Temps, contract workers and interns provide much needed relief when your business requires additional staffing. However, even temporary workers receive the protection of labor laws involving harassment, discrimination and safety. Other laws differ according to the type of temporary help you hire.
The following information briefly touches on labor laws you must follow. Consult an attorney experienced in both labor and tax issues to ensure your temporary hiring practices are compliant.
Pitfalls
Understand this: Temporary employees are a temporary supplement, not a substitute, for a permanent workforce. In 2000, Microsoft learned this the hard way when it paid a $97 million settlement to thousands of long-term temporary employees, who accused the company of improperly denying them benefits. This is not the only area of the law that can trip up companies.
Labor laws apply to everyone. Minimum wage laws, overtime pay rules, recordkeeping and child labor laws treat temps no differently than they do regular employees. Certain benefits are also required. Workers’ compensation insurance generally applies to all employees.
Your company will have to pay unemployment insurance tax on the wages of any temporary employee you hire directly. If you hire a temp through an agency, the agency usually pays this tax. You must also deduct income taxes, Social Security taxes and Medicare taxes from the paychecks of temporary employees. The Family Leave and Medical Act also apply to temps you hire directly or from agencies.
In contrast, contractors are responsible for their own taxes and insurance, because they are in business for themselves. You may want to require proof of insurance. In case of a lawsuit involving a contractor you hired.
The legalities of internships can also trip up employers. The U.S. Department of Labor puts limits on the work unpaid interns can do under the Fair Labor Standards Act.
Hiring Foreign Nationals or U.S. Citizens Overseas
When you hire a foreign national or hire an American citizen for overseas operations, you must be aware of the special legal and tax issues surrounding these hires. You don’t need to knowingly hire foreign workers to run afoul of some laws.
As an employer, the Internal Revenue Service requires you to fill out and keep on file an I-9 form for each employee you hire. If U.S. Customs and Immigration should audit your workforce, they will check the information on this form to confirm citizenship or eligibility to work in the United States. If you knowingly hire foreign workers, you should also make sure they have the appropriate visas and documentation.
Hiring temporary or permanent workers overseas presents other challenges, including licensing and legal concerns. Some countries, for instance, allow only a certain percentage of foreign workers per company. Others require documentation that a foreign worker is needed for a difficult-to-fill position instead of a citizen. Talk to an experienced employment attorney to learn how domestic and international laws apply to your workforce.
