Many workplaces rely on temporary employees for gap coverage or additional labor. For those of us in HR, there are some important considerations when dealing with temporary workers. Read on to learn more.

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What Is a Temporary Employee?

A temporary employee (also called a “contingent,” “on call,” “per diem” or “as needed” employee) is a worker hired on a temporary basis, usually of a short-term duration that is often pre-determined. Temporary employees are not generally eligible for benefits like health insurance, retirement contributions, paid time off, etc., other than what is required on a state-by-state basis.

Why Do Companies Hire Temporary Employees?

There are myriad reasons companies might choose to hire temporary employees, but the general logic is that they need short-term work, and employers don’t need or want the financial burden of hiring permanent workers. Some of the most common reasons for hiring temporary employees are:

  • Time. Temporary employees are a great way to get work done in a tight timeframe, especially if using a staffing firm. This eliminates the burden of the hiring process and ensures less disruption of work.
  • Money. Fringe benefits (health insurance, etc.) average around 30% in addition to salary/pay. Temporary employees eliminate that extra cost, as well as any cost associated with time and effort on hiring, training, onboarding, etc. that a company would normally spend on a permanent worker.
  • Accommodate changing business needs. Some businesses have cyclical or varying hiring needs that make it difficult to predict staffing up or down as needed. Temporary employees allow these types of businesses to meet work objectives without carrying a higher-than-needed, on average, workforce (which, in turn, reduces both time and money, as previously mentioned).

Best Practices for Employing Temporary Employees

Many best practices apply to all employees, regardless of temporary or permanent status. However, consider the following best practices when employing temporary workers.

Set Clear Parameters

Temporary work, by nature, is just that: temporary. When a temporary worker is hired, it’s important to set an end date so that all parties are clear on the terms of the arrangement and to ensure that there is no implied guarantee of continued work. You should also spell out the rate of pay, work schedule, work expectations, etc. so there is no confusion.

While employer obligations to temporary employees are different than their obligations to permanent ones, it behooves companies to set the arrangement up for success by erring on the side of caution. Don’t promise a temporary employee 40 hours of work only to find out you can only give them 20, for example.

Balance Integration and Boundaries

Many employers end up falling on one extreme or another — either they treat temporary workers like they barely exist, or they integrate them fully into the work environment. Neither of these is ideal. Instead, you should aim to welcome temporary workers into the company and make sure they are onboarded with regard to expectations, work culture, and key contacts. However, it’s also very important to refrain from treating temporary workers as permanent workers in order to avoid confusion and mixed messages or creating an impression that the employee might become permanent.

Legal Considerations

Temporary workers fall under employment policies and relevant labor laws, which means that if a temporary employee either experiences or commits discrimination, harassment, or violence, the employer is still liable for their behavior. Temporary employees should receive onboarding and training around company culture and policies, conduct expectations, dress code, etc.

Ending the Arrangement

Companies can dismiss temporary workers for misconduct or poor performance without following the same procedures as for permanent employees. However, employers should be careful if terminating a work agreement early without due cause, especially if the temporary worker falls into a Title VII protected class. This is why it’s critical to communicate the terms of the engagement very clearly.

Examples of Temporary Employees

Here are some common examples and types of temporary employees:

Gap Employees

Companies often use temporary workers to fill longer gaps in employment. For example, a regular staff member taking a leave of absence or a vacancy that has not been permanently filled yet might require that a company bring in a temporary employee to provide coverage until a permanent worker returns or is hired. Similarly, companies may bring on temporary employees to shoulder smaller or more administrative tasks temporarily in order to allow permanent employees to focus on higher-level work, or to assist in clearing backlogs of rote work like data entry.

On-Call/Per Diem

This type of work is commonly associated with the health care field, but it does occur in other industries as well. On-call workers are just as they sound — workers who have been pre-vetted using the company’s process and who are available as needed. Think of substitute teachers and other types of workers who might work when there is a call-out or other short-term gap in coverage.

Seasonal Workers

Many companies “staff up” using temporary workers during busy seasons, which vary based on industry. For retail, the end-of-year holidays are the busiest season, while in farming, the busy season might be summer.

Other Tips for Managing Your Temporary Employees

Below, you’ll find additional tips and consideration points for employing temporary workers:

Health Insurance Eligibility

For insurance purposes, the IRS defines full-time employment as 130 hours per month (30 hours per week) on average per month, which means that if you directly employ temporary workers (not via a staffing firm) on a full-time basis over an extended period, you must offer them insurance benefits. You should do a “look back” to see how many hours they’ve worked to determine if they should be offered insurance. You can learn more here.

The 1,000 Hour Rule

Employers who have retirement plans covered by ERISA (Employee Retirement Income Security Act) are required to allow direct temporary workers (not hired via staffing firm), including part-time workers, to participate in the company’s retirement plan after 1,000 hours worked in any 12-month period. You can learn more about the requirements here.

Questions You’ve Asked Us About Temporary Employees

In short, any hours you need them to. Temporary employees might work a predetermined schedule, or they might work “as needed” or on an on-call basis. The key is communication around schedule expectations.
Yes, absolutely. Temporary employment is a great way for folks to get an “in” with your company and for both you and the employee to “test drive” an employment relationship. However, until you offer them a permanent arrangement, be sure not to make any guarantees of employment.
There is no set period of time an employee can be temporary, but if they perform the same work and hours as permanent employees over an extended period of time, you could be at risk for noncompliance with a variety of intersecting labor laws. See “Tips” above for more information.

Tammi has 8+ years of progressive HR experience in a variety of industries and settings, including nonprofit and higher education. She believes that doing HR well means being a true partner and collaborator with every part of an organization, and by saying “yes” to creative problem solving wherever and whenever possible (and legal). Her favorite work includes diversity, equity, inclusion, and belonging (DEIB); the how and why of hiring and retaining great people; helping to sustain an organizational culture of trust, empathy, and candor; and anything else that prompts employees to say they love where they work. In her free time, you can find her wandering outdoors, studying clinical herbalism, tinkering in the kitchen, dismantling the patriarchy and white supremacy, and hanging out with her cat, Emily Dickinson.

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