Temporary employee laws: A guide to hiring contract roles

The labor market is a strange place right now. A shift towards unconventional work lives means that many employers and companies are in the midst of a total overhaul when it comes to thinking about their workforce.

That said, temporary employment or a contract role may be a good fit for individuals looking to learn more about a certain type of job or eager for immediate work, as well as for employers who are looking to fill a role that has a time-limited or a defined endpoint that doesn’t require a full-time employee. Here we’ll define and discuss what it means to be a temporary employee, the benefits and disadvantages of hiring a temp, as well as temporary employee rules.

What is a temporary employee?

A temporary employee is a contracted worker who is hired for a short-term job. The United States Department of Labor (DOL) defines a temporary employee as someone hired to work for one year or less with a specific end date—however, a typical temp job usually lasts a couple days to a couple weeks. When the position continues longer than six weeks, it’s generally considered a long-term job. Temporary employees are often hired through a temp staffing agency that manages and connects interested individuals to various temp or contract jobs, but temps and contractors can be hired directly by the employer as well.

Benefits of hiring a temp

Hiring a temporary employee can prove useful to employers for a few ways:

  • When you need a short-term project done quickly. Hiring a temporary employee for a limited scope need with a defined endpoint accelerates your timeframe to hire without the intensive and costly process of hiring a full or part-time employee. This is seen frequently in seasonal retail or service hires around holiday commerce. Contract roles are also found in areas such as the tech industry when an organization needs additional support or specialist skills for a project or time period
  • A trial run for a full-time job. If you are looking to hire someone full-time, a temporary job position can also serve as a great trial run. Working with a temp agency saves you time in the hiring process, as they have plenty of resumes on hand and can help connect you with a good fit. Once contracted for the job, a temporary employment provides an opportune time to see how well the employee aligns with your company culture, performs their assigned tasks, and meets or exceeds company goals
  • Filling the gaps. A temporary employee can help you and your company “fill the gaps” in a few ways. Perhaps there is a skillset you need that is lacking in your current staff, but not enough to create a full-time position for it—such as a graphic designer or an office assistant. This is where a temporary employee, such as a freelancer or independent contract worker, can help fill that need. In addition, seasonal needs such as an uptick in business during the holiday season, are a great opportunity to bring in a temporary employee to help with the increased workload. Lastly, if an employee is on a temporary leave, a temporary employee can fill that gap until the full-time employee returns from leave

Disadvantages of hiring a temp

The main disadvantage of hiring a temp is that you have less time for onboarding and training. It takes time for any employee to adjust to their new workplace environment and learn the ropes of the job—a temp employee will not have a lot of time to do so. When hiring a temp, it’s important to consider the complexities of the job, the temp’s experience, and how quickly you expect them to acclimate to the position.

Temporary employee rules

As with any employment contract, there are rules to hiring a temporary employee. Here are a few to take note of:

  • Clear contracts (no fine print!). When hiring a temp worker, you as an employer are obligated to clearly define their payment terms and the length of their employment. It’s also good to include any benefits or additional job requirements that will be part of the contract. These are non-traditional employment contracts, so clearly defining expectations up front is key
  • No longer than 12 months. The DOL states that a temporary job is (by law) a job that lasts less than 12 months. Anything after that must be treated as a long-term employee with the appropriate rights and benefits
  • Exempt from benefits… mostly. Employers are not required to offer full company benefits, such as paid time off, holidays, or healthcare to a temporary employee. However, as we’ll get into in the next section, some temp employees may be eligible for certain benefits depending on the number of hours worked. For example, if a temp works over 1,000 hours in a year, they have rights to social security benefits
  • Eligible for Workers’ Compensation. Temporary employees are, however, eligible for Workers’ Comp—insurance that gives your employees benefits if they have a work-related injury or illness. In most states, this is required. You can check the Workers’ Comp requirements in your state here with the understanding that it is either covered by the employer or by the staffing agency that provided the temp employee.
  • Two-year limit for rehiring. Temps can only be rehired at the same company for two consecutive years.

Temporary employee FAQs

How long can you employ a temporary employee?

A typical temp job lasts from a couple days to a couple weeks. Over six weeks is considered a long-term position. The DOL defines a temp job as lasting less than a year.

How many hours can a temporary employee work?

While there isn’t a specific limit to the number of hours a temporary employee can work, if they work over a certain amount of hours in a year they gain access to certain benefits, according to the DOL. You may be familiar with the 1,000 hour rule (see below)—basically, if any employee, temporary or otherwise, works 1,000 hours in a year, they are eligible to participate in the same retirement plan offered to other employees. For reference, working over 1,000 hours would mean an employee is working approximately 20 hours per week or longer.

What’s the 1,000 hour rule for temporary employees?

The Employee Retirement Income Security Act (ERISA) “1,000hour rule” states that employees who have completed 1,000 hours of service in a 12-month period are eligible to participate in any retirement plan that is offered to other employees. This applies to full-time, part-time, and yes, temporary employees count, too.

Do temp employees get benefits?

Yes, temporary employees do receive some benefits. Even if they do not meet the requirements of the 1,000 hour rule, temporary employees fall under labor laws rights and therefore must receive certain benefits. What those benefits include varies from state to state, so it’s up to you to research what those are. Unfortunately, there is not yet a cohesive place to look this up that we can recommend to you—although you can start with the DOL which states, “​​Collectively, the laws enforced by Wage and Hour cover most private, state and local government employment throughout the United States and its territories.” Some common ones include social security, insurance, and even—for extra incentive—vacation time.

Note: If you would like to include health insurance (which is a good thing but uncommon), you will have to discuss this with your insurance provider, and it generally requires your temporary employee to work at least 20 hours a week.

Do temp jobs become permanent?

This is up to you! If your temporary employee is a good fit for the company or excels at the job, you can decide to offer them a full-time position. In fact, as we talked about earlier, this is a benefit to temporary jobs—it’s a great opportunity to scope out new talent and see who is a good fit for your company.