Is Your Staffing Vendor Putting Your Business at Risk?

Recently, a California-based staffing agency, The Party Staff, filed a lawsuit that’s shaking up the hospitality industry. They’re going after some of the tech-driven gig platforms—Instawork, Qwick, Tend, and Nowsta—with a serious accusation:

These companies are allegedly misclassifying workers as independent contractors to cut costs and undercut traditional staffing firms, gaining an unfair advantage in the staffing market.

If true, it’s not just a problem for workers, it could be a legal landmine for the clients who hire through these platforms.

Let’s break it down.

The Real Issue: Classification Games

At the heart of the lawsuit is how these platforms classify their workers. Instead of hiring W-2 employees, who are entitled to minimum wage, overtime, workers’ comp, and benefits, these apps allegedly treat them as 1099 independent contractors.

That means no payroll taxes. No overtime. No benefits. And way lower operating costs.

Smart business model?

Not if it violates California’s strict AB5 law, which uses the ABC Test to determine if someone is truly an independent contractor.

The Hidden Risk: Joint Employer Liability

There’s a second, even more serious implication for businesses that outsource their staffing:

Companies that directly manage outsourced workers could share legal responsibility under the concept of a “joint employer.”

It’s a risk many clients are taking, often without realizing it.

What’s “Joint Employer Risk”?

If you hire workers through a gig platform or staffing agency, and then:

• Supervise them directly

• Set their schedules

• Assign their tasks

• Treat them like part of your team

...then the law might treat you as an employer, alongside the agency. That means you could be liable for any wage violations, lack of benefits, or safety issues.

How to Protect Your Business (Before It’s Too Late)

Before signing a contract with any staffing provider, tech-based or traditional, do your homework. Use this quick compliance checklist to cover your bases:

Risk-Ready Vendor Checklist

1. Worker Classification Are their workers truly independent contractors—or misclassified employees? Do they comply with AB5 (if you're in California)?

2. Legal Documentation Do they handle I-9s properly? Do they use E-Verify?

3. Wage & Hour Compliance Are they paying minimum wage, overtime, and providing legally required breaks?

4. Active Insurance Do they carry workers’ comp and liability insurance? Ask to see their certificate.

5. Training & Safety Do they offer OSHA-compliant safety training and onboarding?

6. Litigation History Have they faced recent lawsuits? What systems do they have in place to reduce joint employer risk?

7. Cultural & Ethical Alignment Do their values, ethical standards, and communication practices align with your company’s culture and expectations?

Don’t Gamble with Compliance

At Altitude, we believe that reputation, compliance, and trust aren’t things you can afford to gamble with. The right staffing partner should lower your risk, not increase it. 

So, ask the hard questions. Request the paperwork. Make compliance non-negotiable. Because in today’s labor landscape, playing it safe is the smartest move you can make.

Choose wisely.