How to Hire Temporary Employees

If the bed-and-breakfast you own and operate runs at full capacity for the months of July and August and the work is too much for you to do on your own, you might consider hiring temporary employees to help. The same goes for a consulting firm that just landed an important six-month assignment for its biggest client, or a building contractor who agreed to take on a large-scale renovation project.

Temporary workers account for only about 2% of total nonfarm employment in the United States, according to the Bureau of Labor Statistics, but employers in many industries rely on temporary employees to see them through busy periods or fill in during staffing shortages. Temporary workers can be hired to work full time, which is considered 40 hours a week, or part time, which is considered any number of hours less than 40 a week. Overtime is any hours over 40 hours a week.

The two most common forms of temporary employees are those hired for a specified period of time, commonly known as temporary employees and those hired on a temporary basis with the potential to be hired in a permanent position, called temp-to-hire employees.

While temporary employees can be a good idea, there are some potential disadvantages to be aware of. Let’s look at some of the pros and cons of hiring short-term workers.

Potential Advantages & Disadvantages

In some cases, hiring temporary employees can be cost-efficient, giving you the help you need, when you need it. It also may offer the possibility of discovering talented workers who are a good fit for your company and could be hired as valuable, permanent workers.

Additional advantages include:

• Short-term Cost Savings – Working with a staffing company to find and hire temporary employees may result in cost savings, as these agencies typically cover costs such as payroll processing and administrative expenses. Plus, because staffing companies usually have pools of employees ready to work, you’ll save time and money associated with hiring, such as writing and posting job descriptions, screening candidates, and conducting background checks. You’ll need to cover the cost of agency fees, of course, but under certain circumstances, you still could come out ahead.
• Extra Help When You Need It – Hiring a permanent employee to fill a temporary need uses valuable time and isn’t cost-efficient.  Using temporary employees who understand and agree to the terms of their employment can be beneficial to your company.
• Access to Qualified, Vetted Candidates – Staffing agencies benefit from providing employees who will fill the needs of your company, making it unlikely you’ll get a worker who isn’t qualified for the job or comes with unwanted baggage. Because the agency serves as a reference for the candidate, you eliminate the job of contacting numerous people.
• Opportunity to Hire Temporary Workers on a Permanent Basis – Many staffing agencies can accommodate temp-to-hire contracting, meaning if you find an ideal temporary employee and want to move them into a permanent position, you can do so almost seamlessly.

While using temporary staff often makes sense, there are some potential downsides, including the following:

• Not a Good Fit for Your Company – While no employee comes with guarantees, obtaining a temporary employee through an agency limits your ability to spend time with the hire before they join the company, which can increase the chances of getting someone who’s not a good fit. Although the hire might be qualified for the job, there’s the possibility they won’t fit the company’s culture or mesh well with other employees.
• Limited Training Time – While staffing companies generally try to provide short-term employees with the skills needed for the job, some things can only be learned through experience. If the job you’re hiring for requires significant training, a temporary worker may not be the best solution.
• Risk of Losing Talent – Some temporary employees enjoy changing jobs and working for different companies. There’s a risk you could find a worker you really like and would love to hire permanently, only to learn they’re ready to move on when their agreed-upon employment time ends.

Hiring Through a Staffing Company

The size of your company, current staffing situation, and economic factors may affect how you choose to locate and hire temporary employees. If you want to avoid expenses associated with a staffing company, you could advertise for temporary help or see what you might find through word of mouth. Social media and job sites may turn up qualified candidates. If you have a human resources person, that person could be charged with hiring temps.

Often, however, it makes sense to hire a staffing company to provide temporary staff. As noted, going through a temp agency reduces work for you because the agency has the responsibility of finding and vetting employees. You choose the amount of time an employee will be with your company and make the final decision on who gets the job, while the agency is responsible for sorting through applications and weeding out unqualified hopefuls. In addition, most staffing agencies will take care of any paperwork involved with hiring, including contracts, taxes, and other payroll tasks.

