Today’s companies are utilizing temporary employees more than ever before. As the number of companies utilizing a temporary workforce grows, so does the need to take a closer look at employment law in this area. The ideal way to avoid co-employment issues is to partner with an experienced staffing provider that has established policies to ensure compliance with employment laws.

What is Co-employment?

Co-employment arises in situations where two companies maintain control over an employee’s work. This typically occurs when companies utilize temporary or contingent employees as part of their workforce.

In most temporary staffing arrangements, the client is responsible for the day-to-day direction of the temporary employee, while the staffing company is responsible for all of the other employment aspects of the temporary employee’s assignment. Typically, a provider of staffing services:

1. Recruits, screens, interviews, hires, disciplines and terminates the temporary employee.
2. Maintains all necessary personnel and payroll records, including drug screens and background checks.
3. Computes wages and withholds applicable taxes.
4. Remits employee withholdings to and makes employer contributions for federal FICA and federal and state unemployment insurance payments.
5. Pays net wages directly to the temporary employee.
6. Provides Workers’ Compensation insurance coverage.
7. Resolves the temporary employee’s complaints and grievances.
8. At the request of the client, for any valid legal reason, removes the temporary employee assigned to the client.

How Midwest Staffing Helps Manage Co-employment

For the co-employment issues described above, we partner with our clients to ensure that each of us fulfills our role in the relationship with temporary employees. While client employees are regularly involved in the supervision of the actual work performed by our temporary employees, we take great care to ensure we maintain control of the employment relationship at all times. We accomplish this by adhering to a few best practices:

1. All aspects of the economic relationship with temporary employees (e.g. payroll, raises, bonuses, benefits) are administered by Midwest Staffing Group without client involvement. The client provides performance feedback to determine which temporary employees are eligible for bonuses but Midwest Staffing administers the programs.
2. All communications regarding the length or termination of employment are handled by Midwest Staffing Group without client involvement.
3. Employment-related issues that arise between temporary employees and client employees are promptly communicated by the client to Midwest Staffing Group staffing managers. This practice enables Midwest Staffing Group and the client to resolve these issues effectively.
4. We have implemented an open communication policy so that temporary employee issues are recognized early and addressed by Midwest Staffing Group staffing managers before they escalate.

By implementing the above practices, Midwest Staffing Group has been successful in avoiding co-employment issues with our clients. In addition, if issues should arise, we have the support of our experienced human resources and legal staff to advise and assist in these matters. We are committed to providing superior service to our clients in all aspects of our partnership, from properly managing co-employment risks to supplying a high quality workforce!

Congress and the President have extended and expanded the COBRA premium subsidy which will allow more individuals to take advantage of federal assistance. The new legislation is part of the Department of Defense Appropriations Act, 2010 which extends the COBRA subsidy’s eligibility period for two months and extends the maximum duration of the federal assistance from nine months to 15 months. Employers will be required to provide additional notification to qualifying employees of regarding their rights under the Act.

At this point, the Department of Labor (DOL) has not provided a sample of the additional notice required under the provision. However, the new provision does require additional notices describing the new 15-month premium subsidy and other amendments. It will be important for all employers’s to stay up to date regarding the new notices and any sample’s issued by the DOL. Notices should be sent to all assistance-eligible individuals who are on COBRA on or after November 1, 2009, or whose qualifying event is a termination of employment occurring on or after that date.

Credit/Refund Processes for COBRA Subsidy Extension

Credit and refund procedures will be necessary to accommodate assistance-eligible individuals (AEIs) who paid more than the required 35 percent COBRA premium since the enactment of the subsidy extension. We recommend working closely with your benefits department to ensure participants receive the proper refund and that the amount your organization paid out is reimbursed through a premium reduction through a payroll tax credit. As always, Midwest Staffing Group is available as a resource and will keep your organization updated on any critical changes!

2009 will continue to be a busy year for benefits changes! Employers should review and amend plans for compliance with a variety of legislation that will be taking effect soon!

Special Enrollment for CHIP

Effective April 1, 2009, group health plans are to provide special enrollment for persons losing CHIP or Medicare coverage or obtaining premium assistance from a state under a CHIP or Medicare program. Notice requirements of certain rights will be required starting for most plans on January 1, 2011.

What to do? Determine whether your employees have been notified of this expanded right. This is usually done through a summary of material modification (SMM) to your group health plan. These new special enrollment rights may require changes to your plan documents and summary plan descriptions.

HIPAA Privacy & Security

Effective August, 2009 plan sponsors should be aware of any breach of unsecured protected health information (PHI). If a breach is discovered, an employer sponsored health plan must notify the individual within 60 days. If a breach involves more than 500 people media must be notified. Effective February 17, 2010, businesses are responsible for compliance with HIPAA’s rules and regulations.

What to do? Review documents to ensure your vendors are responsible for providing any notices needed in the event of a breach of unsecured PHI.

Mental Health Benefits

Under the Mental Health Parity and Addiction Equity Act, which takes effect Jan. 1, 2010 (for calendar year plans) there will be two changes regarding financial and treatment requirements. Group Health Plans must provide mental health and/or substance use disorder benefits on an equivalent basis to medical/surgical benefits (or eliminate these benefits).

What to do? Review your current group health plan mental health and substance abuse benefit coverage. If changes need to be made, plan for potential cost increases for the 2010 plan year.

Genetic Information

Group Health plans may not impose a pre-existing condition limitation based on genetic information. Plans may not use genetic information to discriminate regarding eligibility, premiums or coverage nor may they require genetic testing. Genetic information is considered private health information (phi).

What to do? Audit the collection or use of family medical histories or other genetic information in your wellness and health promotion programs. Know whether any information is collected for underwriting purposes or prior to enrollment. If information is used in a discriminatory manner, action will be required.

Cafeteria Plan

Currently scheduled to take effect Jan. 1, 2010, for calendar year plans, benefit options may have to be expanded and/or clarified. Plan documents may also require more detailed written plan documents.

What to do? Evaluate your current cafeteria plan documents and SPDs. Note possible changes needed when these rules become final.

Michelle’s Law

“Michelle’s Law” will prohibit an employer-sponsored health plan from cutting off benefits if a college student who is covered under a parent’s health plan due to his or her full-time student status loses that status due to a medical leave of absence.

What to do? Review current SPDs and plan documents to see what changes may be needed. Ensure continued coverage with HMO’s and Cobra administrator’s.