You hired a staffing firm to provide you with entry level workers to manufacture screws for a 3-month government contract you just won. You will not recruit, hire, fire, supervise, or discipline the employees. There might be a longer term opportunity for them after the three months if the contract gets extended. While this solution solves your labor supply concerns, you also need to consider other compliance issues. For example, what should you do when it comes to your Annual Affirmative Action Plan (AAP)? Should these workers be included in your AAP?
To make this decision, you will want to examine whether these workers are considered “employees” since OFCCP regulations provide that all employees must be included in a covered contractor’s AAP. The OFCCP relies on the “common law agency” test for determining who is an employee under OFCCP programs unless otherwise defined in agency regulations or reports. OFCCP’s Federal Contractor Compliance Manual includes the following explanation:
The “common law agency” test generally relates to whether the employer controls the means and manner of the worker’s performance. This determination requires consideration of all circumstances in the relationship between the parties such as: the skill required for the job, who provides required equipment or tools, the location of the work, the duration of the relationship between the parties, the right to assign additional projects, scheduling work hours, the method of payment, the provision of employee benefits and the tax treatment of the hired party. See Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 323-24 (1992).
Given this definition, you have an argument that the temporary workers you are using may not be your employees in this case, and therefore it’s possible you do not need to include these workers in your annual AAP while they are employed by the temporary staffing firm.
Nothing is that simple in HR, so let’s see what happens if you hire them directly after three months because the contract gets extended by two more years? Although this may not be the answer you want to hear, ideally, you should recruit for these permanent positions the same way you would for any other job opening, even if the current temp workforce is wonderful and you just want to hire them all. You should list these employment openings with the state employment delivery system (state job bank), engage in appropriate outreach and recruitment activities, track applicant flow, and include any selection decisions in your AAP data analyses.
Not to add another complication, but what should you do if you are responsible for recruiting, hiring, firing, supervising, or disciplining the temporary employees from the very beginning? In this case, under the common law agency test relied on by OFCCP, the workers may need to be included in your AAP, even though they are being paid by someone else. This is because you are exerting more control over the workers than in the initial example. In this situation, you will want to consider whether the temporary job opening is being posted with the State, who is responsible for gathering and maintaining applicant flow data, and what access you will have to data in case OFCCP asks for it during a compliance review. To achieve compliance in this example, contractors need to be proactive and discuss these obligations with staffing firms up front. Confirming the solution in any written agreement with the staffing firm is also a good idea.
Hiring temporary employees—in a way that is compliant with OFCCP regulations—requires more work than most organizations realize, but by being proactive, you can stay in compliance with all requirements.