Articles - Employee / Labor Relations

As the recession begins to slowly turn around, employers are naturally cautious about increasing the size of the workforce until it becomes clear that hiring additional full-time workers is justified.

The solution traditionally has been to hire through staffing agencies so that an employer had flexibility to adjust to the ups and downs of the recovery.

However, the notion that just because workers are on someone else’s payroll that they are not a businesses’ responsibility or problem is simply not true.

It is clear, in fact, that when a business hires temporary workers, the business assumes much of the same liability as when workers are hired directly. Although staffing agencies still have duties to pay wages and handle such items as reporting to appropriate agencies and workers’ compensation insurance, there are a host of potential employment law liabilities that are still the responsibility of the employer.

An employer can still be sued for sexual harassment, or for having a hostile workplace, or for discrimination regardless of whether the worker gets paid by the company, or paid through a staffing firm. That is because the temporary worker is still under the control and direction of the workplace. This falls under the legal doctrine of co-employment, where both the staffing vendor and the business have duties and obligations.

For employers, the scope of their co-employment responsibility can even extend to liability for negligent hiring and negligent retention. The law is absolutely clear that if a temporary employee harms a member of the public or a co-worker, the employer can be just as liable as if the person were on the employer’s payroll. Many employers have found out the hard way that unscreened or inadequately workers from a Professional Employer Organization (PEO) or staffing vendor can also cause damage. A business can be liable if, in the exercise of reasonable care, the business should have known that a temporary worker was dangerous, unqualified, or otherwise unfit for employment. An employer has an absolute obligation to exercise due diligence not only in whom they hire on payroll, but in whom they allow on premises to perform work.

No employer would dream of walking down the street and handing the keys to the business to a total stranger, yet many employers across America essentially do exactly that every day when engaging the services of vendors and temporary workers.

Part of the problem is that the word “screening” is used differently by staffing vendors and employers. A staffing vendor will “screen” applicants to determine whether a candidate’s resume is a match for the job description. For employers concerned with due diligence, and risk-management, “screening” means having a background check performed to determine whether the person is safe and qualified.

Of course, in the event of a lawsuit where an employer is sued, the employer would likely turn around and blame the staffing vendor or PEO. However, the employer will still need to justify its own due diligence in how it selected and supervised the staffing vendor. The PEO or staffing firm would likely blame the employer for failure to specify what was required. Although the eventual outcomes will depend upon specific facts, employers and staffing vendors can avoid these difficulties in the first place by clearly addressing who has what duties.

These are some of the issues that should be clarified when an employer and staffing vendor work together:

1.Which party is going to perform the background check – the staffing vendor or the employer?

2.What is the screening protocol to be used? Ideally, employers should require a staffing vendor to utilize the same criteria used for their own W-2 employees.

3.What Background Screening firm will be used? The employer needs to ensure that the staffing vendor utilizes a background screening agency that is experienced and qualified for the assignment and follows best practices, such as not offshoring data, not using home based operators, and not substituting cheap database checks instead of real criminal searches.

4.Whose responsibility is it to actually review the Background Screening report? There have been cases where staffing firms have found negative information but no one read the report or acted on it. The negative information typically comes to light when the employer decides to make the worker permanent, and performs its own background check, only to
discover that a crime or resume fraud was missed or not acted upon.

5.In the event derogatorily or negative information is found, how are decisions to be made? The use of automated pass/fail criteria by a staffing vendor or PEO are increasingly becoming a potential EEOC issue, since it can have the affect of discrimination against protected classes of applicants. Employers may want to avoid a staffing vendor or PEO that offers automated scoring, since that reflects a possible lack of understanding of basic employment law and the risk being placed upon an employer.

Another solution is to send anything of a negative nature to the business for a final decision on whether they want that person on the premises. Some staffing vendors, however, take the position that since it is their employee, it is their decision. The critical point is to work out the protocol in advance.

6.Do the consent and disclosure forms for background checks reflect the roles of the parties? Under the federal Fair Credit Reporting Act (FCRA), a business can request that the background release extend to the business so it can review the background report. However the background release must also clarify that the staffing vendor is the employer of record.

7.Who is going to pay for the background checks?

The bottom-line: staffing vendors can avoid a great deal of difficulty if these issues are addressed and documented upfront so that everyone is clear on who has what responsibly when it comes to safe hiring.

BIOGRAPHY

Lester S. Rosen is an attorney at law and president of Employment Screening Resources (ESR) , a national background screening firm headquartered in Novato, CA. See; www.ESRcheck.com

He has authored two books on screening and hiring: “The Safe Hiring Manual: The complete guide to keeping criminals, terrorists, and imposters out of your workplace," and “The Safe Hiring Audit: The employer’s guide to implementing a safe hiring program."

He is considered an expert in employment screening background checks, and is a speaker frequently at nationwide human resources, fraud and security conferences. >>>

He has testified as an expert on employment screening background checks in negligent hiring cases in California, Florida and Arkansas.

He was the chairperson of the steering committee that founded the National Association of Professional Background Screeners (NAPBS) and served as its first co-chair.

Mr. Rosen graduated UCLA with Phi Beta Kappa honors, and received a J.D. degree from the University of California at Davis School of Law, serving on the school Law Review. While practicing law, he specialized in criminal law and his practice has included federal crimes and death penalty cases. He holds the highest attorney rating of A.V. in Martindale-Hubbell. He has served as an adjunct professor of law teaching criminal law and procedure at Hastings College of the Law, and served as faculty member and program chairman of the Hastings College of Trial Advocacy in San Francisco.

He has also been active in working on legislation in California. In 2002, he worked with the California legislature to amend AB 655, a law that adversely affected employers in the area of reference checks and hiring in California. He continues to be involved in working on California legislation effecting employers.

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