Is a Staffing Agency Liable for Overtime Violations?

Yes, a staffing agency can be held liable for overtime violations under federal law. If you work through a staffing agency and haven’t received proper overtime, both the agency and the client company may share legal responsibility. The Fair Labor Standards Act (FLSA) requires nonexempt employees to receive overtime pay at one and one-half times their regular rate for hours worked beyond 40 in a workweek. When a staffing agency controls aspects of your employment, it may qualify as a joint employer, making it fully liable for overtime compliance. For temp workers and staffing agency employees, this means you may have a valid claim against multiple parties if your overtime was miscalculated or unpaid.

If you believe a staffing agency has shorted your overtime pay, The Lore Law Firm can help. Call 866-559-0400 or request a free case evaluation today.

How the FLSA Protects Temporary and Staffing Agency Workers

The FLSA applies broadly to employees across the private sector as well as federal, state, and local governments. It establishes minimum wage, overtime pay, recordkeeping, and youth employment standards protecting workers regardless of whether they are hired directly or placed through a staffing agency. A business is generally subject to enterprise coverage if it has at least $500,000 in annual dollar volume and employees engaged in commerce. Individual employees personally engaged in interstate commerce are covered regardless of employer size.

In practice, individual coverage is broad — courts have found that even routine activities such as using telephone lines, processing credit cards, or handling goods that crossed state lines satisfies interstate commerce. As a result, the vast majority of temp and staffing agency workers have individual FLSA coverage even when their employer falls below the $500,000 enterprise threshold.

Staffing agency workers are not excluded from these protections. If you are a nonexempt employee placed at a worksite through an agency, you retain the same right to overtime pay as directly hired workers. Covered nonexempt workers must receive overtime pay at one and one-half times the regular rate after 40 hours in a workweek.

Who Qualifies for Overtime Under Federal Law

Most hourly and nonexempt salaried workers qualify for overtime pay. However, certain categories are exempt, generally including executive, administrative, and professional employees who meet both a duties test and salary basis test, outside salespeople, and certain computer professionals. The current federal minimum salary threshold for the EAP exemption is $684 per week ($35,568 annually). A 2024 Biden-era rule that would have increased this to $1,128 per week was vacated nationwide by a Texas federal court in November 2024. As of April 2026, $684 per week remains the operative threshold. Some states impose higher salary thresholds; employers must comply with whichever standard provides greater worker protection.

• Nonexempt hourly workers

• Nonexempt salaried workers earning below the EAP salary threshold

• Workers misclassified as exempt or as independent contractors

• Temp and staffing agency employees performing nonexempt duties

💡 Pro Tip: If your staffing agency classifies you as exempt from overtime, verify whether your actual job duties and salary level support that classification. Misclassification is one of the most common bases for overtime claims, and staffing agencies sometimes misclassify employees to avoid paying overtime.

Joint Employer Overtime Liability: When Both Parties Are Responsible

Under the FLSA, separately incorporated entities can be treated as a single employer for overtime purposes. The U.S. Department of Labor has long recognized that when two businesses are sufficiently associated with respect to their employees through shared ownership, overlapping management, coordinated scheduling, and shared facilities, they may be deemed joint employers. This principle directly applies to staffing agency and client company relationships. When joint employer status is established, both entities become jointly and severally liable for overtime violations.

It is important to distinguish between two types of joint employment. Horizontal joint employment (two related businesses sharing employees) is governed by well-established and consistent DOL standards. Vertical joint employment — the staffing agency scenario, where a client company may be jointly responsible for the agency’s placed workers — is governed by a more contested and shifting standard. The DOL’s 2020 rule defining vertical joint employment narrowly was rescinded in 2021, and no formal regulation has replaced it. Courts currently apply varying common law tests examining the economic reality of the relationship.

This matters because all hours worked for joint employers must be combined when calculating overtime. If the staffing agency is your employer for both placements, all hours worked across both assignments in the same workweek must be combined for overtime purposes under the FLSA — because the agency is the single employer responsible for all your hours. If you work 25 hours at one client site and 20 hours at another through the same agency in one workweek, those 45 hours must be aggregated, and you are owed five overtime hours at the time-and-a-half rate. This principle turns on the agency being your common employer, not simply on using the same agency for different placements.

What Triggers Joint Employer Status

The DOL issued Opinion Letter FLSA2025-05 on September 30, 2025, clarifying horizontal joint employment — where two related businesses share employees. That letter confirmed that separately incorporated entities sharing ownership, management, and operations must aggregate employee hours for overtime purposes. However, staffing agency relationships fall under vertical joint employment — a legally distinct framework addressing when a client company exercises sufficient control over a staffing agency’s placed worker to become a joint employer. The DOL’s approach to vertical joint employment has shifted significantly across administrations and is currently governed by common law and court decisions rather than any active DOL regulation, following rescission of the 2020 joint employer rule in 2021. In the staffing agency context, courts evaluate whether the client company exercises sufficient control over hiring, firing, pay rates, and working conditions to qualify as a joint employer alongside the agency. Both entities may be held fully liable for FLSA compliance, including proper overtime pay.

💡 Pro Tip: Keep your own records of every hour you work at each placement, including start and end times, breaks, and which client site you reported to. If your hours are spread across multiple assignments through the same agency, these records can be critical evidence for an overtime claim.

