Hiring temporary employees directly either from agencies or freelance platforms is a hot topic these days. Have you ever thought that companies also hire temporary staff? You may confuse it with ‘Internship programs’. But, well, in some cases it is the same case, but mostly, it is not. So, you should first understand the concept clearly.
What if you come to know that your competitor’s success is due to their temporary staffing? Are you impressed enough to hire yours? Hiring temporary employees directly maybe is your goal, but hold on!
Whether these employees arrive through an agency or not, their talent will determine how much they will be paid per hour or per day. Generally speaking, they are paid a little higher than what a salaried employee would make in the same job, but this is done to make up for the security deficits and benefits.
Hiring temporary employees directly through an agency makes it a must for the employer to pay the agency’s overhead costs in addition to the employee’s salary. Having access to temporary staff gives you the freedom to quickly increase or decrease your crew without incurring the fees of hiring and/or firing workers.
After covering the fundamentals, let’s move on to the requirements for maintaining legality when employing temporary labor. This blog explains legal matters to consider when hiring temporary staff directly.
Hiring temporary staff directly: Legal Context
- You should understand that temporary staff is not the regular staff.
The most common way businesses run afoul of temporary workers is when they veer from the intended purpose and start treating them like employees. Temporary staff shouldn’t be scrutinized in the same way that an employee is:
- Background checks are not done.
- Medical tests for tracing drugs are not done.
- Performance is not regularly reviewed.
Experts advise not to invite temporary staff to company functions also. By going against these standards, you are actually blurring the difference between temporary staff and employees. So, companies run the risk of facing penalties that could have negative tax impacts due to the possible guilt of disorganizing the temporary staff.
- Follow the contract details strictly.
Firms frequently get reliant on their temporary staff. The project’s scope expands, and because the temporary employee is the only one who understands how it works, they remain on longer than expected and start to fit in at work. At company events, they are treated as regular employees, which includes receiving increases and incentives.
Hire the temporary staff for a particular job for a defined time period, and complete the project timely. After a light pause, you can begin with a new project anytime and hire the same temporary staff on a fresh contract. Hire a temporary worker as a regular employee in their place if they are too precious to lose.
- Stay compliant with IRS rules.
As the agency is viewed as the employer and manages tax payments, pay increases, and benefits, there are reduced risks when hiring through an agency. Hiring temporary employees directly carries a marginally higher risk but usually lower expenses. Understanding what the IRS considers to be an employee is helpful in either situation.
Asking yourself the following queries may help you determine if the IRS will consider your temporary staff to be an employee:
- Is your temporary staff working full-time hours or flexibly?
- Does the company’s revenue solely depend on temporary staff?
- Is the temporary staff working in the office or outside flexibly?
- Have you provided your temporary staff the access to the company’s equipment?
- Are you using any of the temporary employee’s equipment?
- Generally, how much do you have control over your temporary staff?
When IRS will review your company employees’ organization, the above questions will be considered. If IRS detects any disobedience, you will be penalized.
Hiring temporary employees directly from an agency is a healthy option. Hiring through other means can be risky and you should not take this risk until you are not able to manage it.