How to Grow Your Team by Hiring Temporary Employees

Hiring temporary employees can help your business meet short-term goals without committing to long-term recruitment. Temp workers give you added flexibility through peak work periods, special projects, or when full-time staff aren’t available, like during parental leave.

It also gives you a way to cut down on the immediate costs and tax responsibilities that come with hiring full-time staff. Plus, it gives you the chance to check out someone’s skills and fit for your company before making a long-term commitment.

But as with full-time employees, there’s still regulatory red tape you need to follow, and temporary hires come with some less obvious costs and risk, too.

Read on to learn more about the pros and cons of hiring temporary employees and how to get it right.

Key Takeaways for Hiring Temporary Workers

• You get more staff and specialized skills with less commitment.
• You don’t have to withhold or pay employment taxes. W-2 requirements only apply to people who are classified as “employees” by the federal government. Temporary workers are on the hook to pay Social Security, Medicare, and federal and state income taxes.
• You do have to pay overtime. Temporary workers are still eligible for overtime pay if they work more than 40 hours per week under federal law.

Who Counts as a Temporary Employee?

Temporary hires (or contingent workers) are people ‌you hire for a specific amount of time, usually with a set end date. Here are the different types of workers that fit this definition:

• Independent contractors
• Freelancers
• Consultants
• Temporary workers hired by a staffing agency to work for your organization

Are Temporary Workers Part-Time or Full-Time?

Temp workers can work any schedule, though many contingent workers only work part-time. According to the US Bureau of Labor Statistics (BLS), part-time workers are three times more likely to have temporary jobs than people who work full-time hours.

How Long Can You Keep a Temporary Employee?

It’s pretty common to see online sources recommend limiting temps to one year (others say two years). However, there’s nothing explicit in any of the major US laws that determine employee vs. contingent worker status (more on that below). You just need to make sure you’re not treating them as an employee.

What Are the Advantages of Hiring Temporary Employees?

There are many benefits to hiring temporary employees. If you’re considering bringing temp workers into your organization, let’s look at some of the advantages:

Expand Your Team for a Short Time

Whatever your short-term needs are—e.g., you’re prepping for the holiday shopping rush or need a specialized consultant—temp workers help you size up and then go back down when you don’t need them anymore.

Plus, it’s a lot kinder to your hires (and more efficient for you) if you’re clear from the get-go about how long you need them. No one likes getting fired unexpectedly.

Reduce Hiring Risks and Find Potential Gems

Hiring temporary workers can help you avoid hiring the wrong person. You can check out how they do before thinking about making them a permanent part of the team, which lowers the chance of a bad hire.

Lower Costs

You avoid the costs associated with benefits, training, and long-term salaries, which can be significant.

What Are the Disadvantages of Hiring Temporary Employees?

There can be downsides to hiring temporary employees. Let’s highlight some of those, so you know what to look out for when getting temporary staff on board:

Legal Issues Around Temporary Employees

One of the most important considerations for any employee is how you treat and classify them. Here are some of the DOL’s guidelines under the FLSA for what constitutes a full-time employee and a contractor:

• Employees: The employer decides what they work on, how much they work, limits who they can work for, and typically provides the equipment they use.
• Contractors: They work with multiple businesses, have temporary contracts with each, and decide how, when, and what they work on.

So while most people refer to temps as “employees,” they really aren’t considered such under US labor laws.

Additionally, there are other laws that contribute to the definition and rights of an employee, including OSHA. Not following these laws will land you in legal and financial trouble

For example, under the IRS, you could be facing a hefty tab for the employment taxes you skipped out on. You need to cover income, Social Security, and Medicare taxes, plus unemployment taxes for your employees.

The best way to protect your business is to give your employees, whether full-time or temporary, the wages, benefits, and working conditions they’re entitled to. For more details, check out our in-depth guide on avoiding employee misclassification.

Negativity and Conflict from Permanent Employees

Temporary staff coming in can ruffle feathers over the job security of permanent staff. Carefully manage the integration of temps into the existing workforce, maintaining your workplace’s balance and harmony.

Even though they’re temporary, ensure they feel welcome and included—and that you recognize existing employees’ experience and skills.

Misunderstandings with the Staffing Agency

Ensure there’s clear communication between the agency and your business. Make it clear to the agency that they understand your needs, so they don’t send you people who aren’t right for the role.

Choose a reputable staffing agency, and make sure to outline your needs in detail when having introductory conversations.

Expectations of a Permanent Role

Close to half (45%) of temporary workers would ‌prefer a long-term job, so some of your temp hires might also hope that their role will develop into a permanent position. If that’s not going to be possible, be sure to make your intentions clear from the start, and don’t give any false hope.

Benefits Eligibility

For the most part, you don’t have to offer any perks or benefits to temporary workers.

• Retirement benefits: The IRS only requires employers to give employees access to retirement plans, not contingent workers.
• Health benefits: As long as your temporary workers fit the DOL’s classification of a contractor, then you don’t have to offer health care benefits. However, be sure to double-check if any part-time employees fit under the IRS’s definition of a full-time equivalent employee.

How to Hire Temporary Employees Yourself

You can recruit temporary people through a staffing agency, but this service comes at a cost. If you’d prefer not to pay for an agency, you can market the jobs yourself on job boards or social media.

Let’s delve into the steps to find temporary staff:

Work Out What You Need

Before hiring, you need to know how many people you need, what skills they should offer, and how long you’ll need them. Do you need cover for seasonal work or a short-term project? Take some time to consider the needs of the business and your team.

Craft a Quality Job Description

You want people to want to work for you. Make sure the job ad has all the right info—title, duties, duration, requirements, pay. ‌Consider giving an engaging summary of your organization and why someone might want to work for you.

Review Resumes and Create a Shortlist

Review the submitted resumes for the right skills and experience, and create a shortlist of candidates to interview. You’ll need to make sure each candidate meets the minimum requirements, but consider putting selecting a mix of different experiences and skillsets.

This way you’ll get to see a wide range of people with a variety of skills. Different experiences and skillsets of temps offer you a chance to trial new business approaches.

Hold Interviews and Hire Your Temps

Once you’ve conducted thorough interviews and chosen your applicants, you’ll need to make the employment legal by creating a contractor agreement, though you won’t need them to submit an I-9. Instead, you’ll need them to send in a W-9, a Request for Taxpayer Identification Number and Certification.