Business Leadership
November 2, 2021

Co-Employment Risk and COVID-19, a Brewing Storm We Can Weather Together

Co-employment risk is nothing new to those in the workforce solutions industry. It’s a tale as old as time. Ask any MSP. However, just as non-traditional employment arrangements are continuing to evolve, so too are the levels of risk associated with co-employment. And we haven’t really revisited how these changes could play out. But there’s something else, one thing business and staffing leaders may not have considered: how could the persistent issues surrounding COVID-19 be stealthily building momentum toward new co-employment problems?

New Paradigms, New Rules, New Risks

The accelerating trend of direct sourcing and increasingly complex SOW-type projects are placing talent in more direct alignment with client personnel. It’s easy for workers to believe they’re client employees when so heavily immersed in the environment, the culture, and the project team. But the ongoing coronavirus pandemic presents additional challenges. 

With teleworking, the boundaries between employer-of-record and clients may have blurred even further. And all the workforce changes inspired by the spread of the virus have taken center stage in the industry conversation. How can we manage hybrid work? Do we commit to remote work or demand people return to offices? The EEOC says companies can require vaccinations, but what about state legislators pushing bills focused on “vaccination discrimination?” It’s a noisy and messy dilemma.  

Yet, now there are more mandates related to COVID-19 safety protocols rolling out, which can be highly specific to certain business types. And from what we’ve seen, clear communication between clients and their staffing partners has already begun to teeter. This is a train that can’t be allowed to derail. It’s essential that clients, MSPs, and staffing providers coalesce on a unified approach.

New OSHA Rules

The Occupational Safety and Health Administration (OSHA), under President Biden’s expanding vaccination mandates, is poised to release an emergency temporary standard (ETS) requiring private employers with 100 or more employees to mandate vaccination or weekly testing for their unvaccinated employees. As Bloomberg Law explained:

“The emergency rule, which will apply to companies with at least 100 employees and is expected to be released next week, will give employers the option of paying for testing and masks for unvaccinated workers or compelling those employees to foot the bill themselves, according to the sources, who requested anonymity because they didn’t have approval to discuss the rulemaking. Employers will be required to absorb testing and mask costs in cases where a worker qualifies for an exemption to vaccination under federal law, the sources said. For instance, employers could be required to finance testing and masks for a worker who is entitled to a religious exemption or to an accommodation under the Americans with Disabilities Act. Companies also may be ordered to pay when testing costs are subject to a union bargaining agreement.”

Similarly. President Biden's Executive Order 14042 requires any federal contractor (a business that holds contracts for work with federal agencies) to mandate vaccines or subject contractor personnel to weekly testing. This applies to teleworking staff as well. However, everything gets murky once we look at independent actions taken by leaders at the state level. Texas provides a good example of this. 

Confusion at the State Level

Governor Abbott recently attempted to pass legislation prohibiting employers from enforcing vaccine mandates (SB 51), but it failed to become law during deliberations. Businesses themselves pushed back, concerned about the safety of their workforce and in maintaining compliance with federal orders. That's important, because standing orders such as these will be challenged in federal court—and will likely be shot down. 

Even though a temporary executive order remains in place, federal law typically supersedes state law. For companies with over 100 employees, or those that may hold federal contracts, any vaccine or weekly testing requirement would be covered under federal law, conflicting with the state's executive order. This has already been the case with large companies operating in Texas, such as Southwest Airlines. 

Confusion at the Organizational Level

This growing morass poses problems for contingent workers serving at client locations. They are becoming lost in the labyrinthine discord brewing between the businesses they support and the different strata of government, which are not in harmony on the issue. For staffing providers, an entirely different wrench is being thrown into the gearworks.

