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Hiring temporary employees has both pros and cons.

The Pros and Cons of Hiring Temporary Employees

Temporary employees are workers who only retain jobs for a limited period of time. This isn’t because the employees quit or were fired. Temporary workers are only intended to fill short-term gaps in your staff.

You can hire temporary employees on a part-time, casual, or full-time basis. Temporary employment typically lasts one year or less. Temporary employees are often hired through a third-party W-2 employer of record, also known as contract placement services or a temp agency. You can also recruit temporary employees yourself.

As with all other business decisions, hiring temporary employees has both pros and cons.

The pros of hiring temporary employees

You can adapt to a fluctuating workload by hiring temporary workers.

Depending on your business, you might have peak sales at certain points during the year. Or a customer might ask you to complete a large, special project. Hiring temporary employees can help your business adjust to a varying workload. The extra workers can help you get more done at peak times. Since the employees are only temporary, you can go back to your normal staff size during slow periods.

You can find new talent for the future by hiring temporary employees.

Do you need to add employees to your business, but you want to make sure they are good fits before you hire them? Consider hiring temporary employees. If the temporary employees are good fits for the positions and your business, you can offer them permanent positions. Using temporary employees lets you evaluate the new workers without long-term commitments.

You have access to specialized skills by hiring temporary staff.

If you are doing a special project for a customer, you might need workers with particular skills to help you. By hiring temporary employees, you can access workers with special or advanced skills, but they will only be employed for the brief time that you need them.

You might save money when you hire temporary employees.

While you do have to offer some fringe benefits to temporary workers, you do not have to provide health insurance, vacation and sick pay, and retirement plans. Not having to provide these benefits can save you a lot of money. If you use a staffing agency, the agency should handle the benefits that must be provided, such as unemployment insurance and workers’ compensation.

You might have fewer payroll responsibilities when you hire temporary workers.

If you use a temp agency, the agency should act as the employer of record. This means the agency will handle the payroll responsibilities that are associated with temporary employees. The agency will pay the employees, and will withhold and remit payroll taxes. Of course, if you do not work with a temp agency, you will need to handle the payroll responsibilities yourself.

The cons of hiring temporary employees

You still have training obligations when you hire temporary staff.

Temporary employees will only be with your business for a short time.  Regardless of the employees’ skills, a certain amount of training is usually required. The training period will waste part of the short amount of time that the employees are with your business.

You could run into legal issues when hiring a temporary employee.

It can be easy to misclassify temporary workers as contractors when they are actually employees. If you recruit the workers yourself, make sure you understand the difference between an employee or independent contractor. Use the DOL independent contractor test to be safe. If you hire workers from a staffing agency or a recruiter, they should take care of worker classification.

You might have uncommitted workers when hiring a temporary worker.

Since temporary employees are essentially “passing through,” they might not be as committed to your business. This might mean the employees are less reliable or are less motivated workers.

You might have to pay higher wages when hiring a temporary staff member.

With temporary employees, you might have to pay a higher pay rate than you pay your permanent employees. There are two reasons for this. First, higher wages make up for the reduced benefits given to temporary employees. Second, temp agencies charge a fee on top of the employees’ rates. You might save money on benefits, but you might also have to spend a little extra on wages.

You will lose money on unsuccessful temps.

If hiring temporary employees doesn’t work out, you could lose money. You might have to spend both time and money to fix errors made by temporary employees. It will cost you money to find replacements. You will have to pay more money for attracting, interviewing, and successfully onboarding new employees.

Whether you have temporary or permanent employees on your payroll, Patriot’s simple payroll software can help you out. We designed the software to be easy-to-use and inexpensive, so you can keep your time and money.

This article was originally published on 6/21/2012.

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