What are Temporary Employees
A "temporary employee" is generally understood to be an employee hired for a short time to assist a principal employer in meeting its workload. As defined by the California Division of Labor Standards Enforcement (DLSE), a temporary employee is an employee that "is used to temporarily supplement the regular work force of an employer in order to meet the anticipated workload during busy periods." Labor Code section 201.3(e). A temporary employee also may be referred to as a "temporary worker".
The DOL definition suggests that a temporary employee may be used for a short, but indeterminate, period of time. However, temporary employment typically involves a fixed schedule for hours and/or days of work. That is, a temporary employee works set hours and/or days which are not intended to include all the hours or days of an on-going position. In other words, the employer and employee have agreed that the temporary employment will not involve the temporary employee working all of the remaining hours and/or days in the position.
For example, suppose a cleaning service temporarily loses a contract with a commercial building, leaving it with only one contract left for its five employees. The employer decides to lay off three of its five employees and temporarily assign the work of the three laid off employees to the two remaining employees. These two employees are considered to be "temporary employees" even though they will be working for an undetermined, but at least temporary, period of time. The DLSE describes this principle: "an employee is not necessarily considered a temporary employee because his or her status may not be indefinite but instead may be expected to terminate within a year. . . . [T]he term ‘temporary employment’ may include work for a period of more than a year, yet if it is temporary in nature and the employee is hired to perform that work only, the employee may be considered a temporary employee." Labor Law Digest, Volume XII, Page 1747 (1975) . A temporary employee is not hired on a permanent basis; nor is he or she hired to perform the work of full-time employees. This is because the overwhelming majority of employers do not suggest that a regular full-time position will become available at the end of the temporary period.
The phrase "indefinite duration" suggests a duration longer than a specific period of time, such as a day, week, or month. Generally, at the time of termination of employment, both the employer and employee should understand and agree about the duration of the employment. For example, an employee might be "temporary" if he or she would have continued employment with the employer for a longer period of time had the need for assistance not been eliminated. Accordingly, even if no particular ending date was agreed upon, the employment still might be "temporary." If, however, the duration of employment could not be estimated or reasonably understood – such as a for a specific period of time – the employment should not be classified as "temporary".
Thus, a temporary employee generally is employed to perform a specific task for a certain period of time, i.e., a temporary or sudden increase in workload.
Does the definition of "temporary employee" differ from that of "part-time employee"? Not necessarily. Generally, a "part-time employee" is not a full-time employee. A "part-time employee" is scheduled to work less than the employee’s regular work schedule, presumably without expectation that the employee will work all of the remaining hours or days. "Temporary" and "part-time" employees can, but do not have to, be the same. A "part-time" employee may be a temporary employee working fewer hours than the employer’s full-time employees.
Which employees need to be paid within California’s 72-hour requirement for terminating temporary employment? Temporary employees who are employed for a specified and limited period of time of not more than 90 days in any 12-month period. Labor Code Section 201(a).
Rules for Hiring and Classifying
California employers must meet certain requirements when hiring temporary employees. Temporary employees must be classified as non-exempt or exempt for wage and hour purposes, and temporary workers generally are entitled to overtime beyond eight hours in a day or 40 hours in a week, meal and rest periods, and reimbursement of necessary business expenses. Depending on the nature of the position, the employer may require the temporary worker to agree to certain conditions. Employers of temporary workers normally have the right to control the workers, although there are limitations. In most cases, unless otherwise excluded, temporary employees will be subject to the same rules and regulations as permanent employees. However, the temporary employer cannot be deemed equal or integral in the operation of the temp agency.
Typically temp agencies will require workers to sign a written contract that includes: (1) demarcation of the workers’ duties and scope of employment; (2) at-will employment; (3) right of control over the workers; (4) disputes to be handled through binding mediation or arbitration; (5) duty to abide by all company policies; (6) duty to abide by all applicable municipal, state, and federal laws; (7) proprietary rights of the employer; (8) non-solicitation or non-competition clauses; and (9) confidentiality concerns. This contract is binding on both the employer and employee. The employer’s authority is limited to that stated in the contract.
