HR Management & Compliance, Recruiting

Calling an Employee a Temp May Not Pass Legal Muster

Staffing and hiring during the pandemic are especially chaotic. Many employers that don’t traditionally use temporary staff are seeking to fill short-term gaps in the workforce or simply want employees for a short time because it’s unclear what the business structure will look like once the pandemic business issues have shifted.

temp
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Employers also may want to use temporary staff to avoid paying benefits and similar items. But temporary isn’t always temporary in the eyes of the law.

What Is a Temporary Employee?

Typically, a temporary employee is a person hired for a limited time for a specific project with a specific end date. Many employers, however, hire staff calling them “temporary” with an open-ended end date or in a “temp-to-hire” circumstance.

The longer employees remain employed, the less likely the law will consider them to be temporary.

What About Hiring Temps Through an Organization or Agency?

Many employers, particularly those with extremely short-term needs such as the need for temporary nurses or CNAs hired through pool staff or a fill-in during Family and Medical Leave Act (FMLA) leave, aren’t anticipating the temps are actually employees of the company.

The issue of joint employment, however, can be quite complicated. Even if you hire through a temporary staffing agency, it’s possible you could be found to be the temp’s employer.

Generally, when you contract with an agency, you want to be clear it will:

  • Bear the burden and expense of running background checks, including appropriate licensure debarred provider and Iowa Single Contact Repository (SING) checks for healthcare employees;
  • Carry the workers’ compensation coverage; and
  • Indemnify you as the company hiring the temp for unpaid wages and other issues and concerns.

As has been noted before, however, whether you also can be held liable for certain problems such as failure to pay overtime can depend on how much control you exercise over the temps. The more control you have, the more you direct and supervise their actions, and the longer they stay with your company, the more likely they will be considered joint employees rather than employees of the agency from which you contracted.

What About Benefits?

Health insurance. Employers frequently hire temporary or part-time staff with the idea they won’t be required to offer health insurance. But the Affordable Care Act (ACA) generally covers employees working at least 30 hours per week or 130 hours per month.

Retirement and other plans. Employees who complete 1,000 hours of service in 12 months are eligible to participate in any retirement plan offered to other employees. If they work for 12 months, the standard applies to both full-time and part-time employees as well as temporary employees.

Unemployment compensation. In general, if a person has been an employee and worked for your company in the last 18 months, it’s possible you could be obligated to pay benefits for unemployment compensation. To be eligible to apply for jobless benefits, the individual must:

  • “Be totally or partially unemployed through no fault of his or her own”;
  • Have earned wages of at least $1,660 in one quarter and at least $830 in a different quarter;
  • Have total base period wages of at least 1.2x the wages earned in the highest base period quarter; and
  • Be able and available for work.

What About Paid Time Off and Benefits the Employer Provides?

In general, the employer can determine how paid time off (PTO) is accrued and if an employee in a specific category such as temp or part-time is eligible for PTO benefits. You should ensure consistency in classes of employees to avoid questions of favoritism or potential discrimination.

Federal contract employers may be required to provide paid sick leave for certain classes of employees according to Executive Order 13706. Federal contractors should work with legal counsel to determine how the policies should operate.

Big Picture

Amid extreme uncertainty, you may turn to temporary employees, but pay careful attention to the circumstances in which the law’s definition of temporary will affect your obligations. Simply calling someone temporary doesn’t make her temporary when she works for an extended period.

Jo Ellen Whitney is an attorney with the Davis Brown Law Firm in Des Moines, Iowa. You can reach her at joellenwhitney@davisbrownlaw.com.