Indirect Labor Acquisition: A Contractual Checklist

by Jason D’Cruz, Partner at Morris, Manning & Martin, LLP and

Tali Hershkovitz, Associate at Morris Manning & Martin, LLP


Carefully drafted contracts help limit a company’s legal exposure when using contingent workers.  The following checklist includes various types of provisions for end customers (also known as service recipients) to consider including in agreements with staffing companies, payroll providers, IC compliance management companies, and other contingent labor service providers (each a “Provider”):

(1) Legal Compliance

  • Include a broad obligation that the Provider will comply with all applicable laws and regulations;
  • Include general non-discrimination provisions, as well as the obligation that the Provider will comply with any affirmative-action and OFCCP obligations;
  • Include an obligation that the Provider will properly classify workers as exempt or non-exempt under the Fair Labor Standards Act and applicable state law;
  • Include an obligation that the Provider will withhold and remit all required payroll and other taxes from workers’ paychecks;
  • Include an obligation that the Provider will appropriately classify, and treat as such, workers who are employees and workers who are independent contractors of the Provider; and
  • Include an obligation that the Provider will ensure that necessary documentation is secured and maintained demonstrating that workers are authorized to work in the U.S.

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