So, for instance, if somebody was normally paid at $13 an hour, for any hours over 40 they worked in a week they’d get cash, but only at, say, $11 an hour. Other workers were simply paid in cash by New Century for all their hours, at straight-time rates no matter how many hours they worked.

Hiring an agency doesn’t necessarily protect you

It’s possible the bosses at ICS believed that by hiring temp agencies to supply their workers, they were insulating themselves from any wage and hour violations. After all, no employees, no wage and hour violations, right? But that would have been wrong. There’s a concept called joint employment, which says the more you control the terms and conditions of someone’s work, the higher the chances you’ll be considered their employer for the purposes of wage and hour law. Even if they’re a temp who was actually hired by an outside agency, and you think you merely hired the agency to provide you with workers.

In this case the fact that ICS, rather than the temp agency, issued paychecks directly to some workers only increased the chances that ICS and the agency would be seen at “joint employers.”

So, the upshot is, ICS and New Century, and New Century’s owner, Hokkito Teddy, were all three considered joint employers, and all three are now on the hook for $725,583 in overtime wages, and an equal amount in liquidated damages. Ouch!

How to really protect yourself

Of course, the first thing to do is to recognize there’s a good chance you may be considered a joint employer in the case of trouble, and make sure you’re doing business with a reputable agency. One that operates in accordance with applicable wage and hour laws, that pays their employees completely, correctly and on time.

The second is to track employee time yourself, and verify with the agency that employees are being properly compensated. No matter what your agency does to track employee time, you’re much better protected if you also use your own time tracking system (such as a punch clock like our Model 125 or ATR120, installed software such as timeQplus, or our cloud-based AcroTime service) to independently verify the time those temps are actually working — and make sure the agency pays them accordingly.

Hiring temporary workers is a great way to cover a large order, deal with seasonal demand, or cover other short term needs without taking on permanent workers (only to furlough them when demand decreases). Don’t let the convenience of short-term workers turn into a long-term headache by failing to verify your temp agency has paid them properly!

Do your organization employ temps? What steps do you take to ensure your staffing agency isn’t getting you in trouble as a “joint employer”?

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