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San Diego Business Law: Good Contracts can Help Avoid Joint Employer Liability

Joint employer situations are common in today’s marketplace. Joint employer circumstances are driven by several factors. First, San Diego businesses have long been using temporary staffing and flex-schedule agencies to find workers to fill work gaps left by full-time employees. Second, with the rise of the gig economy, many workers sign up with staffing agencies as a preference allowing them to have desirable flex schedules and multiple assignments. Third, temporary staffing is ideal for short-term projects that may be ancillary to the main business of the company. Fourth, businesses often find it less expensive and cumbersome to hire companies to provide various services like housekeeping, waste-management, landscaping, tech-support, and the like. However, anytime a business hires outside staffing, there is the potential for the joint-employer doctrine to be implicated. Franchise arrangements are another common circumstance in which the joint-employer doctrine is implicated.

Many San Diego businesses openly contemplate that some portion of their workforce will be jointly employed. In those cases, detailed and specific contracts need to be drafted to establish the parameters of which business is responsible for what tasks and liabilities. Further, indemnity and hold harmless provisions are essential. An experienced San Diego corporate attorney can help ensure that the agreement is well-crafted. California courts have established a list of facts that are to be considered when evaluating potential joint employer status. Among the facts are which employer has the ability to hire and fire, which employer sets the hours and directs the specific work tasks, who provides the training and tools, and to whom do the workers report. In general, the less control a business has over a given worker, the less likely it is for a court to find that the employer is a joint employer.

For these reasons, among other provisions, a well-drafted joint employer agreement should detail which company is responsible for various “control” and supervision tasks. Attention should also be paid to which company maintains employment and wage records. A well-written agreement should also cover these basic circumstances detailing each company’s obligations:

  • Which employer is liable for statutory labor law violations such as failure to provide notices, failure to provide required training, and similar
  • Which employer is liable to third parties for an accident, other negligence, or even the intentional conduct of the worker
  • Which employer is liable to other workers for misbehavior like discrimination or sexual harassment or something similar

On the other hand, many San Diego business seek to avoid joint employer liability. Again, a well-written contract can help. Sometimes, joint employer status cannot be avoided. For example, with respect to wages, California Labor Code, §2810.3(b) mandates that employers shall “share all civil legal responsibility and civil liability” for any applicable workers for wages and for workers compensation. The provision applies to businesses that have more than 25 workers and retain at least five workers supplied by was is commonly called a temporary staffing agency.

That being said, a good contract be used to avoid joint employer liability for circumstances other than payment of wages and workers compensation coverage. This should be considered any time your business contracts to retain labor services from another business. A written contract is important and the contract should cover all the essentials related to avoiding joint employer liability. A well-written agreement can lessen the chances that a court will determine that a joint employment relationship exists.

Call San Diego Corporate Law Today

For more information, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Contact Mr. Leonard by calling (858) 483-9200 or via email. Mr. Leonard focuses his practice on business law, transactional, and corporate matters, and he proudly provides legal services to business owners in San Diego and the surrounding communities. Like us on Facebook.

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