| BUSINESSWEEK ONLINE : JUNE 28, 1999 ISSUE | ||||||||
| ||||||||
 | ||||||||
| FRONTIER -- WHAT WORKS
Temp Insanity? Recent rulings on temp workers could expose your business to major headaches. Here's how to steer clear Need more hands on deck? Using freelancers, leased employees, and other temp workers can often be the most flexible and cheapest way to see that the job gets done. But it's not as simple as it looks. Depending on how closely you supervise these workers and how the job is structured, they could be viewed as permanent employees by the Internal Revenue Service, the Labor Dept., or your state workers' compensation and unemployment agencies. What then? They would be entitled to all the perks and benefits your full-timers get, and you would be responsible for back payroll taxes and penalties. But that's not the worst of it: The workers themselves could sue your company for benefits. Consider the case of former project staffers, so-called permatemps,
at Microsoft Corp. The company claimed that they were leased employees,
not entitled to the same benefits as full-timers. A federal appeals
court disagreed, holding last month that the permatemps were effectively
functioning as regular staff and eligible for company stock options.
Microsoft is expected to appeal. How can you play it safe? A recent study in the Journal of Small
Business Management by researchers Raymond A. Zimmermann and Mary
A. Gowan reviewed the outcomes of 79 court cases brought by the IRS
for misclassification of employees and concluded that small businesses
should be wary of telling contingent workers where, when, and how
to do their jobs. In addition, when you're leasing employees from an agency, let
the agency do its job, advises Ed Lenz, general counsel and senior
vice-president of the National Association for Staffing & Temping
Services. Don't ask to see resumes, get involved with compensation,
give temps business cards or company cars, or enroll them in training
programs. Unfortunately for smaller companies, the urge to merge nonpermanent
employees into the team is almost irresistible. To protect yourself
from temptation, make sure the assignments are finite, with break
periods in between. And if you're leasing employees, settle on a leasing
company that offers its own benefits plan and deducts payroll taxes,
says Bruce B. Harrison, a lawyer at Shawe & Rosenthal, a Baltimore
employment-law company. Check over your pension plan, too. A plan with overly inclusive
language got Microsoft into trouble, notes Russell A. Hollrah, a partner
with the Washington office of Littler Mendelson PC. Another option: investigate outsourcing. Delegate an entire area
of responsibility to an outside agency or another company. That'll
help keep a temporary solution from becoming a long-term problem. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
|  |
 | |
INTERACT E-Mail to Business Week Online | |||
