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Thinking of Bringing on Temporary Employees?

October 7th, 2023 | 8 min. read

By CSI Accounting Staff

Many businesses took the step to hire temporary employees in 2020 due to industry changes and COVID. Spanning across all business sizes and all industries, temporary employees can provide valuable work with little commitment on behalf of either party.

If you're thinking of bringing on temporary employees but haven't pulled the trigger yet, you probably still have some unanswered questions. CSI Accounting & Payroll has advised small businesses for over 50 years. In all that time, we've heard lots of frequently asked questions about temporary employees, such as:

  • What is temporary employment, and how popular is it?
  • What are the benefits of temporary employees?
  • If I decide to hire a temporary employee, how do I determine the terms of employment?

Blog - Thinking of Bringing on Temporary Employees

How Common Are Temporary Employees?

Temporary employees are different from temp-to-hire, contract-to-hire, and independent contractors. Temporary employees aren't intended to be permanent hires and may often be hired for seasonal or project-based help.

Employers have increasingly realized the benefits of hiring temporary help in recent years. Plus, the mindset of a good portion of the workforce has changed from a desire for constant employment to a desire for freedom and work-life balance. This results in a growing attraction to temporary employment for both employers and potential workers.

Beyond that, according to the Bureau of Labor Statistics, there was a "large gain in temporary help services" of 68,000 new U.S. temporary employees in December 2020 alone. Many temporary employees are still bridging the gap in their employment due to COVID shutdowns. This is especially true for workers who previously held jobs in industries with the most severe mandatory shutdowns in 2020.

Benefits a Temporary Employee Can Offer 

Hiring a permanent employee takes a lot of time, and some job sites even charge employers to list their positions. Plus, reviewing applications and interviewing takes plenty of time. If you want to cut down the work in this area, a temporary employment agency can help you quickly find the ideal candidate. Otherwise, you can still handle the hiring process yourself or with the advisory of a payroll service.

Your ideal candidate is likely somebody who already has as much knowledge as possible; you want to minimize training. They might even have additional knowledge that your current employees do not!

If your business works on a lot of projects or faces extreme seasonality, it doesn't make sense to not hire temporary help for those times when your business is under high stress! A temporary worker can improve the job satisfaction of other workers by reducing their workload, and it's a financially smart move for your business to not have more year-round, permanent employees than necessary.

If you're debating hiring your temporary worker permanently (as a temp-to-hire worker), the initial temporary period of time is also when you can evaluate their skills and work ethic, as well as how your bottom line is influenced

How to Determine Terms of Employment

If you plan to hire a temporary worker yourself, you must provide them with written terms of employment. Even if you work with a temporary employment service, they will ask you what your terms are.

Be sure you know exactly what you want the temporary employment to look like with details beyond a standard offer letter, including:

  • Type of employment (temporary, temp-to-hire, contract-to-hire, independent contractor)
  • Any benefits that may be extended to temporary employees
  • Any opportunities to renew or extend the employment

Read the following sections for details about employment end dates and employment termination dates.

How to Specify an Employment End Date

Our HR solution received a question about what it means for the employer if they specify an end date on an offer letter for a temporary worker. Would you then be making the work contractual rather than at-will?

The answer? Not necessarily - you should still state in the offer letter that the work is at-will, and it's actually encouraged to specify an end date! It helps with transparency and brings closure to the employment period. Temporary workers may be employed until a date that lands in the middle of an ongoing project, and they shouldn't expect to stay longer just because the work is not completed.

How to Specify an Employment Termination Date

Our HR solution was also asked if it's a good move to plan to fire a temporary employee and give them a termination date. You may think this is a generous move on your part because it gives the worker an opportunity to prepare.

No, informing a temporary worker of a shortened employment period due to underperformance is not wise.

Why? Unless they're temp-to-hire, they should already not expect to be hired permanently when their employment period ends. Plus, continuing to have access to your workplace and information gives them the opportunity to sabotage your business if they have hard feelings. You could also risk seeing a drop in their performance or even an improvement in performance in hopes that you will change your mind.

Plus, other employees may feel like they are being discriminated against if they mistakenly expect to receive notice before termination. 

Need More Guidance on Hiring Practices?

Now you should know more about temporary employment, including its popularity, the benefits of temporary employees, and how to determine the terms of employment.

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CSI Accounting Staff

This article was composed by a member of our staff who interviewed our experts to get the facts straight. Any uncited information found here came straight from a knowledgeable accountant or payroll specialist.