  • Clients are attempting to dictate policies and procedures without including the staffing providers, who are the workers’ employers of record.
  • These policies could be wrong. A client business, for example, may not fall under the federal mandates, but that doesn’t mean the staffing supplier is exempt. And as the contingent workers’ employers, the federal mandate may apply to them. 
  • In cases where businesses have more latitude to set their own policies (e.g., masks vs. no masks, mandatory vaccination as a condition of new employment, etc.), they must coordinate with staffing partners and MSPs to ensure that all parties understand the guidance and have mechanisms in place to ensure compliance. 
  • For situations where a client’s action or inaction violates established practices related to COVID safety, such as those enforced by OSHA, they can be held liable under the provisions of joint responsibility

Best Practices for Mitigating Risks

Co-employment Risk Mitigation

Working together, clients and their staffing partners (or MSPs, if engaged) can overcome persistent obstacles along the path of compliance through the following best practices.

  • Any changes or updates in existing policies, local regulations, and other rules should be presented first to the staffing supplier and discussed. The staffing partner can then inform and educate its workers.
  • Create layers between contingent workers and client managers through staffing suppliers or a Managed Service Provider (MSP).
  • Involve staffing partners in all aspects of the employee’s management.
  • Ensure regular communication between contingent workers and staffing suppliers.
  • Address with the staffing supplier all issues related to worker performance, discipline, discrimination, harassment, and other concerns.
  • Negotiate compensation and benefits between the staffing supplier and its employee.
  • Present any awards and bonuses to the employee through his or her staffing supplier.
  • Facilitate direct hire and temp-to-perm conversions through the staffing supplier, not the worker.
  • Offers and terminations must always flow through the staffing supplier or the MSP, depending on the program design, which should be tracked, automated, and recorded by workforce technology.
  • Limit the inclusion of contingent workers in company functions unless absolutely necessary to the performance of the work.

Joint Responsibility Risk Mitigation

Co-employment isn’t the only risk factor that could impact the program. With COVID-19 and other safety issues, clients and their staffing partners should also collaborate closely with each other to help prevent incidents or communication gaps that could lead to situations where OSHA’s joint responsibility kicks in.

  • While staffing agencies often provide general safety and health training, clients should participate in developing specific training tailored to their particular workplace equipment and hazards. In a managed workforce arrangement, MSPs have proven to be crucial and effective bridges between clients and suppliers in this kind of onboarding process.
  • Robust communication between MSPs, staffing suppliers, and clients is paramount to ensuring that the necessary protections are provided—and who will be providing these resources (e.g., personal protective equipment, tools, etc.).
  • Staffing agencies have a duty and a right to inquire about the conditions of their workers’ assigned sites.
  • Staffing suppliers, for their part, should be checking in regularly with the MSP or client to assess the ongoing safety of the facilities.
  • Clients have a responsibility to maintain healthy working conditions and assure suppliers that contingent talent are being sent to safe workplaces. Whether directly or through the MSP, suppliers and clients should be distributing and receiving regular reports about safety compliance, identified risks, injuries, and more.
  • Staffing agencies and MSPs aren’t expected to become experts on a client’s unique workplace hazards, but they should evaluate what potential conditions exist, what hazards may be encountered, and how best to protect their workers. Clients, meanwhile, should step up and make every effort to impart this information transparently to staffing firms and MSPs.
  • The staffing agency and MSP should verify that the client has fulfilled its responsibilities for a safe workplace. The client’s response should be documented. This is particularly important if the client seems to be obstructing the evaluation or refuses to offer forthcoming details.
  • And as OSHA stresses, “Host employers (clients) must treat temporary workers like any other workers in terms of training and safety and health protections.”

We’re Still in This Together

The outbreak of the pandemic has altered the nature of the workforce and even work. Our new normal has been underscored by a sense of remoteness, physical distance, virtualization, and other precautions that have led to unaccustomed separation. But unity is the key to surviving and thriving in the next normal of our society. It’s more important than ever before that suppliers, clients, and MSPs remain aligned and communicative.

Photo by Raychel Sanner on Unsplash

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