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Legal Issues


Temp Agency Workers - Who is the Employer? - May 9, 2012

Businesses can benefit from utilizing workers provided by a staffing or temp agency. However, you should be aware that under Iowa law, these workers may also be considered employees of your business in certain circumstances, such as under the Iowa workers' compensation law. 

 

Under Iowa law, when a worker is employed by a staffing agency or labor broker in order to provide services for the staffing agency or labor broker's customer (the "special employer"), the staffing agency is presumed to be the employer of the worker. However, the special employer is also often considered a joint employer of the worker for purposes of workers' compensation.

 

In order to determine whether a worker is an employee of the special employer, a court will consider: whether the special employer or the temp agency has the right to select the employees; whether the special employer or the temp agency has the responsibility for the payment of wages; whether the special employer or the temp agency has the right to discharge or terminate the employee; who has the right to control the work of the employee; whether the special employer is the responsible authority in charge of the work; and whether the worker and the special employer intended to enter into a contract of employment. Even if there is not an express written employment contract between the special employer and the worker, a court may find that there was an implied oral contract. Courts will consider whether the parties' actions indicated that the special employer and the worker intended to and consented to enter into an employment relationship.  

 

In practice, the following facts indicate that a special employer is the employer of a worker provided by a staffing agency for workers' compensation purposes:

  • The special employer interviewed and/or had the right to select or approve the employees who worked at the special employer's facility;
  • The worker reported for work and maintained time records in the same manner as permanent employees of the special employer;
  • The worker was treated the same as permanent employees of the special employer by, for example, wearing the same dress or uniform as permanent employees, working with permanent employees on the same shifts, being subject to the same rules and regulations as permanent employees and being included in company extracurricular events;
  • The special employer had direct supervision and sole control over the worker;
  • The special employer had the right to terminate the worker;
  • The special employer had a practice or policy of employing workers provided by staffing agencies after a trial period;
  • The worker was trained by the special employer;
  • Worker's shifts or hours were assigned by the special employer;
  • The special employer was responsible for giving warnings to the worker for misconduct;
  • The general employer did not have any representatives on site at the special employer's facility.

Your business may not be able to or may not want to avoid being considered a joint employer of workers provided by a staffing agency - for example, if a business is an employer of temporary workers for purposes of workers' compensation, it has immunity from common-law tort claims provided by the Iowa Workers' Compensation Act with respect to such employees - but you should be aware that your business may be considered an employer of workers provided by temp agencies under certain circumstances.