Manage my business

Temporary Employee Rules, Limits and Requirements

Does your business have a temporary staffing need? If the role doesn’t require a permanent employee, consider hiring a temporary or “temp” employee for the job. But just how long can you employ a temporary employee? Read on to learn about temporary employee rules before you recruit for your next temp worker.

What is a temporary employee?

Like part-time, seasonal and leased workers, temporary employees are part of the contingent workforce. This growing segment of the workforce often fills gaps in permanent staffing. This could be because of business growth or the increased workload of a new project. It may also be because a permanent employee goes on sabbatical, maternity leave or vacation.

Temporary employees can fill job functions ranging from administrative services to bookkeeping. For these and other roles, hiring a temporary employee offers a way to cope with the overflow of work. They also do so in a way that avoids the higher cost and administrative overhead of hiring a permanent employee.

This cost advantage combined with the speed at which you can hire temp workers makes them an attractive choice for businesses of all sizes.

Temporary employees are generally not given all of the fringe benefits of a permanent employee. They usually aren’t eligible for promotion, reassignment or transfer. Despite this, temporary employees are still covered by many of the same protections that permanent employees enjoy.

Benefits requirements for temporary employees can vary by state. However, employers of temporary employees may be required to provide:

  • Social Security
  • Unemployment benefits
  • Worker’s compensation
  • Labor law protections for workplace health and safety, discrimination and harassment

Temporary employee rules: Duration of temp work appointments

The U.S. Department of Labor (DOL) defines a temporary work appointment as one that lasts one year or less and has a specific end date. However, employers can generally determine the duration of a temporary work appointment. The appointment could span days for a short-term engagement. A long-term engagement may last several weeks or even months on a seasonal or annually recurring basis.

The end date you choose could be the completion date of a specific project or the return of a permanent staff member after a temporary hiatus.

Temporary employees may start to qualify for other benefits if you prolong the duration of a temporary work appointment. The DOL’s 1,000-hour rule is a notable example. This rule makes part-time workers eligible to participate in employer-sponsored retirement plans. To become eligible, they need to work at least 1,000 hours per year or approximately 20 hours per week.

Does your business need the regular, ongoing services of a temporary employee? Give the temporary employee an opportunity to showcase his or her skills, talents and commitment to your business. Consider re-classifying him or her as a permanent employee when you can accommodate the new hire.

About the author

Manasa Reddigari

Manasa Reddigari has tackled topics ranging from computer software to home remodeling in her more-than-a-decade-long career as a writer and editor. During her stint as a scribe, she's been featured by MileIQ, Trulia, and other leading digital properties. Connect with her on copyhabit.com to find out what she's been writing about lately.

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The Growth Center does not constitute professional tax or financial advice. You should contact your own tax or financial professional to discuss your situation.