How Staffing Agencies Fail to Include All Compensation in OT Calculations

One of the most common overtime violations involves failing to include all compensation in the regular rate of pay. Under the FLSA, the “regular rate” must encompass virtually all remuneration paid to an employee, not just the base hourly wage. Staffing agencies frequently exclude nondiscretionary bonuses, shift differentials, piece-rate pay, and commissions when computing overtime, resulting in a lower overtime rate that shortchanges workers on every overtime hour.

The overtime premium is calculated as one and one-half times the employee’s regular rate for each hour worked over 40 in a workweek. When a staffing agency improperly excludes qualifying pay components, the underpayment can add up significantly. For example, if your agency pays a $2 per hour night-shift differential but fails to factor it into your overtime rate, you lose money on every overtime hour during that shift.

💡 Pro Tip: Review your pay stubs carefully. If your overtime rate is exactly 1.5 times your base hourly wage and you receive any additional compensation like bonuses or shift differentials, your employer may have violated the law by excluding that pay from your regular rate.

What an OT Calculation Lawyer Can Do for Your Claim

An OT calculation lawyer can evaluate whether your staffing agency properly computed your overtime pay. These cases often involve complex payroll analysis, especially when multiple pay components should have been included in the regular rate. An attorney with extensive FLSA experience can review your pay records, identify underpayments, and calculate back wages you may be owed, including liquidated damages equal to unpaid wages — which are the default upon a finding of violation. The employer bears the burden of proving good faith to avoid them.

Staffing agency overtime cases can involve multiple liable parties. Because joint employer liability may apply, your claim could extend to both the staffing agency and the client company. An attorney can determine which entities bear responsibility and pursue recovery from all of them. You can learn more about staffing agency misclassification and liability in similar cases.

💡 Pro Tip: Under the FLSA, the statute of limitations for overtime claims is generally two years from the date the cause of action accrued, or three years if the employer’s violation was willful. Do not delay seeking legal guidance, as waiting too long could reduce or eliminate recoverable back pay.

Steps to Take If Your Staffing Agency Owes You Overtime

If you suspect your overtime pay has been miscalculated, taking action early strengthens your position. Start by gathering documentation. Pay stubs, time sheets, employment agreements, and written communications about pay rates or schedules can all serve as evidence.

• Request copies of your pay records and timekeeping data from your staffing agency

• Compare your recorded hours against pay stubs to identify discrepancies

• Note every pay component you receive beyond your base hourly rate

• Document any off-the-clock work or time-shaving practices

• Consult an unpaid overtime attorney to assess your claim

You do not need to resolve this on your own, and you are protected from retaliation. Federal law prohibits employers from retaliating against workers who assert their FLSA rights. Filing a complaint or pursuing a claim is legally protected, and your staffing agency cannot lawfully terminate, demote, or discipline you for doing so.

💡 Pro Tip: If your staffing agency tells you that you are not entitled to overtime because you are a “temp” or “contract worker,” do not accept that answer at face value. Your classification should be based on actual job duties and how the work relationship functions, not merely on a label assigned by the agency.

Frequently Asked Questions

1. Can a staffing agency be held liable for unpaid overtime even if the client company controls my schedule?

Yes. Under the FLSA’s joint employer doctrine, both the staffing agency and client company may be liable for overtime violations. Liability depends on factors such as shared control over hiring, pay, scheduling, and working conditions. If both entities exercise sufficient control, both can be held jointly and severally responsible.

2. Does my staffing agency have to include my bonus in overtime calculations?

In many cases, yes. Nondiscretionary bonuses tied to production, attendance, or performance metrics must generally be factored into the regular rate when calculating overtime. If your agency excludes these amounts, your overtime rate may be improperly lowered.

3. What if I work for two different clients through the same staffing agency in one week?

If the staffing agency is your employer for both placements, all hours worked across both assignments in a single workweek may need to be combined for overtime purposes. If combined hours exceed 40, you are likely owed overtime at the proper rate for every hour over that threshold.

4. How do I know if I have been misclassified as exempt by my staffing agency?

Exemptions depend on actual job duties and compensation, not job title. If you primarily perform routine, nonmanagerial tasks and earn below the $684 per week salary threshold, you may have been misclassified. An OT calculation lawyer can analyze your role and determine whether you should receive overtime.

5. How far back can I recover unpaid overtime from a staffing agency?

Under the FLSA, you can generally recover unpaid overtime going back two years from the date you file your claim. If your employer’s violation was willful, meaning the employer knew or showed reckless disregard for the law, courts may extend that period to three years.

Take Action to Recover the Overtime Pay You Have Earned

Staffing agencies are not above the law when it comes to paying proper overtime. Whether your agency excluded bonuses and shift differentials from your regular rate, failed to combine hours across assignments, or misclassified you to avoid overtime obligations, you may have a valid claim for back wages and liquidated damages. Joint employer liability under the FLSA means both your staffing agency and the client company where you worked could be responsible.

The Lore Law Firm is committed to helping employees recover the wages they are owed. If you suspect your staffing agency has violated overtime laws, call 866-559-0400 or submit a free case evaluation to discuss your situation with a legal team that fights for workers.

Michael Lore

Founding Attorney

Michael Lore is the founder of The Lore Law Firm with over 25 years of experience in labor and employment law. He handles cases ranging from unpaid overtime and class actions to executive contracts and personal injury matters in courts nationwide.

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