White Paper: Tenure Limits & Co-Employment

If you’re considering implementing a tenure policy, start with asking yourself:

What is the purpose of the policy?

Typically, the answers are:

1. To protect ERISA benefits
2. To protect Employee Stock Purchase Plan (ESPP) benefits.
3. To limit potential co‐employment liability.

There’s good news and bad news

Unfortunately, there are no specific laws that provide a clear path or direction on this topic. The court cases that deal with claims surrounding this issue create precedents and provide us with the insight to the court’s considerations, thus enabling us to create guidelines and appropriate recommendations to our clients.

Based on our experience managing the contingent workforce of large corporations throughout the US, there are no consistent practices across the board. Of our current client base, the majority do not have a formal length of stay policy. A smaller percentage have some sort of policy or guideline that ranges from 12 to 18 months. Although policies may exist, in our experience, the majority allow for case by case considerations for exceptions largely due to the challenge and costs associated with hiring and training a replacement after a fairly short period of time.

Top 4 Best Practices

We recommend that any firm with contingent workers follow these four best practices for co‐employment management:

1. Engage independent contractors appropriately by classifying them correctly. This is best done by substantiating...

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Tenure Limits White Paper