Avoiding Liability for Temporary Workers’ Benefit Claims

As written by George M. Reardon in Staffing Industry Review

A common misunderstanding among staffing clients is that lengthy assignments make temporary workers eligible for the clients’ employee benefits plans or entitles them to be hired by the client. To mitigate this perceived risk, clients sometimes contractually require staffing firms to replace temporary employees after certain time periods and often require staffing suppliers to indemnify for such claims.

While there have been several multimillion-dollar class action lawsuits (what I have nicknamed “retrobenefits” suits) claiming client-sponsored employee benefits for temporary employees — Microsoft famously paid $97 million to settle one of them —if staffing firm-employee relationships are properly managed and clients’ benefit plans are properly drafted, there is little risk to the staffing clients and their staffing suppliers.