In addition, the employer must establish that it has made reasonable efforts to ensure that the temporary employee is competent to perform the work for which he/she was hired; there must be valid nondiscriminatory reasons for terminating the employee; and the employee is not protected by any employment contract that has been violated.
Due to the supposed lack of permanent employment, temp agencies are not exempt from the federal Family and Medical Leave Act (FMLA). While there may be no space on the application for FMLA leave, if a client requires leave, a temp must be covered under the law.
The law may view a temporary agency that is not simply "staffing" an employer but rather recruiting and/or training employees for that specific employer as an "integral part" of the employer’s business. If this is the arrangement, the temporary agency may be considered a "joint employer." This would make the employee simultaneously an employee of two companies, and the agencies must work together to ensure compliance with federal and state law.
Wage and Hour Considerations
As temporary employees become more popular and more common throughout California, employers utilizing these workers must be aware that the full scope of California’s pay and hour requirements applies to them. These requirements include:
Minimum Wage
Employers must pay temporary employees California’s required minimum wage for each hour worked in the state. Employers may not pay these workers a sub-minimum wage if they work at any other locations outside of California.
Overtime
Applicable California overtime rules apply to temporary employees regardless of whether the worker performed work in different states. Overtime wages are based on the total number of hours worked for an employer in the seven days prior — no matter where the employee performed those hours. California overtime rules set the maximum time for daily overtime at eight hours.
Meal/Rest Breaks
California’s meal and rest break requirements also apply to temporary employees. The "intermittent work" doctrine does not seem to apply to California meal and rest break laws. This doctrine releases an employer from providing a meal or rest break when employees may not have needed or wanted one. The law allows employers to deny a meal or rest break when the work does not permit employees to take breaks due to its nature. However, this exception only applies to categories of work which are generally exempt from meal and rest break requirements.
Pay Stubs
California employers are not required to give temporary employees pay stubs.
Workers’ Compensation Benefits
Temporary employees, like full-time staff, are entitled to health benefits, sick leave, and protection from employment discrimination under California law. California law covers both benefits and protections for workers in the following areas:
Temporary employee health benefits California law requires that employers extend all mandated and non-mandated health benefits to temporary employees who work 30 hours a week or more for seven or more days in a row. Mandated health benefits include:
California law specifically mandates coverage for temporary employees who work 30 hours a week. Non-mandated health benefits include:
Temporary employee sick leave Temporary employees may be eligible for paid sick leave under the Healthy Workplace Healthy Families Act of 2014. The law requires that temporary (or part-time) employees get at least 24 hours or three (3) days of paid sick leave every year. Employers can opt to give either an annual lump sum of paid sick leave or let employees accrue paid sick leave over time. Employees can use the sick leave for their own illnesses or injuries or the illnesses or injuries of a family member. Family members qualify as:
California employment discrimination protections Just like full-time employees, temporary employees are protected from employment discrimination under the Fair Employment and Housing Act (FEHA). Temporary workers cannot be discriminated against based on their race, color, ancestry, nation origin, age, religion, sex, sexual orientation, gender identity, marital status, medical condition, military and veteran status, pregnancy, and mental and physical disabilities.
Termination Rights
When the time comes to separate employment, everyone who works in a temporary or long-term capacity is entitled to notice. Under California law, if an employer separates the employment and the employee is not part of the wage and hour laws, the employer must pay the amount due at the time of termination. If the employer employs workers covered under the wage and hour laws, and those covered under the California Law, the employer must give the employee 72 hours’ notice prior to termination. In lieu of 72 hours’ notice, the employer must pay the employee’s wages for those 72 hours. However, if your employer has more than 75 employees as of January 1, 2016, they cannot avoid paying wages due to a lack of notice. If an employer has a policy that requires employees be separated on the payroll date, the employer will not owe wages if the employer can prove that the policy requires such. The notice should be in writing to ensure that both the employer and employee have record of the notice .
Under the California Labor Code, if employers do not pay employees for their due wages, they can face severe penalties. These penalties include $100 for each initial violation, with a maximum penalty of $200 for subsequent violations. It can be detrimental to the employer to not pay due wages as California law allows employers to be paid out of due wages for time spent attending court. The waiting time penalties are paid to the employee in addition to any regular wages that are due.
