If you own and operate your own staffing agency, you face unique liability issues that differ broadly from those faced by many traditional businesses. In addition to having to comply with all laws and regulations pertaining to taxes, employee benefits and so on, you also must worry about potential liabilities and lawsuits. Because the nature of your industry makes your business something of a “middleman” between professionals and businesses seeking assistance, you face considerable exposure to legal issues.
Some of the more common legal issues faced by staffing agencies include the following:
Contract disputes
In your industry, you probably deal with a variety of contracts, and all of them have the capacity to land you in legal trouble. In addition to traditional employment contracts, you might, for example, use contracts to set the number of hours an employee can work for an employer before that employer can hire the worker without using your agency. You may, too, utilize legally binding documents when creating nondisclosure agreements.
Misclassifying employees
Misclassifying employees is another area where many of today’s staffing agencies find themselves in hot water. Often, companies classify workers as independent contractors because of associated tax considerations and benefits, but the government is becoming increasingly strict about incorrectly classifying employees, so doing so can lead to legal trouble.
Failing to comply with laws
As a staffing agency owner, you can also run into trouble if you run afoul of the law. Depending on the size of your agency, you may expose yourself to lawsuits if you make errors regarding overtime pay, or if you fail to comply with safety standards set by the Occupational Health and Safety Administration. Using discriminatory hiring practices is another way some staffing agencies set themselves up for trouble.
Recognizing the traditional and unique liability concerns your staffing agency faces is a crucial step in learning how to alleviate risks, protect your business and prevent potential problems before they arise.