November 2008
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Pitfalls of temporary employment

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by Nineveh Alkhas and Jason C. Kim
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Employers can enjoy many benefits from hiring independent contractors and workers from temporary staffing or leasing agencies. They can achieve increased efficiency and flexibility; save money on recruiting, training and payroll; and reap other administrative benefits.

However, to unsuspecting employers, the perceived benefits may be far outweighed by the costs of damages, fines and penalties associated with improperly using or classifying such workers. Employers who think they can avoid tax and employment laws by simply shifting the burden to a third party should think twice. The reality is laws relating to employment-related taxes, wages, discrimination, benefits and other matters may cover these workers, as well.

Have you hired workers from third-party agencies? Have you entered into relationships with independent contractors? If so, you should take a closer look at those relationships to make sure they comply with applicable laws.

The question in each of these arrangements is whether a worker is properly classified as one of your "employees," thus triggering their rights and your obligations under employment laws. More often than not, the answer—surprising to most...



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