3 Key Length of Stay Policy Considerations

More and more companies across various industries rely on the contingent workforce to maintain business critical initiatives and keep up with innovation. However, as worker misclassification lawsuits continue to make headlines, organizations grapple with questions surrounding joint employment liability and compliance ramifications, including length-of-stay or tenure (LOS) policies.

In this blog post, we discuss LOS policies and dispel common misconceptions surrounding them. We also delve into three important LOS considerations for organizations to confidently implement and navigate the associated regulatory landscape, while fully utilizing the contingent workforce.

1. Time Limits to LOS Policies

There is a false perception that contingent workers are granted certain rights after providing services to an end-user for a certain time period, be it the six or twelve-month mark. The assumption is that after this timeframe passes, contingent workers are automatically granted all kinds of rights based on a theory of joint employment

In actuality, there is no specific time limit for contingent worker assignments granting these workers heighted protections as a direct employee of the end-user in the United States, and tenure hasn’t been a major consideration in the widely publicized cases surrounding joint employer liability. As soon as a contingent worker starts his or her first day of work for an end-user, joint employment liability could potentially apply. End-users can successfully control their liability by effectively managing their interactions with contingent talent, as well as carefully crafting their internal benefits and policies to exclude such contingent talent, as permitted by the law.

2. ERISA Benefits for Contingent Workers

Although contingent workers may receive ERISA benefits from an end-user, these organizations have control over their plan’s eligibility by carefully maintaining a well-defined ERISA plan. Well-defined plans can legally exclude contingent workers.

It’s recommended that organizations set guidelines for managing joint employment and not unenforceable policies. They can also partner with a trusted Managed Service Provider (MSP) that can help hiring managers:

• Evaluate contingent assignments periodically,
• Decide whether assignments should continue, and
• Determine if appropriate joint-employment, headcount and financial controls are being maintained.  

These steps can be taken without any disruption and resistance that an LOS policy could potentially create, since once it’s set as a policy, it must be enforced.

3. Federal Agencies and Worker Classification Criteria

There is a misconception that the criteria for determining worker classification across government agencies are the same everywhere. In fact, the requirements and guidelines among the federal (and even state) agencies can differ. Below are examples of just a few:

• The Department of Labor (DOL) holds that the end-user and supplier are liable for violations in the Wage and Hour regulations and laws, individually and jointly, when it comes to enforcing the Fair Labor Standards Act (FLSA).
• Equal Employment Opportunity (EEO) laws help protect employees from being discriminated against, including before they are hired at an organization. Workers can make harassment claims anytime, even on their first day of a temporary assignment.  
• The Americans with Disabilities Act (ADA) prohibits discrimination on the basis of disability in all employment practices. The courts may hold both the end-user and supplier liable because they each have some discretion over the work environment and the accommodations that can be made.

Although navigating so many different regulations can be a complex endeavor, organizations can seek out an Employer of Record (EOR) to help them ensure they are being compliant as they navigate joint employment challenges.  

Utilizing an Employer of Record Partner to Navigate the Landscape

Joint employment risk will always be a factor for organizations that rely on contingent talent, especially in the modern era of remote work and globally expanding workforces that can be tied to even more compliance considerations. Learn more about the EOR trends shaping the future of work in our ebook.

To confidently navigate these different regulatory landscapes, organizations can seek out a reputable EOR partner with experiences and knowledge in managing employment activities above and beyond the minimal risks associated with length of service/tenure, which will help to:

• Establish appropriate methods to classify exempt and non-exempt workers;
• Understand various legislation requirements such as the ADA;
• Guide end-users an appropriate communications and control over contingent workers; and
• Eliminate EEO harassment and discrimination risks.

An EOR partner will act as a trusted advisor to the organization, helping to continuously mitigate risk, providing ongoing expertise in regional and local compliance, and staying up to date on the most recent legal requirements. For organizations looking to establish an industry-leading worker experience, EORs can also provide comprehensive benefits as well, including medical coverage, pension plans, 401k options, and even on-demand pay. Not only can a great worker experience contribute to improved worker attraction and retention efforts, it can also benefit the employer brand as well.

Discover more proven strategies to successfully managing risk and liability surrounding your contingent workforce when you download our ebook.

Disclaimer: The content in this blog post is for informational purposes only and cannot be construed as specific legal advice or as a substitute for legal advice. The blog post reflects the opinion of Magnit and is not to be construed as legal solutions and positions. Contact an attorney for specific advice and guidance for specific issues or questions.