An Agile Workforce: How Flexible Are You?

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1 An Agile Workforce: How Flexible Are You? Joseph Marth, PhD Vice President Research & Development Kellis Borek, JD Vice President Legal & Labor Services

2 WELCOME Participate in today s audience polls! You just need your phone. To set-up, text the word Archbright to Then, when prompted during the presentations, text the letter that corresponds to your answer.

3 Today s Workshop Two Parts Part 1: Understanding Agile Workforce Strategically and Legally Part 2: Creating an Agile Workforce Implementation Plan for Your Organization

4 Part 1: Understanding Agile Workforce Strategically and Legally

5 Agile Workforce Agile (defined, Merriam-Webster) 1. marked by ready ability to move with quick easy grace; 2. having a quick resourceful and adaptable character. Agile Workforce (defined) A flexible workforce that benefits employers and workers with choices about when, where, and how work gets done.

6 Agile Workforce Related terms and phrases Agile Working Liquid Workforce Gig Economy

8 The Gig Economy WOW!

9 X The Reasons for Agile An Agile Workforce results in the following outcomes: For Companies Innovation Adaptability Efficiency Productivity Cost Savings Bigger Talent Pool Stream Extended Business Hours

10 X The Reasons for Agile An Agile Workforce results in the following outcomes: For Workers Work Life Balance Increased Job Satisfaction & Personal Productivity Self-Determination Variety Flexibility Job Employment Security A bridge back to W-2 I m struggling Starving Artist

11 The Shift is Moving Quickly Source: Workplace 2025 (Randstad, 2016)

12 Agile Workforce Dimensions of an Agile Workforce: - Time - Environment - Location - Infrastructure - Role - People - Source - Oh, and also! - Legal - Let s put it all together!

13 Agile Workforce: TIME Flextime Self-rostering Core hours Varied working hours Working time accounts Annualized hours Compressed work schedules Flextime - core biz hours 2017 SHRM Report on Employee Benefits Flextime - any type 48% 50% 52% 54% 56% 58% Source: Agile Working by enei (employees network for equality & inclusion)

15 Agile Workforce: LOCATION Physical offices Telecommuting on an Occasional Basis Telecommuting/remote working 2016 Mixed: Fixed Fluid % 20% 40% 60% 80% Telecommuting on an Occasional Basis Source: SHRM s National Study of Employers (2017)

17 Agile Workforce: ROLE Workers especially those on the younger side want to work in a model that allows them fulfilling professional experiences by working for multiple employers. An Agile career allows that to happen, so they gravitate to that type of professional lifestyle. - Jim Fink of Randstad s Workforce 2025

18 Agile Workforce: SOURCE From: Agile Talent: How to Outsource & Manage Outside Experts by Younger & Smallwood (2016) Availability Unique or scarce Commonly available 1: Own Own the best talent, and retain it Importance Strategic 4: Rent Rent the best talent, and set it up for success Nonstrategic 2: Own Deliver the basics at the lowest realistic cost 3: Rent Contract out, and let procurement lead

19 Examples of Renting: Outsourcing Crowdsourcing Sharing/partnering Freelance Utilizing former employees Fixed-term contracts Bidding on tasks Agile Workforce: SOURCE Source: Agile Working by enei (employees network for equality & inclusion)

20 Agile Workforce: SOURCE Joint Employer Employees Contractors Employees

21 Agile Workforce: LEGAL Section A: Independent Contractors

22 Worker Classification Employee or Indpendent Contractor? A worker's status as an "employee" is governed by statue and case law An independent contractor will be considered an employee entitled to minimum wage and overtime if as a matter of economic reality, the contractor is dependent on the business he/she serves See Keynotes on Washington, Oregon and Idaho Independent Contractors

23 Economic Realties Test The Washington Supreme Court set forth six factors for the economic realities test: 1. The permanence of the working relationship between the parties; 2. The degree of skill the work entails; 3. The extent of the worker s investment in equipment or materials; 4. The worker s opportunity for profit or loss; 5. The degree of the alleged employer s control over the worker; and 6. Whether the service rendered by the worker is an integral part of the alleged employer s business.

