Co-Employment Risk When You Use Temporary Staff
Co-Employment Risk When You Use Temporary Staff
By TNTSEO United
Last updated: October 2026
Co-employment means a staffing firm and its client share employer duties for the same worker. The firm usually handles payroll and onboarding, while the client directs daily work and controls the site. Using an agency does not remove the client's responsibility for how temporary workers are treated.
When a staffing firm places a temporary worker, federal agencies such as OSHA and the EEOC treat the staffing firm and the client business as sharing employer responsibilities, so both can be accountable for safety and discrimination rules.
The exact obligations depend on the law and the facts. At FIS Recruitment, our temporary employees stay on our payroll but work for you.
What is co-employment?
Co-employment describes an arrangement in which a staffing agency and a client business both have employer responsibilities toward a worker. Joint employment is the legal term used by federal agencies. The U.S. Department of Labor explains that joint employment involves employers sharing legal responsibility for the same employee.
In a staffing arrangement, vertical joint employment means a worker employed by an agency performs work that also benefits its client. A warehouse supervisor may direct the shift while the staffing firm pays the worker. Those roles can create overlapping obligations even though the businesses handle different tasks.
There is no single test that answers every liability question. Wage obligations, workplace safety, discrimination and labor relations involve different laws. Start with the particular issue, then establish which businesses have duties under the applicable standard. The name on the paycheck does not settle every question.
Who is responsible for what: staffing firm vs client
The staffing firm usually administers pay, while the client manages the work performed at its site. Safety and nondiscrimination require attention from both. The table describes a typical division of work supported by federal guidance, not a transfer of all legal responsibility to whichever business performs an administrative task.
| Duty | Usually handled by the staffing firm | Usually handled by the client | Source |
|---|---|---|---|
| Wages and payroll tax withholding | Pays workers and withholds taxes as the payroll employer. | Reports hours worked. May retain wage obligations if it qualifies as a joint employer. | EEOC contingent-worker guidance; U.S. DOL joint-employment Q&A |
| Overtime and time records | Processes pay using reported hours and maintains required payroll records. | Tracks actual site hours and supplies complete information for payroll, including overtime. | EEOC staffing example; U.S. DOL recordkeeping guidance |
| Safety training and hazards | May provide general safety training; must inquire into site conditions and verify protections. | Provides training specific to site equipment and hazards; addresses hazards it can prevent or correct. | OSHA temporary-worker guidance |
| Anti-discrimination | Makes nondiscriminatory assignments and takes corrective action within its control when required. | Treats assigned workers without unlawful discrimination and addresses misconduct at the site. | EEOC contingent-worker guidance |
| Site supervision | Coordinates the assignment and receives client feedback. | Usually directs daily work, schedules and task performance. | EEOC contingent-worker guidance |
Source: OSHA, EEOC and U.S. DOL guidance as cited above. General rules, not legal advice.
When a staffing firm places a temporary worker, federal agencies such as OSHA and the EEOC treat the staffing firm and the client business as sharing employer responsibilities, so both can be accountable for safety and discrimination rules.
OSHA's temporary-worker guidance makes the extent of responsibility dependent on the facts. The EEOC's contingent-worker guidance likewise considers employer status, statutory coverage and conduct. Shared responsibility does not mean identical liability in every dispute.
Where the federal rules stand in 2026
The U.S. Department of Labor still identifies its joint-employer initiative as a proposal, and our review found no published final replacement. The NLRB operates under a separate standard. Neither agency's rule status should be treated as a reason to postpone safety training, accurate time reporting or action on discrimination complaints.
According to the DOL proposal page, the department announced the proposal on April 22, 2026; the Federal Register published it on April 23, 2026. DOL set June 22, 2026, as the comment deadline.
The proposal would align joint-employer analysis under the Fair Labor Standards Act, the federal wage-and-hour law, with the Family and Medical Leave Act and the Migrant and Seasonal Agricultural Worker Protection Act. DOL proposes four factors for vertical joint employment:
- Whether the potential joint employer hires or fires the worker.
- Whether it substantially supervises and controls the work schedule or employment conditions.
- Whether it determines the rate and method of payment.
- Whether it maintains employment records.
DOL says additional factors may matter. Authority to control work that has not been exercised may also be considered, although the proposal gives it less weight than exercised control. This remains a proposed analysis, not a new compliance checklist already in force.
The Federal Register confirms that DOL rescinded its 2020 joint-employer rule in 2021, with the rescission ultimately effective October 5, 2021. That history is separate from the National Labor Relations Board, which administers federal labor-relations law.
The NLRB states that a federal district court in the Eastern District of Texas vacated its 2023 rule on March 8, 2024, before it took effect. The Board formally restored the prior regulatory text on February 27, 2026, and confirms that its 2020 rule remains operative. That does not reinstate DOL's rescinded rule.
Practical ways employers manage co-employment risk
Manage co-employment risk by assigning responsibilities clearly and checking that the work gets done. OSHA recommends documenting safety responsibilities in the staffing agreement, while EEOC guidance explains why both parties must respond to discrimination within their control. Use the agreement to organize action, then review what actually happens on site.
