Does Use Of Temporary Labor Violate Contractors’ Laws?

The use of temporary labor in the Idaho construction industry is a fairly common practice. Typically, a contractor or subcontractor who temporarily needs some unskilled or semi-skilled labor to perform various tasks at a construction site may make arrangements for the temporary labor such that the labor agency provides the workers to the contractor/subcontractor for a fee. The agency is the “employer” of the workers and covers the payroll costs, while the contractor/subcontractor directs the work to be performed.

On its face, it appears that the contractor/subcontractor is not contracting for construction services. Rather, the contractor/subcontractor is simply seeking to acquire more workers for its workforce.

However, the arrangement is more likely to come into existence along the following lines: the contractor/subcontractor contacts the temporary staffing agency and inquires as to whether the staffing agency has workers who can assist the contractor/subcontractor with a particular construction task. For example, the contractor/subcontractor may inquire as to whether the staffing agency can assist the contractor/subcontractor with a “framing project,” or “demolition project,” or can provide “hod carriers to assist masons.” In the case in which a contractor seeks to augment its work force for a particular task, it is conceivable that the temporary staffing agency may be acting in the capacity of a public works contractor in violation of Idaho law.

A “public works contractor” can be construed broadly under Idaho law to include “any person who…offers to undertake…any construction…of any public work….”

In a 1996 case from West Virginia and a 2012 case from Alabama, the Supreme Courts of both states held that temporary staffing agencies were in violation of contractor licensing laws because the services rendered by staffing agencies fell within the broad definition of a “contractor” for the purposes of the respective states’ contractor licensing acts.

In the West Virginia case, the court held that the temporary staffing agency violated the contractor licensing act because it supplied laborers to perform a particular item of work for which a contractor’s license was required. The court did not indicate that the result might be different had the agency simply provided laborers for no purpose except to augment the contractor’s work force, but such reasoning may be implied in the decision.

In the 2012 Alabama case, the court indicated that because the workers were supplied for the purposes of carrying out carpentry work, that the labor supply agency was acting in the capacity of a contractor without a license. The court implied but did not expressly state that its result might be different had the supplied workers been mere performers of menial labor.

Although there is no reported Idaho court decision on whether or not a temporary labor agency needs or does not need a public works contractor’s license, the foregoing cases indicate that the use of temporary help for the performance of skilled or semi-skilled work on a public works project risky, at best.