24 Agile Workforce: LEGAL Section B: Joint Employers

25 Risks Joint Employers may be liable for one another s alleged violation of employment laws such as Title VII, WLAD, OSHA, FLSA, WMWA, FMLA Joint Employers may be liable for one another s ULP s and may be compelled to bargain with a union representing the employees of another employer Joint Employers may be liable for one another s contractual commitments, such as provision of benefits Joint Employers may meet the threshold for coverage of certain laws from both employers (i.e., 50 employee minimum for FMLA)

26 What Situations Can Give Rise to Joint Employer Liability? Staffing agencies Borrowed or Shared employees Outside workers? Subcontractors? Vendors? Licensor and licensees

27 NLRB: When Is a Staffing Agency a Joint Employer with Its Client? Two employers share or codetermine those matters governing the essential terms and conditions of employment. Browning-Ferris Industries of Ca. (August 2015)

28 NLRB Current Factors control staffing agencies decisions on Hiring Firing Discipline Supervision Performance Day to day work instructions or assignments Wages (including agreements on wage caps, cost-plus agreements, etc.) Hours, schedules, overtime Number of workers supplied Method and manner of work performance

29 Common Staffing Agency Agreements Having the ability to reject agency employees or to ask the supplier/employer to remove employees Establishing the qualifications of the agency employees Requiring a drug and/or background test of agency employees Setting forth a maximum wage scale to be paid to agency employees Provisions that the user/employer establishes work shifts Requiring agency employees to comply with the user/employer s safety and training procedures Having the primary employer s supervisors supervise the agency s employees Exercising control over the speed, method or equipment used in work performed by the temporary employees

30 OSHA OSHA has long held that an employer can be cited for hazards to other employers employees if OSHA finds that the employer created or controlled the hazard.

EEOC EEOC Compliance Manual Two or more employers that are unrelated or that are not sufficiently related to qualify as an integrated enterprise, but that each exercise sufficient control of an

31 EEOC EEOC Compliance Manual Two or more employers that are unrelated or that are not sufficiently related to qualify as an integrated enterprise, but that each exercise sufficient control of an individual to qualify as his/her employer Joint Employer Test Assumes the employers are separate entities and assesses whether the degree of control is nevertheless sufficient to treat both as employers

32 FLSA DOL Administrator s Interpretation No Joint Employment - January 20, 2016 expanded potential liability for employers o When joint employment is found: The employee s hours worked for all of the Joint Employers during the workweek are aggregated and considered as one employment, including for purposes of calculating whether overtime pay is due All of the Joint Employers are jointly and severally liable for compliance with the FLSA AI withdrawn effective 6/7/17 So what s the test now?

33 9 th Circuit Court Factors 1. Whether the work was a specialty job or employees work alongside primary employer s workers; 2. Whether responsibility under the staffing contracts can pass from one labor contractor to another without material changes; 3. Whether the premises and equipment of the alleged employer are used for the work; 4. Whether the work was piece work and not work that required initiative, judgment or foresight; 5. Whether permanence/tenure existed in the working relationship; and 6. Whether the service rendered is an integral part of the alleged employer s business.

34 DOL Opinion Letter

35 FMLA Definition of Joint Employment: exists when an employee is employed by two (or more) employers such that the employers are responsible for compliance with the FMLA

36 FMLA Primary Employer Determining who is a primary: Who has authority to hire and fire; To place or assign work to the employee; Who decides how, when, and the amount that the employee is paid; and Who provides the employee s leave or other employment benefits In the case of a temporary placement or staffing agency, the agency is most commonly the primary employer

37 FMLA Primary Employer The primary employer is responsible for: Giving required notices to its employees; Providing FMLA leave; and Maintenance of health benefits The primary employer is also mostly responsible for job restoration

FMLA Secondary Employer A secondary employer is responsible for accepting the individual upon return from FMLA: As long as the company continues to use an employee from the staffing agency, and The