An employee has the right to unemployment benefits when they are terminated from employment. When an employee is terminated without cause, they may be eligible for unemployment benefits until they find employment. However, an exception is if the employee was entitled to holiday or vacation pay and not paid appropriately. If holiday or vacation pay owed as wages is not paid, but the employee is terminated, the employee may not collect unemployment for the period it should have took to pay the owed benefit.
Employer Compliance & Consequences
Employers must assure that their temporary employees are subject to the same payroll practices and are receiving the same benefits and wages as permanent employees and that appropriate taxes are paid prior to the transfer of those wages. Employers using temporary employees must adequately supervise their use of temporary agency employees and decisions regarding termination of such employees are under the control of the employer and not the staffing agency. Employers using temporary employees must maintain an "ordering agreement" with the staffing agency under which the parties agree upon the "standard of care" or "standard of conduct" expected of the temporary employee.
Laws requiring employers to provide employees with meal and rest breaks apply to temporary workers. Regulations require temporary agencies to provide the initial 30 minutes of unpaid lactation break time. For example, it is a violation of the law for a temporary staffing company to force a temporary employee to work under terms less favorable than those afforded its employees. Specifically, the law prohibits temporary staffing agencies from "refusing or failing to pay to a worker sent to or hired by a client employer wage or salary equal to that which the client employer ‘directly or indirectly’ directly pays or is liable to pay a directly hired employee of the client employer in the same or substantially similar job when the wage or salary paid to the directly employed employee is provided for by any ordinance, statute, regulation, policy, or custom or practice."
Temporary employment agencies and entities that hire temporary employees must comply with Federal or State employee background check regulations (including the Fair Credit Reporting Act or prohibitions against criminal background checks by California employers). The same requirements apply to both temporary employees and permanent employees. The California DNA Privacy Law requires employers to inform an employee who may have a DNA sample collected for purposes of testing the sample that the employee may submit the sample for testing by a laboratory of their own choosing and at their own expense. Temporary employment agencies and entities treating employees differently based on their immigration status may be liable for discrimination for refusing to refer a worker for placement because of their perceived or actual immigration status or citizenship.
Like other employers, temporary staffing agencies are required to pay wages as earned, to maintain personnel files and to pay the employer’s share of social security and medicare. Employers are obligated to pay unemployment insurance benefits; temporary staffing agencies must assure their employees have registered with the state unemployment office.
There are fines and penalties for violations. Governor Newsom recently signed legislation to streamline wage order violations. Courts will have the discretion to award a civil penalty to an employee of $100 for the first violation and $200 for each subsequent violation not exceeding $4,000. The employer may be held responsible for attorney fees and costs and punitive damages.
Recent Updates & Trends
Since the passage of the Fair Employment and Housing Act in 1959, California has considered employees to be a protected class. Companies that hire workers for temporary or short-term assignments have not been exempted from this protection and the law attempts to ensure that workers are not facing discrimination even when doing work part-time or on a provisional basis. An increasing number of firms are using temporary employees to meet staffing needs, however, even though a temporary worker has the same rights as a traditional employee, few companies are using proper vetting procedures to avoid problems.
In 2015, the California legislature passed AB 219 to strengthen the laws prohibiting employers from denying a worker reasonable accommodations. AB 219 also made it illegal for employers to refuse to hire, employ, or like a person who had requested an accommodation. These changes put additional legal protections into place for temporary workers who may wish to seek an accommodation .
A new trend that is expected to progress in 2016 is increased scrutiny for staffing companies and other providers of temporary employees. In AB 622, which was passed into law on January 1, 2016, the state of California gave the Labor Commissioner more power to go after people who steal wages from employees, including temporary employees. Another trend is the requirement that all businesses – including staffing agencies – register with the state beginning January 1, 2017. All businesses must register with the Secretary of State and a registration must be renewed every two years. Registrations are also open to public inspection. The purpose of the law is to regulate predatory staffing companies that target low-wage workers.
The trend is toward greater protections for workers, regardless of whether they are in traditional long-term employment or are engaged in shorter-term work. Without careful compliance, companies that rely on temporary workers could get into legal trouble in the form of wage theft or discrimination claims.
