Temporary Employees and Employment Law
Temporary employees give you flexibility in meeting your staffing needs, but recent years have brought new legal pitfalls for the unwary HR professional.
HR Guide to Employment Law: A practical compliance reference manual covering 14 topics, including overtime and FLSA requirements
Correctly classify temporary workers
Incorrectly classifying employees as temporary workers can be a costly mistake. If a court decides they’re really regular employees, you’ll have to give them the benefits they would have received if they had been classified correctly. This could include health insurance, life insurance, retirement benefits, and stock options.
Learn more about wage laws and correctly classifying workers in the Wage and Hour Compliance Manual
Employment laws regarding temps
Under many laws, temporary employees are treated as having two employers – the staffing agency and you. Both companies must come with these laws. In general your company’s liability under federal and state equal employment opportunity laws – such as Title VII of the Civil Rights Act of 1964 (Title VII) and the Americans with Disabilities Act (ADA) forbidding discrimination, harassment, and retaliation – is the same for temps as it is for your regular employees.
If a temporary worker is disabled, your company and the staffing agency are jointly responsible for accommodating her disability and not discriminating. Even if the staffing agency doesn’t hold up its end of the bargain, you still must try to accommodate.
The same principle applies under the National Labor Relations Act (NLRA), the Fair Labor Standards Act (FLSA), worker’s comp and other employment laws such as the Occupational Safety and Health Act (OSH Act).
The typical contract with a staffing firm specifies which entity provides workers’ comp insurance for temporary employees. You should make sure that someone else does. Otherwise your state’s law might allow an injured temporary worker to sue your company for negligence and collect much more than workers’ comp would allow.
State-by-state comparison of 50 employment laws in all 50 states, including wage laws
Staffing agency’s tax mistakes
Your company could be liable if a staffing agency is supposed to pay employment taxes to the IRS but doesn’t. Your potential liability depends on the taxes involved and your contract with the staffing company.