Legal Entanglements of Motivating Temps

Companies that use long-term temporary workers from staffing agencies need to be aware of the legal obligations and risks involved in establishing programs designed to motivate those workers. These risks include IRS audits and penalties, and Department of Labor liabilities. The chief concern, according to Irene Cohen, CEO of Corporate Staffing Alternatives Inc., is in not violating the agency’s status as employer of record.

“Most companies don’t have a problem until the temps have been there for more than six months,” she says. At that point, the more you treat them like regular employees, the harder it’ll be to convince the Department of Labor or the IRS they aren’t, or they shouldn’t be, your employees.

In terms of motivating employees, Cohen explains employers should be careful not to:

• Offer temps company business cards with their names imprinted on them
• Put the temporaries’ names on their office doors
• Extend special recognition awards directly to temporaries
• Directly invite the temps to company parties or picnics or offer free meal tickets. Instead, extend the invitation through the staffing agency, if you use one. If not, exercise good judgment as to the kinds of gatherings you invite temps to, and the frequency with which you include them.

Ideally, Cohen says, to stay clear of legal risks, all motivational incentives-whether financial or otherwise-should be arranged through the staffing agency. “You want to avoid liabilities under tax and labor laws, and the only way to do that is to make sure that nothing makes the company look like the temporary’s actual employer.”

Karen Ford, an employment and labor lawyer with Littler, Mendelson, Fastiff, Tichy & Mathiason in San Francisco, adds that employers should recognize the possible risk. And to be on the safe side, they should check with an employment lawyer before devising any type of motivational program for their temporary employees.

In the long run, the question of employer status isn’t based on hard and fast criteria, she says, but on a combination of many specifics. “What you want to look at is the totality of circumstances,” she says.