How Long Can a “Temp” Be on Assignment?
Ever since the now infamous Microsoft settlement that awarded millions of dollars to temporary workers who were later classified as core (common law) employees and “benefit eligible”, the issue of assignment length has been a talking point for employers getting ready to launch flexible workforce strategies.
We are often asked – how long can I keep your temporary employee on assignment and not put my company at risk.
While the short answer to this question is easy – there are no legally required “hard stops” for how long a temporary employee can work on a work assignment at your company – the longer answer is a bit more nuanced. The truth is that to fully protect your company from any unforeseen impact of using temporary employees for either short or long term assignments, there are a handful of “safe harbors” that need to be in place.
While some employers have placed limits on how long a temporary employee can work on assignment in their work environment, there are much more important “safe harbors” that need to be in place to fully protect emloyers from unexpected employer liabilities.
To understand all the miscues around “length of assignment”, we have to go back to a law suit settled in late 2000 where Microsoft agreed to pay 97 million dollars to their temporary and contract employees who were claiming to be common law employees of Microsoft. While the length of time an employee was on assignment at Microsoft was part of the complainants argument at the time, the reason for that argument was a desire to have Microsoft’s temporary and contract employees covered by ERISA eligibility requirements – iow, showing that they had worked 1000 hours or more and entitled to take part in valued MS stock option plans.
The Microsoft settlement quickly earned the employer community’s attention big time! The wake of that lawsuit was widespread and in some ways unfortunate in that it caused many employers to limit the amount of time an employee could work as a “temp”, mistakenly believing that length of assignment was the factor that was at the root of the mis-classification issue – when that was never the case. There were many other factors the judge considered when determining whether or not Microsoft’s temporary employees should be considered a common law employee. In fact in today’s world, the IRS uses a 20 point test to determine employee status and length of assignment is not one of the 20.
While there are many “safe harbors” an employer should have in place to minimize the risk that their temporary employees would be re-classed as common law employees, the employee’s length of assignment is not one of them.
The good news is that none of these “safe harbor” remedies are complicated or costly….
Instead of using in house temporary pools or contracting directly with “1099” workers, we recommend using a third party staffing agency who will assume the full employer role, and significantly reduce the risk of having a temporary employee re classed as “your” common law employee.
We advise all of our clients to make sure their key benefit plans use language that specifically excludes third party (i.e. staffing firm) employees. Spell out exactly who you intend to cover and who you don’t. Courts will honor your intent.
Train your supervisors to support the role their staffing agency needs to play in employee communications and management. For example……
- Communications to temporary employees around the terms of their assignment need to go through the staffing agency, not the hiring manager or their on site supervisor.
- Allow your staffing vendors to be on site as needed.
- Stay out of issues between the staffing agency and their employee re: any and all issues relating to their employees status, pay, paycheck, access to benefits, etc.
- Provide feedback on the employee’s performance to the agency, not directly to the employee
- Make sure your contract with any staffing agency you use spells out the specific activities they will perform and make sure those activities include all the activities relevant to the employer role.
For example…..the agency’s role in your staffing process should include their responsibility to…..
- Recruit, screen and evaluate employees to be placed on assignment
- Determine employee pay rates, benefits and expense reimbursements
- Hire, fire, and assign employees (you can ask for a temporary employee to be removed from their assignment with your company, but you cannot terminate the employee’s relationship with their staffing agency).
- Handle employee complaints and concerns
- Pay worker and distribute pay check
While the legal concerns about length of assignment have gone away, there are other concerns about how long a temporary employee should work for you that address other business issues:
Intellectual Property Concerns
In 2016, Microsoft established a new set of “assignment limit” rules, based not on the risk of co-employment, but based on their concerns about the integrity of their intellectual property. Because they were uncomfortable allowing a temporary or contract worker to have long-term access to their proprietary information and systems, they decided to mandate that an employee’s access to their systems end after 18 months of temporary employment, in effect ending their ability to work on assignment.
While higher wage employees often prefer “longer term project based assignments”, many lower wage temporary workers consider themselves negatively impacted when asked to stay for long periods in temporary roles. This is a particularly important consideration when temporary workers work side by side core employees doing the same or similar work.
In situations where an employer regularly looks to its temporary workforce when hiring, there is risk attached to keeping the temporary employee in the workforce once they know they will not be hired. Issues with productivity, morale and attendance are commonplace.
Most of our clients who regularly hire our temporary employees, have rules whereby an employee will either be hired or removed from their assignment after a defined period.
Another consideration that touches the “length of assignment” issue is the employer’s increased exposure to charges of discrimination when decisions about how long a temporary employee can remain on assignment is left up to individual supervisors. The longer a “temp” is in your workforce, the more chance there is that a perception of disparate treatment will surface. Making length of assignment a matter of policy rather than management/ supervisory discretion, mitigates that risk.
PACE Staffing Network provides employees for assignments intended to last as little as two days to multiple years and does so seamlessly, based on the employer’s internal policies and our assessment of our employee’s motivations.
While we will provide information on the operational risks an employer might face by either limiting or extending assignment lengths, in the end, it is a decision that is made by both the employer and the employee. In reality, once the original agreement re: “length of assignment” has been satisfied, an employer can always offer the opportunity for the assignment to be extended; the employee can decide if they want to accept the employer’s offer.
If you’d like help with your next temporary staffing project and how to optimize the value of today’s popular flexible staffing models, give us a call at 425-637-3312 or e mail us at firstname.lastname@example.org