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Identifying and Managing the Risks of Borrowed Employees

Posted by Mollie and Maureen on August 13, 2018 at 9:59 PM

The risk management arena sometimes may seem a little gray, particularly if it involves the services of borrowed employees. For example, under law, an organization or municipality can be held liable for injuries suffered by a third party even if the individual is an employee borrowed from another company or an independent contractor.

Such employees present a slippery slope for organizations who seek their services, primarily because the organization has little control or insight into the employees’ initial hiring, training and/or supervision. Amplifying the overall risk notwithstanding, borrowing workers is oftentimes extremely convenient. However, the situation requires that the organization relying on borrowed workers takes some precautions prior to committing to their services.

  • The organization should not pass on the option to commit the conditions of potential injury or misconduct to paper. As a result, the organization can create the opportunity to shift the responsibility to the third party’s company if a lawsuit is issued by the third party. But for the contract to be valid, the third party’s company needs to be covered by insurance that extends to lending employees and their actions.
  • The organization in need of borrowed labor should look into the other company’s hiring and training process, and potentially set the terms of the employee’s quality (years of experience, for instance)
  • The organization in need of borrowed labor should hold its end of the bargain in terms of notifying the employee’s company of any problems that may arise.

Joint Employment

Joint employment is defined as two or more employers sharing direct control over an employee. Consequently, both employers are responsible for the actions of that employee. Although the law is clear in these cases, situations involving two or more employers can become murky enough. For instance, consider how overtime work is regulated in these conditions. Both employers have an obligation to honor the employee’s hours, but the decision concerning who pays the employee what cut is entirely up to them.


It is perfectly reasonable for a third party member to file a suit directed at the organization contracting the services of borrowed workers. Even if the borrowed workers are independent contractors, under law they are listed as employees of that organization and under very broad terms.

What is of utmost importance is for the contracting company to notify their attorney of the incoming suit as soon as possible. Any contracts the organization may have signed should also be provided to the attorney. How the remainder of the suit is handled boils down to the particularities of each separate case.