Legal Smarts: Hiring Temporary Employees
The holidays are coming up, which can mean hiring temporary workers in retail and other industries. Do you know how to protect yourself against claims of unfair pay, benefits requests payments, and other temporary employee legal issues? Temporary employee laws abound so it’s important that you’re well informed. Here are some of the A-B-C’s of law relating to temporary employees that will help keep your company off of Santa’s “naughty” list this season.
Temp Employee Tip No. 1: Temporary employees may be entitled to certain employee benefits like medical insurance and enrollment in your retirement plan. Depending upon the length of time the temporary employee is in your service, they may earn the right, whether by company policy or law, to enroll in the benefits programs available to permanent employees. For example, many companies allow employees to enroll in the company-sponsored medical insurance program after three consecutive months of full-time service. However, it may not be your intention to provide benefits to your temporary employees. To avoid this potential benefit drain, revisit your existing policies related to FMLA leave, medical insurance, and other employee benefits to ensure that you are not unwittingly opening up your insurance benefits pool to the crop of temporary employees in your midst.
Under the federal employee benefits law, Employees Retirement Income Security Act (better-known by its nickname, “ERISA”), workers who log over 1,000 hours in a 12-month period on the job are entitled to participate in the pension or retirement plan offered by their employer. To inoculate your company from inadvertently opening up pension enrollment, carefully track the hours logged by your temporary employees. As a preventative measure, create a work schedule and term of employment that will not cause the temporary worker to breach the 1,000 hour rule.
Temp Employee Tip No. 2: Don’t attempt to disguise temporary employees in volunteers’ clothing. Use your volunteers only for volunteer-type work. It is often tempting to enlist people to work under the title of “volunteer” who will perform all the functions of a paid employee, but for free. However, as Shakespeare might say, an employee by any other name . . . is still an employee. In other words, just by naming the worker a “volunteer” does not automatically give the employer a free pass regarding wage and hour law and other potentially nasty employee legal entanglements. The true volunteer may donate their services to your organization so long as the understanding and intent of the volunteer is that the services provided will not be for pay or will necessarily result in employment at the end of the volunteer stint. Keep in mind that it may raise a few eyebrows at the IRS if the “volunteer” is engaging in the core functions of the organization. For example, candy-stripers in a hospital are commonly considered volunteers. However, if that same candy-striper is providing nursing services or performing open-heart surgery, then it is less likely that their “volunteer” title will pass muster.
Temp Employee Tip No. 3: It may be worth your while to use a temporary employment agency to staff your temporary uptick in workforce needs. Although the employee’s employment is intended to be temporary, it may turn into a long-term drain on your company because temporary employees are entitled to draw unemployment benefits. Temporary employment agencies can, however, serve as a buffer in this regard because the agency is considered the employee’s employer, not your company. Although you will pay more in an hourly rate to hire employees through the agency, your liability will be capped at the hourly rate and you will not have to worry about unemployment claims.
Temp Employee Tip No. 4: Temporary employees have just as many legal rights as permanent employees when it comes to equal pay claims, sexual harassment lawsuits, and the panoply of other employment-related civil rights claims. In other words, what begins as a temporary worker relationship can turn into a protracted and enduring litigious relationship if the customary precautions are not observed. One major first step in building your litigation buffer is to have your temporary workers go through some modicum of orientation sessions which include a crash course in the company’s equal employment opportunity policy, anti-harassment policy, and mandatory reporting requirements. As icing on the cake, the prudent employer will distribute employee handbooks to their temporary employees and collect signed acknowledgement forms confirming that the employee is bound by the aforementioned policies.
Around this time of year, ‘tis the season to seek out temporary employees to supply the extra manpower needed to weather the anticipated boom in seasonal business. While you respond to the increased demand for employees, don’t forget to stay savvy about all of the trappings of permanent employees that generally apply to temporary ones as well.
Davis Wright Tremaine LLP
- HR Guide to the Fair Labor Act
- How to Draft an Employee Manual
- Employer’s Guide to Worker’s Compensation
- Strategic HR Planning
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