Seasonal and Temporary Employees: What Are the Risks?

Contingent employees can pick up the slack when business get busy, but structure the relationship carefully or their liabilities may linger long after they’re gone.

Mid-summer traditionally means beach parties, picnics … and seasonal and temporary employees.

It’s easy to see why. The jobs of vacationing employees have to be covered. Seasonal businesses are going full blast. And throughout the year, there are sudden workload increases that require extra hands on the oars. Temporary or seasonal workers, along with independent contractors, are a seemingly ideal solution.

But are there any risks in employing temporary employees?

We discussed that question in the recent BLR audio conference: Seasonal and Temporary Workers: Navigate the HR, Wage/Hour and Practical Implications—and Risks for Your Workplace. The speakers were Laura E. Innes, an employment law attorney with Simpson, Garrity & Innes, and Drew Langevin, a management consultant. Both are based in San Francisco.

The conference began with a listing of sources for what are generically called “contingent workers.” Most, said the speakers, come from temporary agencies or professional employer organizations (“PEOs”). These groups recruit and compensate the workers and ensure their employment complies with applicable law. A third source is employee leasing agencies, which do the same except for the recruiting, which the client company does. The speakers felt that temp agencies were best used for short-term projects, the others for longer duration or recurring activities.

Your responsibilities to temporary employees

Your company has certain responsibilities to temporary workers, even though you’re not directly paying them. “When you bring on someone’s employees, they are also your employees,” said Innes. “This is something employers often forget.”

She explained that if workers are directed and controlled by you, you’ve formed a joint employer relationship with the sourcing agency. You and the agency are both responsible for ensuring that the temps are covered by workers’ comp, meet all wage/hour standards and have an I-9, W-4, and Social Security number on file. You also need to be sure that the agency has not improperly classified employees as exempt under FLSA rules if they shouldn’t be. This calls for dealing with reputable vendors and monitoring them diligently.

You are not required to offer contingent workers the same benefits as employees, the speakers noted, but you need to be careful that they don’t become eligible for benefits without your intending it. “Look at how your plans define eligibility,” said Innes. “If it just says ‘employee,’ you leave yourself wide open. Maybe you should have it read ‘employees on the payroll to whom we issue a W-2.’”

Let temporary workers know what policies apply to them

Both speakers emphasized the need for employers to make contingent workers aware of dress codes, safety and security standards, rules on access to data and other policies that apply to them, perhaps through a contingent worker handbook. Langevin noted that such a document would help your legal defense if you are sued over trouble a temp worker caused. “They couldn’t say ‘I wasn’t told about that,’” he said.

The speakers raised special cautions about independent contractors.

“Be certain contractors have the proper insurance coverage such as errors and omissions and general liability,” warned Innes. She added that employers should also look into who owns the rights to any creative work a contractor produces. Generally those rights are transferred to the employer under a “work-for-hire” agreement, but such an agreement can have unintended consequences. “In California,” Innes said, “anyone doing work for hire is automatically considered an employee.”

The conference concluded with advice on bringing in student interns, a common summer practice. “If the intern simply ‘shadows’ your employees, learning what they do,” said Innes, “none of the employment laws apply, but if they do anything of value … even answer a phone … then all the laws apply.”