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How to Manage Contingent or Temporary Workers

Author: Cheryl Lipton

Many businesses have found it profitable to use contingent workers. Contingent workers run the gamut from independent contractors to part-time, temporary, seasonal, casual or leased employees. Organizations may prefer the flexibility of contingent workers who can be added or eliminated as workloads demand.

Businesses benefit from hiring contingent workers because it reduces their labor costs. By hiring contingent workers, employers need not make contributions to Social Security, unemployment insurance, workers' compensation and health insurance; and it saves the administrative expenses of withholding taxes.

However, it is critical that an organization carefully consider whether a worker truly is an independent contractor and not a misclassified employee. The Fair Labor Standards Act (FLSA) dictates how employers treat their employees, even if they are not full-time staff. An employer could find itself facing penalties, back taxes and back overtime payments if it has misclassified a worker in violation of the FLSA. Employers must be diligent and follow the steps below to ensure they do not violate the FLSA's requirements.

In addition, opting for contingent workers, temporary workers, staffing agency relationships, contractors or franchise relationships may not shield an employer from meeting the joint-employer standard as determined by the National Labor Relations Board (NLRB).