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Dobbeck: Part-time employees entitled to a host of benefits

Published: Thursday, March 28, 2013 5:30 a.m. CDT

A constant source of concern for employers is determining who is a full-time or regular employee as opposed to a part-time employee or temporary worker, and the significance of that determination. Although the Department of Labor does not define how many hours an employee must work to be classified as full-time or regular, individual states may have definitions. so check with your state to see if rules are established.

There are many issues you must consider before deciding whether to hire a part-time employee or if your needs would be better served by contracting with a temporary agency. This article addresses some of those considerations.

With limited exceptions, most legally mandated benefits are offered to part-time or in-house temporary employees just as they are to full-time employees. Some of the legally mandated benefit programs are:

• Family & Medical Leave – After one year and 1,250 hours if you have 50 or more employees within a 75-mile radius.

• Jury duty leave – All employees, effective immediately.

• Military leave – All employees except "temporary employees," effective immediately. The Uniformed Services Employment and Re-employment Rights Act of 1994 defines a temporary employee as one whose pre-service job was for no more than a brief, non-recurrent period and was not reasonably expected to continue for a significant length of time.

• Pregnancy Discrimination Act - Affects employers with two or more employees.

• Retirement savings – Under the Employee Retirement Income Security Act, if the company has a retirement savings plan, it must include all employees who work at least one year and 1,000 hours during the year.

• Social Security – All employees, effective immediately.

• Time off to vote – All employees, immediately.

• Unemployment insurance – All employees, immediately. The chargeable employer is the most current employer for whom the employee performed services 30 or more working days within a 365-day period.

• Workers’ compensation insurance – All employees, immediately)

Individual states also may have protected leaves and absences to make sure to check your state regulations. For instance, in Illinois:

• Victims Economic Security & Safety Act Leave is available to employers with 15 or more employees.

• Military leave is available for first responders and State Guard.

• Military family leave is available for employers with 15 or more employees.

• Blood donation leave is available for employers with 50 or more employees.

• School visitation leave is available for employers with 50 or more employees.

Because there is no legal definition for full- or part-time employment, each company has the right to determine eligibility for company benefits. These may include paid vacation, group health, paid holidays, personal or medical leaves of absence, bereavement leave, tuition reimbursement, tool purchase, etc. When drafting these policies, it is important to specifically spell out length of service and number of hours needed for inclusion. For administrative ease, it is best to keep all policies as uniform as possible.

In all states, unemployment insurance will charge an employer for unemployment costs if the employee worked for the company for a stated period of time. In Illinois, if the employee works for 30 or more working days within a 365-day period the employer is responsible for up to six months of state unemployment benefits. This is generally true even if you have an agreement with the employee that the position is for a limited amount of time. For this reason, a good rule of thumb for hiring in-house temporary employees is to keep their employment limited to less than 30 working days. If the position will last beyond this limited amount of time, consider contracting with a temporary service.

The law is very clear about who is and who is not an independent contractor. The IRS has a set of rules and most states do as well. In Illinois, both the Minimum Wage & Overtime Act and the Unemployment Insurance Act set forth specific rules regarding this status. Below are a few of the determining factors when various agencies look at your employment arrangements:

• Such individual has been and will continue to be free from control or direction over the performance of such services, both under his contract of service and in fact.

• Such service is either outside the usual course of the business for which such service is performed or that such service is performed outside of all the places of business of the enterprise for which such service is performed.

• Such individual is engaged in an independently established trade, occupation, profession or business.

• Such individual has the ability to set his/her own hours.

• Such individual is paid on a project basis, generally not an hourly basis.

• Such individual has the ability to earn a profit and contract with other clients.

Unless your "independent contractor" meets all of the guidelines above, he/she is probably your employee and entitled to all benefits as other employees. A good example of an independent contractor would be the person who comes in to paint your engineering office. A poor example would be someone with whom you contract to do design engineer work when you employ others as design engineers.

Contracting with a temporary agency may be a great way to decrease your obligations and control costs. Agencies typically charge between 130-170 percent of the hourly wage to cover the costs of mandatory benefits and for the profit margin. In return, you will have fewer additional obligations. As with any contracting arrangement, you should be specific about your needs.

Decide whether the assignment is truly temporary or if you might wish to hire the individual in the future. Most temporary agencies offer temp-to-hire arrangements and you will be able to place the worker on your payroll after he/she has worked a minimum number of hours. Utilizing the temp-to-perm arrangement is very helpful as a trial employment period. You can try out the employee for a number of months before deciding whether or not to "buy." If you are a government contractor, consider asking the temp service to perform E-Verify on your behalf. Also, consider skill assessments for competencies you need such as math, attention to detail, reading, inspecting, analysis, filing, etc. Skill assessments are available at a minimal cost from companies such as G.Neil or Wonderlic.

Just because you are not the "employer of record," you still have legal responsibilities. If the temporary worker claims harassment or discrimination, both you and the temporary agency may be held liable. In fact, most labor laws cover temporary employees and a good lawyer will sue both the agency and the assigned employer. A good rule of thumb is to ensure that the temporary employee goes through a short orientation so that he/she understands your policies regarding harassment, discrimination and safety. Consider giving your policies and job descriptions to the temp service so that the temporary worker can review them before the assignment begins. Also ask that the service provide proof that your policies and descriptions were reviewed. Unless specifically stated in the contract, workers’ comp costs may fall to you. If there is any change in the job responsibilities or assignments you may also be found liable for workplace injuries so always remember to contact the agency if the assignment or job responsibilities change. Doing so may incur an increase in wages but the payoff is decreased liability and more protection for you.

Many companies use long-term temps. These folks may be with you for several years but are technically not your employee; they are employees of the temp service. Be careful to guard yourself against additional responsibilities for these long-term temps by segregating the "management" of your temps from your regular employees. Use the temp service's time reporting structure, not yours. Make sure the temporary employee contacts the temp service if he or she is going to be out and check over your 401(k) and profit-sharing plans to ensure you won’t be held responsible for adding temps who are with you for the long haul. Finally, don’t keep files on these temps. If there is a problem or you need to discipline, contact the temp service. (Thanks to Yvonne Graff from The Agency Staffing and Rich Wenzel from Working World for chiming in on precautions to take when using long-term temps).

To summarize, it is important to remember that your obligations are defined by the actual employment relationship and not by the words you may use to define it. Just because someone does not work full time he/she is still entitled to a host of benefit programs and is also covered under most federal and state discrimination laws. Take some time to determine what will work best for your company as you begin to rebuild your staff. If you do, you will have an up-front understanding of your costs and your responsibilities.

.• If you need help in understanding or developing employment policies, contact Karla Dobbeck, president of Human Resource Techniques Inc. Call 847-289-4504, or email karlad@hrtechniques.biz.

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