Five Myths about Co-Employment

By: Leslie Stevens-Huffman

The topic of co-employment often arises when engineering firms utilize experienced contractors to meet project deadlines. Managers sometimes perceive that contract professionals pose excessive risks and threats since the co-employment topic is so misunderstood.

Or as Stephen Clancy, director, Contingent Workforce Strategies and Research for Staffing Industry Analysts recently wrote in Challenging the Myths of Co-Employment: “This misunderstanding has led to unproductive, damaging talent management rules and policies that have put numerous organizations at a competitive disadvantage.”

To make sure you don’t throw the baby out with the bathwater, we’re busting the top five myths about co-employment.

Myth No. 1: Co-employment is bad

By definition, co-employment means that an individual is employed simultaneously by more than one employer. Since you bear all the responsibility when you hire workers on your own, companies stand to benefit by sharing some of the risk and responsibilities with an employment partner. Your risk is further reduced by the fact that the staffing firm typically has been viewed as the primary employer by the courts.

Myth No. 2: Using contractors opens my company up to lawsuits

Contractors aren’t any more likely to sue than full-time employees, since companies are required to follow applicable federal, state and local employment laws no matter who they hire.

Myth No. 3: Contractors shouldn’t attend holiday parties or company events

Managers find that engagement and productivity soars when contractors feel connected to the engineering team. And since clients are strictly responsible for controlling the work environment and conditions, the benefits of offering contractors camaraderie and team-building opportunities in a controlled setting more than outweigh the risk.

Myth No. 4: Limiting contractor hours mitigates co-employment risk

In some cases, limiting contractor hours over the course of a year might reduce co-employment risks. But legal experts say that as long as the staffing company retains control over payroll, hiring and terminations, and provides workers’ compensation and other benefits, the number of hours worked by contractors within a specific time frame is irrelevant.

Myth No. 5: Contractors are entitled to participate in company benefit plans

Myths abound surrounding the infamous Microsoft case. Unfortunately, Microsoft created the problem by failing to exclude flexible workers from some of its benefit plans. And they left the door open by hiring independent contractors who weren’t employed by a staffing firm. The best way to avoid a similar fate is by including non-discriminatory language that specifically excludes from benefit plans contractors who work independently or for a staffing firm.

Educating yourself on co-employment is the best way to enjoy the benefits of utilizing contract engineers to meet project deadlines without the hassle or worry.

Other information of potential interest

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Disclaimer:  The views and opinions expressed in this article are those of the author only and do not necessarily reflect the views or position of Peak Technical Staffing, USA or its affiliates.  This article is for general information only and does not constitute the provision of legal or tax advice.