38 FMLA Secondary Employer A secondary employer is responsible for accepting the individual upon return from FMLA: As long as the company continues to use an employee from the staffing agency, and The agency chooses to place this employee with the company Secondary employer must also refrain from interfering with an employee's FMLA rights and from discriminating against him/her for protected activities

39 Primary v. Secondary Employer Responsibilities FMLA RESPONSIBILITIES OF JOINT EMPLOYERS PRIMARY EMPLOYER SECONDARY EMPLOYER Count jointly-employed employees for coverage and eligibility determinations (Fact Sheet #28) Yes Yes For employee-eligibility determination, use its worksite for eligibility test (50 employees within 75-miles of the worksite) (Fact Sheet #28) Yes, unless the employee has physically worked at the secondary employer s facility for at least one year No, unless the employee has physically worked at the secondary employer s facility for at least one year Provide FMLA notices to the jointly-employed employee (Fact Sheet #28D) Provide FMLA leave to the jointly-employed employee (Fact Sheet #28D) Maintain benefits for the jointly-employed employee (Fact Sheet #28A) Restore the jointly-employed employee to work (Fact Sheet #28A) Not retaliate, discriminate or interfere (Fact Sheet #28A and Fact Sheet #77B) Yes Yes Yes Yes Yes No, however the secondary employer must provide FMLA notices to its own employees No, however the secondary employer must provide FMLA leave to its own eligible employees No, however the secondary employer must maintain benefits for its own employees who take FMLA leave No, unless the secondary employer is continuing to use the placement agency and the agency places the employee with that secondary employer Yes Keep records Yes, the primary employer keeps all required records Yes, the secondary employer keeps payroll data and identifying employee information

Workers Compensation Insurance In Washington, the PEO (staffing agency) carries W/C insurance coverage Reports hours worked Pays insurance premiums Bears entire cost of

40 Workers Compensation Insurance In Washington, the PEO (staffing agency) carries W/C insurance coverage Reports hours worked Pays insurance premiums Bears entire cost of the W/C claim BUT NOTE: If the staffing agency fails to pay the required premium to L&I, client company is responsible for the unpaid premium RCW ; WAC

41 Mitigation Strategies Step 1: Cost-Benefit Analysis Step 2: Minimize Joint Employer Factors Step 3: Assess risk created by the staffing agency Step 4: (Only if Step 2 is unsuccessful or unworkable): Monitor Staffing Agency Compliance

42 Cost-Benefit Analysis Examine your relationship with your staffing agencies, including operations, personnel management, and services provided, and determine how much control you need of agency employees

43 Policies Review handbook and internal policies for language referring to control or potential exercise of control over contractors Handbooks should apply to employees only, not contractors

44 Contracts Review staffing agency contracts. Terms to consider: Staffing Company s employees are solely employed by Staffing Company The parties do not intend to create a Joint Employer relationship Staffing Company alone retains the sole right to make employment decisions: hire, wages, benefits, schedule, assign work, train and discipline Client Company cannot and does not have the right to make employment decisions, and exercises little or no control over leased employees, other than day to day coordination of work

Employment Practices Staffing company has its own employment policies and procedures Client company does not require agency employees to follow its policies (except safety and job specific

45 Employment Practices Staffing company has its own employment policies and procedures Client company does not require agency employees to follow its policies (except safety and job specific procedures) Minimize any control by client company; relinquish control that fails to support business objectives Staffing company s duty to pay wages is not conditioned on receipt of funds from client employer

46 Employment Practices DO NOT retain the right to make hiring and firing decisions DO NOT have staffing agency employees attend general workplace training (other than safety and directly job-related training) DO communicate to the Staffing Company s representative if dissatisfied with a worker s performance, rather than to the Client s own operational managers or human resources representatives

Employment Practices Refrain from treating the Staffing Company s employees like your own employees, for example: providing them with business cards or otherwise indicating that they are employees of

47 Employment Practices Refrain from treating the Staffing Company s employees like your own employees, for example: providing them with business cards or otherwise indicating that they are employees of the employer; providing them with a corporate account or access to the employer's internal computer systems; requiring them to follow the employer's employee policies; providing professional development training or opportunities.

