Worried About Benefits Liabilities for Your Long Temporary Staff? Don't be.

February 13, 2012
Posted by Link Staffing Services

In the late 1980s, Microsoft ran afoul of the IRS and was then successfully sued by a number of its former long-term independent contractors for retroactive benefits. That case, Vizcaino v. Microsoft, wound up costing the software giant $97 million. No wonder companies ever since have been wary about the distinctions between independent contractors, to whom no benefits accrue, and employees. Mistakes can be costly. Some have even adopted policies limiting the length of staffing firm assignments, even though these artificial limits can by disruptive to the employers and economically harmful to reliable workers.

Unfortunately (or maybe fortunately) these assignment limits are usually based on misconceptions, many of which are explained in an American Staffing Association issue paper.

In fact, if you are “renting” staff, there is no automatic cut-off after which they become full employees, eligible for benefits. The key to utilizing staffing firm employees—or any independent contractors—for an extended period of time, without benefits liabilities, is to maintain clarity around who is and is not a full-time employee, and who is and is not eligible for specific benefits.

As the ASA paper explains, staffing firm clients can avoid benefits exposure by amending their benefits plans to exclude staffing firm employees, by having staffing firm employees waive their right to the client's benefits, and by minimizing their contacts with those employees to reduce the chance that they will be considered to be the client's common-law employees. The paper also provides suggested language, developed by expert benefits counsel, that clients can use to exclude staffing firm workers from participation in the client's benefits plans.

If you manage the situation carefully, there should be no problem maintaining valuable working relationships as long as they need to continue.

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