Is a Temp Agency Employee also Your Employee?

Author: Ronald E. Lyons Date: 02/28/2017

Categories: Employment Law & Litigation

Employers often look to temporary staffing agencies to fill pressing employment needs.  Historically, an employee hired this way has been considered to be solely an employee of the agency.  That may be changing, and if your business hires temps through an agency, you should be aware of this development.

Last month a federal Circuit Court found that a hospital, using a temporary worker hired through a staffing agency, can be deemed to be the co-employer for purposes of insurance policies covering employees.  In this case, a patient of the hospital filed a medical malpractice action against the hospital along with various doctors and nurses, including a nurse provided by a staffing agency.  The staffing agency and the hospital each had its own medical malpractice insurance policy.  The question was whether the temporary nurse qualified as an “employee” of the hospital under the hospital’s insurance policy.

The contract between the agency and the hospital expressly said that healthcare practitioners provided by the agency were the sole employees of the agency and not of the hospital.  A closer look at the facts, however, established that the hospital exercised a great deal of control over the nurse.

Under the staffing agreement, the hospital was responsible for orienting the nurse to the job and establishing all policies and procedures.  The hospital also maintained the right to “float” the nurse to other areas to which she was not originally assigned and the right to terminate her if she refused that assignment.  The agreement gave the hospital the right to terminate any nurse provided by the agency if the hospital determined that the nurse’s performance was unsatisfactory.  The agency did not provide any supervision of its personnel working at the hospital, and the hospital was solely responsible to dictate the type of care to be provided by the nurse.

The staffing agency’s malpractice insurance company provided coverage to the nurse whom it had placed with the hospital.  That insurance company subsequently filed suit against the hospital’s insurance carrier seeking contribution and claiming that the nurse was an employee of the hospital and, therefore, entitled to coverage under the hospital’s policy.

The Circuit Court seized upon the fact that hospital’s insurance policy did not exclude agency-provided staff from its definition of “employee”.  Because the professional liability section of the hospital’s policy extended protection to hospital workers without excluding agency-provided workers, the Court found that the nurse was covered under the hospital’s liability policy.  In addition, because the hospital maintained a clear “right-to-control” the nurse placed by the agency, that nurse was deemed to also be an employee of the hospital for the purposes of the liability insurance.

The ruling in this case was based on specific provisions of the hospital’s insurance policy.  The opinion, however, could be expanded and applied to other employee matters such as rights under qualified benefit plans, worker’s compensation claims, and employee discipline as well as equal pay for businesses that hire through temp agencies.  If your business uses temporary staffing agencies to meet staffing needs, be sure that your liability insurance and other employee policies are scrutinized, especially in situations where you as the employer retain comprehensive control over the employee.

For more information or help regarding issues, business related, please contact me at (240) 778-2306 or