Jeff Ruzal Quoted in “Insourcing Trend Could Simplify Wage Issues”

Major employers that typically hire outside contractors are increasingly bringing workers in-house due to pandemic-driven labor and supply chain issues, a developing trend that attorneys said increases worker protections and employer liability under labor law. ...

But employers have found advantages to enlisting workers outside their organizations.

"They might choose to outsource workers for short-term projects so they don't need to go through onboarding employees, or because an outside entity performs special services that a company doesn't have in-house," said Jeffrey Ruzal of management-side firm Epstein Becker Green.

"There could be considerable benefits to outsourcing," Ruzal said. ...

"There could be some distinct legal advantages to [insourcing] in the avoidance of certain hurdles," such as misclassification or joint employment issues, Ruzal said.

Employers also benefit from having more control over compliance efforts than they do when relying on other entities to comply.

"It causes businesses to own the relationship and to ensure upfront that they're focused on compliance measures," he said.

There are also business advantages to insourcing, Ruzal said. "Greater accountability in direct employment goes a long way from a performance perspective and will result in realized gains for that business."

Wage and Hour Issues Remain

Just because a worker is in-house doesn't mean wage and hour issues can't come up, attorneys on both sides said. ...

Ruzal said employers that are insourcing workers for jobs they typically outsource should treat the new workers the same way they treat existing in-house employees.

"Businesses should not treat new individuals ... as an extension of outsourcing," he said. "They're not just a replacement for traditional contractors that they may have historically used, but rather [they] have to obviously be viewed the same way [and] onboarded carefully."