Paying Employees: Options for Hiring Temporary Help

Paying Employees: Options for Hiring Temporary Help

Bringing on temporary help to get through busy seasons is standard operating procedure for business. Companies may also bring in temporary help to cover leaves of absence, maternity and paternity leaves, sabbaticals, and any other circumstances that keep employees away from work.

Does your company have plans to use temporary help this year? If so, don't forget that there are implications for payroll. How you classify and pay temporary help will always be governed by applicable laws. You might want to consult a payroll or employment expert if you have never hired temporary help before.

In terms of worker classification and pay, you have several options:

1. Go Through a Temp Agency

Working with a temp agency is the easiest and most effective way to get the temporary help you need. Workers supplied by temp agencies are, according to the law, employees of those agencies. Your company simply pays the temp agency for the services it provides.

Because you are not technically the employer, you don't have to worry about things like withholding and tax reporting. You are not obligated to provide temp workers with health insurance. None of the things that apply to permanent employees are your responsibility. Temp agencies take care of those things.

You could transition a temp agency hire to a permanent worker without too much trouble. However, the process necessary to make it happen would depend on your arrangement with the temp agency. This is something you might want to discuss with your agency representative if there is any chance temp workers will be transitioned to permanent hires.

2. Go Direct Hire

Your second option is to go the direct hire route. This is to say that you hire temp workers the same way you would hire permanent workers. The only difference here is that temps know their employment is only for certain amount of time. As direct hires they are paid directly by your company and are entitled to certain rights and benefits.

If you are a BenefitMall client, we would onboard temp hires using the same policies and procedures for standard onboarding. Payroll processing for those temps would also be integrated into our normal systems. The whole thing would be completely seamless on your end.

The one advantage of going direct hire is that transitioning a temp worker to permanent placement is a lot easier under this arrangement. The onboarding process is already complete, the employee's information has already been recorded, etc.

3. Offer Work on Contract

The third option is to bring temporary workers on as contract workers. The law considers contractors to be self-employed individuals who maintain some level of control over how they work. Why is this important? Because classifying a worker as a contractor while still controlling the majority of what that person does could be in violation of IRS regulations.

We recommend offering contract work only if you can document that a given position is truly a contract position. Otherwise, incorrectly classifying an employee as a contractor could result in fines and penalties.

If you do choose to offer contract work, payroll processing will be extremely simple. The contractor is paid the agreed sum in exchange for a certain amount of work provided. There is no withholding involved, no tax reporting, no benefits to consider, and no W-4s to fill out.

We are experts in payroll here at BenefitMall. If you have any questions about bringing on temporary employees, we would be more than happy to sit down with you and device a customized payroll solution to account for all your hiring needs.