48 Monitor Staffing Agency Compliance Endeavor to ensure that the Staffing Agency: Maintains an employee handbook that covers policies such as timekeeping, complaint processes, conduct standards, injury protocols, protected leave, and other common employment and benefits policies Establishes policies for complying with applicable laws and regulations and provides managers and supervisors with related manager training

49 Monitor Staffing Agency Compliance Sets up its own standardized guidelines for expense reimbursement, including travel, rather than referring to the Client Company for these matters Follows internal protocols for investigating workplace complaints of discrimination, harassment, wage and hour violations, etc.

Monitor Staffing Agency Compliance Establishes its own policies and practices for reporting of time worked, overtime, and paid time off, and calculates the amount of wages payable as well as payroll

50 Monitor Staffing Agency Compliance Establishes its own policies and practices for reporting of time worked, overtime, and paid time off, and calculates the amount of wages payable as well as payroll taxes This information (other than hours worked) should not be shared with the Client Company Diligently conducts pre-employment screenings, including background checks, drug testing and I-9 eligibility verifications

51 Agile Workforce: ENVIRONMENT Fixed/dedicated desks and/or office Open office/activity-based/agile working and some variations Leaders -> dedicated space // ICs > open space Fully open/nomadic Combo of nomads and residents Hot desks - combo of shared desks and open desks Fixed team but open desks And??

53 Agile Workforce: ENVIRONMENT

54 Agile Workforce: ENVIRONMENT Source:

55 Agile Workforce: INFRASTRUCTURE Technology: Internet Bandwidth Systems - Cloud vs. Hosted Equipment Business & Home Office Requirements Files Physical and/or Paperless Security

56 Agile Workforce: PEOPLE Individual competencies and traits Manager/leadership competencies Generational differences

57 Talent Pool vs Talent Stream

58 Agile Workforce: OH & ALSO! Really consider the organizational factors: Type of Industry (e.g., Manufacturing vs. Services) Geographic Factors (e.g., region, traffic, etc.) High Tech vs. Low Tech Type of Employees Needed Customer Experience Impact to Organizational Culture

59 Agile Workforce: OH & ALSO! Implications for HR: New HR Competencies needed HR Policies Compliance challenges (contract vs employees, ADA, etc.) HRMS

60 Agile Workforce: OH & ALSO! Further considerations for workers: Continue to get harder to find full-time jobs Erosion/loss of benefits and protections provided to employees Health & retirement benefits Erratic income The Self-Employment Tax

61 Part 2: Creating an Agile Workforce Implementation Plan for Your Organization

62 Instructions Form Table Groups or Groups of 4-5 Each member considers the information presented in Part 1: How and which portions of their employee base can be considered for Agile Working particularly: Time & Location Options (use the Time & Source handout) Sourcing Options, with a focus on renting workers (use the Younger & Smallwood 2x2 grid handout) Share among the Group Create a hybrid organization that includes as many elements of everyone s needs for Agile Working: Create an Agile Working Profile for this organization what are you looking to implement in the next 2 years? continued

63 Instructions Create a high-level Agile Working Implementation Plan with the following considerations: Assessing legal risks and thoughts on how to minimize/mitigate Policies that may be required for working remotely, including Daycare and pets Internet bandwidth Video-conferencing Home office specs Attire Security Manager competencies and training Employee Engagement and Company Culture how will this be impacted by Agile Working and how will you address this? Group Report-outs

64 Thank You! Presenter Information: Kellis Borek, JD Vice President, Legal & Labor Services Joseph Marth, PhD Vice President, Research & Development

Joint Employers: Latest from the NLRB, EEOC and DOL

Joint Employers: Latest from the NLRB, EEOC and DOL Kellis M. Borek Vice President Labor & Employment Services Who do you do business with? Parent Corporations Temps Outside workers Subcontractors Vendors