As a business owner, it’s important to be cognizant of the labor laws relating to the hiring of temp workers.
While federal rules and regulations govern many aspects of part time and temporary workers, employers typically have a great deal of flexibility when it comes to benefits.
According to the federal law, a temporary employee needs to work with a company for at least 1,000 hours in one year to be entitled to benefits. Moreover, the same employee cannot be hired by the same company as a temporary employee consecutively for more than two years.
Who is a part time employee?
As defined by DOL or U.S. Department of Labor, a person who is appointed to work with a business for a year or less and his work ends on a specific date can be considered as a part time employee. The terms of a temporary work appointment can be determined by the employer, but it should either be for a short term engagement or seasonal basis if the business is engaging him for several weeks or months.
The date of ending temporary employment can either be the completion date of the project or the return of the permanent employee from leave
Rights of temporary employees
According to the DOL’s 1,000 hour rule, temporary employee can qualify for certain benefits after working for an extended period. For instance, a part time employee can be eligible to be part of the retirement plan sponsored by the employer after working a minimum 1,000 hours annually or nearly 20 hours per week with the same company.
Some of the statutory benefits to temporary employees like social security, short term disability insurance, and worker’s compensation insurance etc. may differ from state to state.
Whereas some benefits like comprehensive fringe benefit package and the matters not considered by the applicable laws can depend on the part time employee benefit policy made by the employer.
Some of the benefits a company can include in its policy for the part time employees may include:
Retirement Plans: According to the ERISA or Employee Retirement Income Security Act, the owner of a small business is required to consider part time employees eligible for retirement plans, including 401(k) plans, as offered to other employees. The eligibility of part time workers for retirement plans is just like their eligibility for health insurance benefit, depending upon the amount of hours worked with them. The employee must work more than 1,000 hours with the company to be entitled to the retirement benefits.
Health Insurance: Usually the owners of small businesses do not offer health insurance to part time workers even if it is offered to permanent workers. Still some of them offer this benefit as an additional advantage to attract the employees. But the health insurance to part time employees depends on various factors including the definition of part time employee as per the law of that state and insurance provider to the company etc. When offering health insurance to part time workers the business owner should consult with their insurance provider to know about the minimum qualification required. Normally the temporary worker has to on average work a minimum of 20 hours per week to be eligible for health insurance.
Overtime: The employers covered under FLSA are required to pay overtime to all the employees equal to one and a half times of their regular hourly rate for all the hours worked more than 40 hours in a week. But according to the federal law, the employee is not entitled to get overtime for working on weekends or holidays unless those hours are really the hours of overtime work. In this way, the overtime for full time as well as part time workers depends on local laws, state laws and the policy of the company
Fringe benefits: The owner of small business can offer various types of low cost benefits to his temporary employees, which may include personal vacations, paid vacations, reimbursement for partial tuition or sick days, stipend for wellness and health, tickets for sports events or options of telecommunication etc.
Unemployment benefit: According to state laws, a part time employee can be eligible for unemployment benefits if the business is in operating condition. The unemployment benefits to temporary employees can depend on the number of hours worked during the previous year; the wages earned during a particular time period; and/or whether he is fired, quit, or unemployed. The owner of a business is also required to be enrolled with the unemployment insurance plan of the state.
Thus, the number of hours worked by the part time employee can help in making decisions about the benefits he deserves to get from the employer, and whether it includes the options of retirement plan or health insurance benefit.
However, the employers has more flexibility to decide about the eligibility of the temporary employees for other fringe benefits like vacation time and healthcare. Part time employees should consider negotiating with their employers about receiving benefits they are not otherwise entitled to.
On the other hand, the owners of the business should offer various types of benefits to their part time employees even if they are not included in the state or federal laws.
Though employers are restricted by federal and state laws in providing benefits to their employees, they can still use their wisdom while deciding about the eligibility of their part time employees for some of the statutory benefits provided by the law for permanent employees.