One of the toughest jobs a leader can have is that of risk mitigator. Protecting the downside requires an acute understanding of the threats at the door.  Unfortunately, leaders today are awash in information that is often non-actionable or meaningless.  Worse yet, it is often too late when a real threat appears.  By then, the flaming monkey is tearing through the office threatening to burn the business to the ground.

When I recently heard about the Sullivan v. Kelly Services decision, I leaned forward.  Then I started asking leaders in our staffing and recruiting clients if they had heard anything about the ruling.  With two exceptions, no one had.

So here is the short version.  A ruling by a federal district court in California has implications that threaten to impact many staffing and recruiting firm’s already quickly diminishing margin.  In California, firms that provide temporary staffing are required to reimburse for their employee’s interview time.  Although this decision impacts only staffing and recruiting firms that are doing business in California, the potential threat may stretch well beyond.

More Firms Are At Risk Than Kelly Services

Sullivan v. Kelly Services was a case decided in November 2009. This civil case, brought before a federal district court, charged that Kelly Services is liable for the time its employee spent pursuing temporary work assignments. The court ruled that this employee’s actual interviewing time is “compensatable” under California Law. Simply put, an employee should be compensated by the firm for the interviewing process itself.

A decision in favor of the plaintiff, Catherine Sullivan, suggests that any staffing agency doing significant business in California has financial exposure for interviewing time.

Where do we go from here?

From my perspective, this judgment seems to reward behavior that a staffing firm would like to keep to a minimum. Isn’t the idea to place employees after as few interviews as possible?  Temps may see the interview activity as a new way to earn interim dollars.

Luckily for our clients, VoiceScreener can reduce if not eliminate the exposure to pay for time spent interviewing. We’ll be blogging about that in posts coming up shortly.

For now, here’s some background for you on the federal court for the Northern District of California, Sullivan v. Kelly Services, Inc. (Case No. C 08-3893 CW), Judge Claudia Wilken presiding (the link is a 530k PDF file). Also, here is a quick summary by legal blogger who goes by The Complex Litigator.

We welcome your perspective!

Graphic acknowledgement: DanMaudsley, shared via Creative Commons