Scheme to Avoid Employer Liability Results in Consent Judgment

Using a staffing company to supply workers can seem to be a wonderful way to secure a qualified workforce while avoiding the challenges of hiring employees and the administrative demands associated with having so many people in your employ. Probably for these very reasons United Plastics contracted with ASI Staffing Group to provide workers at United Plastics’ facilities in Massachusetts and Mississippi. United Plastics’ learned the hard way, though, that it was still subject to the legal ramifications of being the employer of these agency employees. As part of a June 2016 consent judgment entered in the U.S. District Court for the District of Massachusetts, United Plastics and ASI Staffing Group agreed as joint employers to pay 566 ASI employees $1.4 million in back wages and liquidated damages for overtime pay. The DOL maintains that an investigation by the DOL’s Wage and Hour Division revealed “ASI Group developed a scheme” to avoid paying time-and-a-half overtime wages “under which they created additional company names.” Employers need to recognize that when they contract with a staffing agency, they may still be on the hook for any violations of the rights of those agency employees. The DOL’s takeaway for employers on this case: “The resolution of this case should send a strong message that employers can’t hide behind staffing agencies to avoid their responsibilities to their workers.” Our takeaways for employers on this case: First, do your due diligence to make sure that the staffing company you intend to use has a good reputation and a solid record in regard to legal compliance. Second, make sure your contract with the staffing agency includes a commitment by the staffing agency to comply with all laws in regard to the employment of its employees. Third, make sure your contract includes a commitment by the staffing agency to indemnify you in the event you are held liable because the staffing agency violated the rights of the employees who the staffing company placed in your facility.