If you decide to work with a staffing agency, reach out to one that specializes in your industry. You’ll need to tell the agency how many workers you need, when you’d like them to start, what responsibilities the job entails, how long you’ll need the workers, and the hourly wage or salary.

If the agency knows of a candidate who is a good fit for the job, it may contact that person directly. If not, agency staff will create a job description and advertise it on behalf of your company.

The downside of working with a staffing agency, of course, is the cost. Typically, an agency will charge 25% to 100% of the hired employee’s earnings. If you agree to pay your temp worker $20 an hour, for instance, the agency may charge you $30 for every hour the employee works.  The agency pays the employee’s salary out of that fee and keeps the rest as markup. If you decide to work with an agency, make sure you understand all the fees involved and what they cover.

With more than 25,000 staffing agencies in the United States, according to the American Staffing Association, how can you decide which one to work with? Some staffing agencies are local, supplying employees to companies within a limited geographical area, while others are national firms that can provide staffing services to customers across the country. Some agencies concentrate on certain industries, such as health care or manufacturing. A local firm may have lasting relationships with job candidates, while a larger, national firm may have a larger pool of candidates. When considering a staffing firm, find out who its clients are, the tools and technology it uses to locate and screen candidates, how long it’s been in business, and what support it offers for employers.

Some temporary staffing agencies that show up consistently on “Best Of” lists for 2023 include Adecco, Aerotek, Express Employment Professionals, Integrity Staffing Solutions, Kelly Services, Manpower Group, Randstad, Robert Half, and TrueBlue.  Always check online reviews for the local offices in your area. This will give you a good idea if they are a suitable fit for your business.

Staying in Compliance

As with any employment situation, there are some rules you’ll need to pay attention to when hiring temporary employees. Like full-time, permanent employees, temp workers are protected by federal labor and employment regulations that call for a safe workplace and a right to work in an environment that is free from harassment or discrimination.

The U.S. Department of Labor (DOL) defines a temporary work arrangement as one that lasts for one year or less and has a specified end date. An employer, according to the DOL, cannot hire the same worker for more than two consecutive years.

Short-term employees are obligated to pay Social Security and Medicare taxes, along with worker’s compensation insurance and state and federal unemployment insurance. If you hire a through a staffing agency, the agency normally issues the worker’s paycheck with the required deductions taken. If you hire on your own, you’ll need to make sure the deductions are taken from the worker’s paycheck or require the employee to pay quarterly withholdings to the IRS.

If your business is hiring one or more employees for the first time, you’ll need to register for payroll taxes, as they are a legal requirement for hiring and paying workers. Failing to track and report all payroll taxes can result in government audits and fines. If you need more information or assistance registering for payroll taxes, CorXec can help.

While temporary workers usually are not entitled to benefits such as paid sick leave, vacation time, or health insurance, you should be aware that any employee who works for 1000 hours or more in one year is eligible to participate in a company’s retirement plan. If you hire an employee who works more than 20 hours a week, you may have to make provisions for getting them signed up for participation.

Also, under the federal Fair Labor Standards Act, temporary workers are entitled to overtime pay if they work more than 40 hours in one week. Overtime pay should be at least one and a half times the amount of regular pay, meaning if an employee’s normal hourly pay is $20, overtime pay should be at least $30.

While most employers who hire temporary workers will not encounter any legal issues, there are some specific legal claims that could occur. Temporary workers, like those employed on a permanent basis, have been known to file legal claims involving discrimination, workplace safety, contract disputes, fair pay, and other issues. Knowing what you must do to remain in compliance can help you avoid the possibility of these types of problems.

If you’re unsure about rules applying to temporary workers or need help with paperwork or tax issues, the team at CorXec can help assure you remain in legal compliance and your business continues to run smoothly.

Register For Payroll Taxes

CorXec can quickly register your new business for state payroll taxes. Our specialists manage the process of registering your new business for State Unemployment Insurance Tax (SUI) and State Income Tax (SIT), which saves you time and money.