The Law Office of Kurt H King

September 5, 2018

Contract Workers Are Often Employees of the Company For Which They Work

A staffing agency places you to work fairly long-term for a company.  The company treats you as an independent contractor, and you sign numerous documents to that effect.  The company pays a set amount to the staffing agency which pockets part and pays you, along with payroll taxes and insurance.  Are you the company’s employee?  Often the answer is YES.

Here is some law on the issue:

A.  EEOC

In its “Enforcement Guidance: Application of EEO Law to Contingent Workers Placed by Temporary Employment Agencies and Other Staffing Firms,” EEOC Notice No. 915.002 (December 3, 1997), the agency declares on page 7 (cases in support cited at footnote 14):

A client of a temporary employment agency typically qualifies as an employer of the temporary worker during the job assignment, along with the agency.  This is because the client usually exercises significant supervisory control over the worker.”

               The EEOC there gives this example on pages 7-8:

 

Example 3: A staffing firm hires charging party (CP) and sends her to

perform a long term accounting project for a client.  Her contract

               with the staffing firm states that she is an independent contractor.

CP retains the right to work for others, but spends substantially all

of her work time performing services for the client, on the client’s

premises. The client supervises CP, sets her work schedule, provides the

necessary equipment and supplies, and specifies how the work is to be

accomplished.  CP reports the number of hours she has worked to the

staffing firm.  The firm pays her and bills the client for the time

worked.  It reviews her work based on reports by the client and has the

right to terminate her if she is failing to perform the requested

services.  The staffing firm will replace her with another worker if

her work is unacceptable to the client.

              In these circumstances, despite the statement in the contract that

              she is an independent contractor, both the staffing firm and the client 

              are joint employers of CP.

 

As the EEOC indicates, it makes no difference that documents state that the worker is an independent contractor and not an employee.  Substance trumps form.

B.  Missouri Case Examples 

Wright v. Habco:  Missouri sides with the EEOC, its Supreme Court having dealt with this set of facts long ago in Wright v. Habco, 419 S.W.2d 34 (Mo. 1967).    There plaintiff Wright fell off a scaffold and sued Habco at common law for his injuries.  The trial court sustained Habco’s motion for summary judgment, ruling plaintiff’s exclusive remedy was under workers’ compensation law.  The Missouri Supreme Court affirmed.

When he fell, Manpower, Inc. employed Wright.  Manpower furnished workers to its customers, usually on a temporary basis.   Manpower sent Wright out to work for defendant Habco on a project to extensively renovate a building.

Manpower furnished no equipment to plaintiff Wright, merely instructing him as to who to report to at Habco to begin his work.  Habco’s foreman bossed Wright on the job, directing him as to what work to do.  Without question, Habco controlled the work done by Wright.

Manpower paid Wright $1.25 an hour; Habco in turn paid Manpower $1.97 per hour that Wright worked.  Manpower paid for workers’ compensation and unemployment insurance on Wright and its other workers, and withheld social security and income tax withholdings from Wright’s wages.

Habco’s president stated in his deposition that he did not consider Wright to have been its employee, but rather an employee of Manpower.

Regardless, the Court held Wright to have been an employee of Habco, and his relief limited to that afforded him under Missouri Workers’ Compensation Law.

Tolentino v. Starwood Hotels & Resorts Worldwide:  More recently, the Supreme Court held defendant Starwood (owner of Westin Hotel Management which operates the Westin Crown Center hotel in Kansas City, Missouri) to be the joint employer of plaintiff Tolentino, a housekeeper whose services Starwood contracted with a temporary staffing agency to receive.  437 S.W.3d 754 (Mo. banc 2014).

The arrangement was that Starwood informed GLS (the temporary staffing agency) how many housekeepers the hotel needed and GLS provided them.   Starwood paid GLS $5 per room cleaned.  GLS was to pay the housekeepers and satisfy payroll withholdings requirements.  GLS paid Tolentino $3.50 per room cleaned.

In February 2008, GLS assigned Tolentino to clean at the hotel.  In April of that year, Starwood notified GLS that it no longer wanted Tolentino to work as a housekeeper at the hotel because he failed to complete his work in a timely fashion.

Unfortunately, GLS failed to comply with Missouri’s Minimum Wage Law.  Tolentino ended up filing a class action in Missouri state court against Starwood as his employer liable under the Law.

Starwood moved for summary judgment, denying that it was Tolentino’s employer.  The trial court granted the motion.  Tolentino appealed to the Western District of the Court of Appeals, asserting that there were genuine issues of material fact as to whether GLS and Starwood were his joint employers.

The Court of Appeals analyzed the facts with four “functional” factors used by federal courts in cases involving multiple alleged employers:

(1) who has the power to hire and fire the worker;

(2) who supervises and controls the worker’s schedule and conditions of work;

(3) who determines the rate and method of payment of the worker;

(4) who maintains work records.

 

In Tolentino’s case, the appellate court found issues of fact existed regarding the hotel’s (Starwood) authority to hire and fire, finding that by directing GLS not to assign Tolentino to the hotel any longer, as a practical matter Starwood could prevent the worker from working for the hotel.  Factor One favored Tolentino in the eyes of the Court.

Factor Two regarding supervision and control was also decided in favor of the worker—the hotel assigned rooms to be cleaned by particular housekeepers, upheld its cleaning standards, inspected the rooms for cleanliness, and required unsatisfactory work to be redone.  Further, the work was simple and easily supervised.

The court also ruled Factor Three on rate and method of payment in favor of the worker, noting that the hotel paid GLS, which in turn paid the housekeepers.  But, the hotel established, and raised, the pay per room arrangement, indicating the hotel retained substantial control over the rate and method of pay.

Tolentino also raised issue of fact with regard to Factor Four concerning maintenance of work records, asserting that the hotel maintained time sheets and productivity records which it used to “fire” him from working for the hotel/Starwood.

Based on these factors, the court of appeals reversed and remanded for trial.         

C.  Eighth Circuit

Beaver v. Jacuzzi Brothers, 454 F.2d 284 (CA8 1972):  This diversity case from Arkansas arose when a temporary worker from Kelly Girl, Inc., fell on a greasy floor while on temporary assignment to Jacuzzi Brothers.  She sued Jacuzzi Brothers for common law tort.  The District Court denied her, finding she was an employee of Jacuzzi Brothers and limited to workers compensation benefits based on the right of control of her performance Jacuzzi Brothers had over the work of the temporary employee.

The Eighth Circuit affirmed, observing:

“As a matter of common experience and of present business practice in our economy, it is clear that an employee may be employed by more than one employer even while doing the same work.”

In conclusion, workers may actually be the company’s employee–temporary or permanent–and entitled to protection by law from retaliation and discrimination.

Kurt H. King, Missouri Attorney

816.781.6000

20 E. Franklin, Liberty, Clay County, Missouri 64068

Retaliation & Discrimination, Litigation, General Matters

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