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Subcontracting And Employment Law Violations

There are valid business reasons for a company to hire another company to provide a workforce. A company whose labor needs may change quickly might prefer the ability to quickly scale up or scale down without it impacting payroll. Such arrangements can also help employees who are able to find steady work through temp agencies or other subcontractors. There are serious problems with subcontracting, however. It can be used as a tool to deny workers proper wages, including overtime benefits. It can shield bad actors from the legal consequences of their actions. The rise in popularity of these arrangements has naturally led to an increase in the abuse of workers. The Department of Labor' Wage and Hour Division has released new guidance regarding the acceptable use of subcontracted employees.

Joint employment relationships give rise to both the contracting company and the subcontracting company when it comes to worker rights. The subcontractor is not insulation against lawsuits over employment law violations. The relationship does not allow the contracting company to provide unsafe working conditions. It does not allow them to subject employees to harassment or abuse. It certainly does not allow them to pay workers less than the minimum wage or demand that they work overtime without getting paid for it. 

The Wage and Hour Division has increased its efforts to protect workers from abuses of the joint employment relationship. When a contracting company controls its workers to a high degree and treats them as employees, they should be found to be employees when it comes to legal protection. Hopefully increased enforcement will protect the growing number of employees who find themselves with two employers and nowhere to turn for fair treatment.

Source: The Washington Post, "Department of Labor sends warning shot to clients of tem staffing agencies," by Lydia DePillis, 20 January 2016 

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Costello & Mains, LLC

18000 Horizon Way, Suite 800
Mount Laurel, NJ 08054

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