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U.S. Department of Labor Futurework
  Trends and Challenges for Work in the 21st Century
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Flexible Staffing Arrangements

A Report on Temporary Help, On-Call, Direct-Hire Temporary, Leased, Contract Company, and Independent Contractor Employment in the United States

Susan N. Houseman
August 1999

9. Coverage of Workers in Flexible Staffing Arrangements by Labor Standards

Most statutes establishing benefits or standards for workers were written with the traditional employee—a full-time, permanent worker—in mind. The large and growing number in flexible staffing arrangements, however, has sparked concern that existing law is inadequate to protect these workers. A related concern is that, although businesses have many legitimate reasons for using alternative arrangements, legal loopholes provide an added incentive to use these arrangements in order to circumvent certain labor standards.

The current situation does not entirely favor business, however. Whether workers in flexible staffing arrangements are covered under various laws is often ill-defined. In the absence of clear legal language, employee coverage and employer liability is being determined by the courts, which often apply different standards to different laws and sometimes even different standards to the same law. Such ambiguity causes considerable confusion and legal expense for businesses.

Whether and how workers in flexible arrangements are covered by various labor standards turns on whether they are defined as covered employees and exactly who their employer is under a particular law. For this reason, I begin by providing some background on the legal issues concerning the definition of employees and employers when flexible staffing arrangements are used. Next, I discuss policy issues raised by flexible staffing arrangements within the major employment program areas and areas of employment law.

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