Temporary Workers: Pros and Cons

Posted October 17, 2017

Hiring temporary workers is a growing trend among employers. While the majority of temporary work continues to be traditional blue-collar and low-level office jobs, demand is also growing for short-term managers, financiers, computer experts, engineers, teachers, nurses and other specialized trades or professions. Hiring temporary workers rather than employees can be a cost-effective decision, but also carries significant risks for employers.

Pros

There are many beneficial aspects of hiring temporary workers, including the following:

  • They are usually cheaper because they do not receive benefits, nor are you required to pay workers’ compensation, employment taxes or unemployment premiums for temporary workers.
  • If using a staffing firm to procure workers, the staffing firm is typically responsible for recruiting, placement, training, payroll and supervision of the temporary workers.
  • You can use them to respond to fluctuating staffing needs, such as an unexpectedly busy period, seasonal needs, employee absences or special projects.
  • They allow you to respond strategically to economic or product-demand cycles, instead of hiring several workers and then laying them off months later.
  • Hiring temporary workers could be a recruiting tool to test the abilities of potential employees, then permanently hiring only the ones who perform well.
  • You can use temporary workers to fill vacant positions while searching for full-time employees.
  • They can be a conservative way to rebuild your workforce following an economic downturn.

Cons

Be sure to examine the risks and potential downfalls of hiring temporary staff, including the following:

  • Hiring temporary workers often means establishing a shared-employment relationship with a staffing company (“co-employment”), which presents several risks.
  • The staffing company should be exerting primary control over the temporary worker, but sometimes that line can become blurred. If the distinction between employees and temporary workers is not kept distinct enough, you could be liable for unexpected responsibilities and costs (workers’ compensation, employment taxes, unemployment premiums, benefits, etc.).
  • Hiring temporary workers that are their own bosses eliminates the risk of co-employment but presents the risk of misclassification. Misclassifying a worker as an independent contractor can result in major penalties, plus the requirement to pay applicable employment taxes, workers’ compensation, overtime and more.
  • Productivity may not be as high with temporary workers.
  • Staffing agency fees may offset money saved.
  • There may be workplace tension between employees and temporary workers who do similar work, but for differing pay and benefits, leading to poor morale.
  • Temporary workers have less loyalty to your company, and are more likely to leave for a slightly better position or salary.

This information is geared toward leased employees and independent contractors. It does not apply to common law employees that work for a short period of time. To learn more about ways to manage your workforce, contact Horst Insurance today.