Temporary Workers: One Size Does NOT Fit All | DCR Workforce Blog

Temporary Workers: One Size Does NOT Fit All

As the economy continues to struggle, and our legislators continue to fail to resolve budget-related issues, the question of temporary workers often surfaces and heated discussion often follow.

Some equate temporary workers with foreign workers.  Organized labor and others warn of swarms of temporary workers entering the U.S., taking jobs from needy American citizens.  This rhetoric contributed to the failure of the last serious attempt at immigration reform in 2007.  In contrast, others believe that American universities have failed to produce graduates with the Science, Technology, Engineering and Mathematics (STEM) degrees needed for technological innovation.  They demand immigration reform to make it easier to source and retain these skills from other countries.

Much has been written about the downtrodden worker forced to choose between no job and a temp job with below-market wages and no benefits.  These individuals are sometimes portrayed as the victims of the staffing industry, where they are paid less and have no benefits.

It is generally recognized that the days of lifelong employment with a single employer are gone, with temporary workers now accounting for more than one-fifth of all U.S. employment and regular workers typically holding positions with 6+ companies over the course of their career.  Many ask “how did we get to this point?” Again, there are a variety of opinions.  Is this the result of the intensification of global competition in the 1980s?  Did pressure from Wall Street to increase the bottom line drive businesses to offshore jobs and seek labor cost reductions?  Does the continuing dismal economic picture result in a reluctance to hire full-time or permanent staff?  The answer: all of the above.

The rapid growth in temporary workers also reflects a shift in the attitudes of the workforce. It’s not just the employers who recognize that their staff are ‘employees at will’. The unraveling of job security in the labor market was accompanied by a reduction of benefit packages and a deterioration of stable, reliable wages and promotion pathways. How long has it been since you heard someone say, “I’m staying in the company because the health benefits are great” or “I need to wait until my stock options vest” or “this is a company that promotes from within.  There’s great opportunity here.”

The reality is, the term “temporary worker” covers a lot of ground, and ‘one size does not fit all’.  Sweeping generalizations often prevent an understanding of the motivations for becoming a temporary worker, the use of this worker population, and the associated value and challenges. Business and political strategies and decisions must be driven by a fact-based understanding if we are to establish a highly productive workforce that can contribute to our economic, political and social goals.

Who Are the Temporary Workers?

Temporary work assignments are filled by people of all age groups, with all skills, for many different reasons.  Younger individuals entering the job market with highly sought after skills recognized that temporary work might provide greater opportunities for financial gain as well as a better work-life balance.  At the other end of the spectrum, the shift from an industrial to knowledge-based economy has enabled individuals approaching retirement to extend their working careers with less demanding positions.  Some individuals indeed seek temporary work to tide them over while looking for their next regular job.   Students seek temporary work to build experience and work credentials.

The types of temporary assignments differ.

Contract Workers are engaged by staffing agencies for an assignment with one of the agency’s clients.  For the duration of the assignment, contract workers are W-2 employees of the staffing agencies.  Most staffing agencies offer healthcare and other benefits to their contract workforce, although the employer contribution to those benefits is often less than for staff employees.  Agencies today source individuals with all skills, from commercial (clerical and light industrial) to technical and professional.  Although there is much discussion of day laborers, most commercial assignments range from a 4-12 weeks while technical assignments frequently exceed one year.  As the employer of record for contract workers, staffing agencies are bound by the same employment legislation as any other employer.  The staffing agency negotiates the pay rate with the worker, and then charges the client a bill rate that includes a mark-up to cover costs and generate a profit.  There is a popular misconception that contract workers are paid less than regular employees.  In fact, for hard to find skills these individuals often command a premium.

  • Independent Contractorsare self-employed freelancers who are responsible for finding their assignments, paying all employment-related taxes and other statutory payments, and providing their own benefits.
  • Project teamsare companies, often with five or less employees, who contract with a client to provide a service or specific deliverable.

Fact or Myth?

Agency contractors undergo screening processes, conducted by the hiring staffing agency, which is at least as rigorous as that of a company hiring regular workers.  Staffing agencies require proof of eligibility to work in the U.S., as would any employer.  The notion that hiring illegal immigrants at below-market rates is a common staffing agency practice is not supported by any studies into the contract worker population.   Despite this fact, accusations persist.  States like Massachusetts have actually passed stringent legislation aimed at protecting temporary workers from staffing agencies but toned down its provisions later.

The ties between temporary workers and immigration are complex.  The U.S. offers 66,000 visas each year for seasonal, short-term, low-skilled. As this does not meet the demand, numerous industries – agriculture, hotels, construction and nursing homes among them – have been frequently cited for employing large numbers of illegal workers.  In terms of higher skilled workers, H-1B visas allow US employers to temporarily (up to a maximum of 6 years) employ foreign workers in specialty occupations. If a foreign worker in H-1B status quits or is dismissed from the sponsoring employer, the worker must apply for and be granted a change of status to another non-immigrant status, find another employer or leave the US.  Applicants must have at least a bachelor’s degree to apply.  The government allows up to 65,000 workers to enter the U.S. each year under this program.

Many companies have historically rehired former workers (interns, retirees, employees who were downsized) as independent contractors.  In situations where these individuals are asked to take on the same responsibilities previously held and/or are required to work under the same working conditions (location, hours of work, etc.), the company is potentially in violation of employee misclassification and subject to the fines, penalties and other expenses imposed by the IRS and States.  To avoid this risk, companies should consider bringing these former employees back on assignment through a staffing agency who will serve as the employer of record.

The economic and social challenges we are facing today demand flexibility in our approaches to work.  Government regulations and business practices must support all effective means of building a workforce that drives our economy while providing a high quality of life for our citizens.


Disclaimer:
The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.