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Temporary employees: The new normal for contractors

December 19, 2013

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An estimated 12% of workers in the United States are temporary employees, according to a recent study by the consulting firm MBO Partners. The survey also suggests that the number of temps will continue to trend upward — to as many as 23 million nonpermanent employees by 2017. That’s 6 million more than in 2012.

Temporary help is nothing new in the construction business. But, as the U.S. labor force continues to evolve, this already high number is expected to only get larger. With even more nonpermanent employees in the office or on the job site, it’s important to review your current policies to ensure you’re prepared, protected and getting the best value out of each temp.

Best practices

First and foremost, managing temporary employees properly shouldn’t be an afterthought. These seemingly low-risk, short-term staff members can bring liability and productivity risks. Here are some specific best practices to keep in mind:

Perform due diligence. More and more temp staffing firms are popping up — and not all are created equal. Choose a provider carefully, giving preference to one that specializes in the construction industry. Ask any prospective temp agency about whether and how they perform background and reference checks, drug testing, and criminal records searches.
Pick your projects. Aside from providing office support, temporary employees are best used for standalone, relatively short-term projects.

For example, a midsize concrete contractor won an unusually large bid to replace an Olympic-size municipal swimming pool. To keep the job on schedule and within budget, the contractor decided to add 10 temps to his workforce for the demolition phase, rather than pushing his established crew into overtime or going through the expense of hiring new permanent employees.

Bring any complaints (or compliments) to their bosses. One potential liability with temps occurs when there’s a perception that they’re being treated as bona fide employees. They’re not: It’s critical to always deal directly with the staffing company regarding a temporary employee’s job performance, remuneration or termination.

Federal guidance

The U.S. Small Business Administration (SBA) provides detailed information on the proper use of temps.

The agency’s guidance stipulates that companies apply the same rules to temporary employees as they do to all employees — including policies regarding harassment, discrimination, health and safety, minimum wage, overtime pay, recordkeeping, and child labor. The SBA also advises companies to keep up with the complex federal statutes that draw distinctions among:

•    Temporary employees,
•    Independent contractors, and
•    Seasonal employees.

Each may be viewed differently under U.S. labor laws. For example, independent contractors, who frequently work as supervisors or consultants in the construction industry, are typically self-employed and “experienced in certain fields and often work unsupervised or as part of your team,” according to the SBA. “It’s important to note that independent contractors are hired by you and not employed by you,” the guidance states.

Total picture

In addition to legal and operational issues, tax issues may arise from the use of temporary employees — as well as independent contractors and seasonal workers. So your best bet is to review your approach to and policies for these staff members with your financial advisor and attorney.

For more information contact Bill Poland at [email protected]

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a Clark Schaefer Hackett professional. Clark Schaefer Hackett will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.

Guidance

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