The big picture: A Tennessee appeals court has ruled that a staffing contract cannot unilaterally prevent a temporary worker from being considered co-employed by the client company, emphasizing that actual control dictates employment status. This decision underscores the legal principle that substance over form prevails when determining employer responsibilities and liabilities.Two newlinesWhy it matters: This ruling has significant implications for staffing agencies and client companies, as it clarifies that contractual agreements alone may not shield clients from co-employment obligations if they exert direct control over contingent workers. It highlights the need for careful review of operational practices and contractual language to mitigate legal risks.Two newlinesBetween the lines:

• The court found that the client company's control over the worker's hours, tools, and supervision established a co-employment relationship.
• This direct control superseded the terms of the staffing contract designed to limit the client's employer status.
• The ruling reinforces the importance of operational realities in determining legal employment relationships, regardless of written agreements.Two newlinesStaffing & HR impact: Staffing firms must educate clients on the risks of direct supervision and ensure contracts clearly delineate responsibilities, potentially impacting service models and gross margins. HR departments within client companies need to re-evaluate how they manage contingent workers to avoid unintended co-employment liabilities and ensure compliance.Two newlinesThe bottom line: Actual control, not just contractual language, is the ultimate determinant of co-employment status, demanding vigilance from all parties in the contingent workforce ecosystem.