The concept of using outsourcing services and temporary employees has gone through some major changes over the past decade.  Temporary employees, agency workers, or freelancers were originally thought of as a quick way fill to positions due to ill, vacationing, or otherwise absent employees, or to fill the skill set necessary for a special, short-term project.  Today more and more employers are looking to incorporate temporary help into the work environment as a necessary and vital part of the team.  These temporary employees are hired for a variety of tasks, and, in some instances, extended lengths of time.

There are advantages and disadvantages to using outsourcing services and temporary employees when filling positions.  Advantages include significant cost savings, since the employer does not have to be concerned about paying benefits or employment taxes.  Temporary employees are either paid through an agency, or if they are functioning as an independent contractor, directly.  Temporary employees and independent contractors are hired on an hourly or “per project” basis, rather than as staff, further eliminating financial risk.  In addition, the use of temporary employees is a great way to get through a “crunch,” fill a unique need, or lighten a heavy departmental workload.  

Introducing these employees into the fold can have a significant impact on your company’s morale.  Having someone new on-board who is not a “real” member of the team can cause anxiety among the core workforce, and can instill feelings of uneasiness among the temporary employees.  Although many temporary employees can be on-sight at a company for weeks or even months at a time, it can be difficult to avoid being looked at as “outsiders” by company staff.  

There are certain steps that management can take to avoid a decline in company morale, while encouraging a cohesive and positive environment for all involved.  Sharon Terry, Astron’s resident Writer/Marketing Specialist, and former freelance marketing/PR specialist and copywriter, can speak from personal experience.  “Managements’ attitudes can greatly shape the relationships between temporary and staff employees.  First and foremost, communication is key.  Managers should take the time to introduce the temporary employee, explain what exactly they are working on and why they are there.  This simple action, which can be overlooked, can eliminate suspicion and encourage a comfortable working environment.  In my own past experience of freelancing on-sight at five major corporations, that small effort meant the difference between being initially seen as ‘Sharon, the freelance writer who is here helping us out on the ‘XYZ’ project,’ and ‘some freelancer who’s sitting in Kate’s desk while she’s on maternity leave.’” 

It’s wise to keep in mind that, although there are many benefits to using outsourcing services and temporary employees, there are certain risks involved.  According to the Workforce Management article, “Seven Costly Myths About Managing Contract Workers” by Ronald E. Wainrib, Esq., employers must be sure to classify all workers correctly, especially independent contractors, in order to avoid any costly fines and penalties with the IRS.  “The IRS is specifically targeting companies that have laid off employees to save costs and then hired independent contractors to perform the same work.  Their incentive is the same as that of business being audited – the huge amounts of money not being paid in employment taxes.  In short, employers’ savings become Uncle Sam’s losses, and Uncle Sam wants his money back!” 

The IRS Worker-Status Test determines a worker’s status as an employee or an independent contractor based on three categories:  Behavioral Control, Financial Control, and Type of Relationship.  Even if these factors are complied with, employers must still be aware of additional federal and state laws governing the workplace, including the risk of a temporary employee being considered a “common-law employee.” As the name suggests, a common-law employee is defined as “any individual who, under common law, would have the status of an employee.”  Even contracts specifying that a worker is not a full-time employee do not always hold up in court.  As Mr. Wainrib explains, “Courts have considered written contracts less important than the actual working relationships, control of worker performance, and other factors when worker status is at issue.”  

One important rule of thumb is to always go through the worker’s agency on all financial and contractual matters.  It is also recommended that employers’ consult their legal departments for advice.  The Workforce Management article, “Best Practices for Using Temporary Employees,” by Andrew E. Schultz, offers a list of 10 ideas for staying on the safe side of the law by being sure not to blur the lines between the two groups.

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