For years, companies have used temporary employees as a convenient and economical way to meet last minute and short-term staffing issues. A staffing agency pays a temporary worker for their services, but employers remain obligated to comply with state and federal employment laws, including discrimination statutes. As the use of temporary workers increases, employers need to guard against potential liabilities. Observers say the recent temp-hiring upswing is a reflection of our improving economy.
Temp employees create many of the same exposures
Some employers don’t realize when they hire employees through temp agencies they’re potentially exposing themselves to most, if not all, the same risks that are involved in directly hiring employees. As long as you control those employees and you require them to adhere to your polices (and they are directly supervised by your firm), then they are essentially considered to be your employee under various employment laws. If they file a claim for harassment, discrimination or other unfair business practices, you will need temporary staffing insurance as a way to mitigate against such claims.
Temporary employees are different from “leased employees” however, and their distinction matters for purposes of workers compensation coverage. To the client company, the temporary workers or “temps” are usually considered independent contractors. To the leasing company, they are actual employees.
It is fairly easy for a client company to include temporary employees in its workers compensation policy. The names and relevant data of the temps are submitted to the insurer as persons affecting payroll and the risk modification rating. It’s easy to classify these individuals as additional employees in the general type of work done by the client company.
Whether workers are brought in by a staffing agency or directly, employers need, not only temporary staffing insurance but also to be concerned about employment laws and benefits. Failing to clearly define what is considered temporary employment runs a real risk that one of those contingent workers could claim they were entitled to benefits under the company plan.