- Write down the handoffs. Identify who provides orientation, site training, time approval, complaint handling and incident reporting. Name a contact and backup for each business.
- Route pay and HR questions promptly. Send payroll corrections and assignment concerns to the staffing firm's contact. Keep responsibility for investigating issues within your own control rather than treating referral as closure.
- Make time reporting complete. Agree how supervisors submit actual hours and resolve discrepancies. DOL recordkeeping guidance requires accurate hours and wage information for covered, nonexempt employees, meaning workers subject to the applicable overtime requirements.
- Train for the actual assignment. Explain site hazards and equipment before assigning the work. Coordinate with the agency when tasks change so training and protective measures match the job.
- Include temps in site conduct rules. Give them a clear way to report harassment or discrimination. Coordinate investigation and corrective action with the agency instead of simply requesting a different worker.
- Document assignment decisions. Record planned duration, changes, performance feedback and reasons for ending or converting an assignment. Keep those records available for review with the staffing firm and counsel.
Before the worker starts, walk through a practical question: if the shift supervisor receives a safety or harassment complaint, who acts next? The answer should identify action by the host as well as communication with the agency. A contact list is useful only when managers know when to use it.
How a staffing firm like FIS splits the work
At FIS Recruitment, our temporary employees stay on our payroll while working for your business. We handle onboarding and orientation and assign a dedicated account manager and recruiter. Your team still directs the site work, so discuss the responsibilities and communication process before the assignment begins.
See how we work with employers for our service approach. Use the intake conversation to explain the role, schedule, reporting line and site hazards. Ask how payroll corrections and assignment changes should reach your account contact, and identify who will handle site-specific training.
If you are considering a permanent hire after an assignment, review how temp to hire works. You can also compare temp, temp to hire or direct hire and read what a staffing bill rate covers. Keep the service model, commercial terms and responsibility discussion connected.
Frequently asked questions
Temporary staffing can divide administrative work without eliminating shared employer duties. These answers distinguish payroll, site safety and discrimination responsibilities using DOL, OSHA and EEOC guidance. For a particular assignment, review the applicable law and the actual working relationship before deciding which obligations each business must fulfill.
What does co-employment mean?
Co-employment means a staffing firm and its client share employer responsibilities for a worker. Federal agencies generally discuss this as joint employment. The division of daily tasks may be straightforward: the agency pays the worker while the client supervises the assignment. Legal responsibility requires a separate look at the applicable law, the relationship and the conduct involved. A payroll arrangement alone does not answer every liability question.
Is a staffing agency the employer of a temp worker?
A staffing agency is generally an employer of the temporary workers it hires and assigns, but the client may also be an employer. EEOC guidance explains that staffing firms typically hire workers, pay wages and withhold taxes, while clients often exercise supervisory control. The relevant legal test determines whether both qualify. Employers should therefore distinguish who administers payroll from who has responsibilities for the worksite and treatment of the worker.
Who is responsible for a temp worker's safety?
Both the staffing agency and the host employer have responsibilities for a temporary worker's safety under OSHA guidance. The precise duties depend on the facts and the hazards each party can address. An agency may provide general safety training, while the host provides training tailored to its equipment and workplace hazards. The agency must also inquire into site conditions and verify that the host fulfills its safety responsibilities.
Can a client company be liable for discrimination against a temp?
A client company can be liable for unlawful discrimination against a temporary worker. The EEOC explains that a client qualifying as the worker's employer is accountable on the same basis as for its other employees. Coverage and the facts matter. The staffing firm can also be liable if it participates in discrimination or knows, or should know, about it and fails to take prompt corrective measures within its control.
What is the new DOL joint employer rule?
The DOL joint-employer initiative is a proposed rule, not a final replacement found in our review. DOL announced it on April 22, 2026, to address joint-employer analysis under federal wage, leave and agricultural-worker laws. Its proposed vertical analysis examines hiring and firing, substantial control of work, pay decisions and employment records. Employers should confirm the status before relying on it and should not confuse it with the separate NLRB standard.
How can employers reduce co-employment risk?
Employers can manage co-employment risk by clearly assigning tasks and following through on their own obligations. Document the division of responsibilities, provide site-specific safety training, share accurate time information and coordinate responses to complaints. Keep assignment changes and personnel decisions documented. These practices support communication and accountability; they do not eliminate potential liability. Have an employment attorney review how the agreement and actual working relationship fit the applicable rules.
Talk to us about temporary staffing
Talk with FIS Recruitment about the work you need covered and how the assignment will operate. Bring the job duties, schedule, supervision plan and site-training needs to the conversation. We can discuss the staffing arrangement while your team identifies the responsibilities it will manage at the worksite.
Call FIS Recruitment at 800.248.8687, email info@fisrecruitment.com, or open a requisition.
This article explains general rules; confirm your obligations with an employment attorney.
