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Temporary Help
The principal business of temporary help
agencies is to fill positions on a short-term
basis. They employ people who want to work
either limited hours or for limited periods.
Companies that need part-time or full-time
help for only a finite period can use a temp
agency to avoid the hassles, mainly government-imposed,
associated with hiring and subsequently laying
off someone.
Additionally, some businesses
use temp agencies
for selective employee outsourcing.
That
is, they keep "temporary"
employees
on board for extended periods,
sometimes
for several years. These employees
are often
referred to as "permanent
temps."
The main advantage with such an arrangement
is greater flexibility to reduce staff or
to release an unsatisfactory worker. The
main cost is that temp agencies charge their
clients a hefty premium over the actual amount
actually paid to the worker, often in the
neighborhood of 50%. This premium covers
employer-paid payroll taxes, employee benefits,
administrative overhead, and a profit margin.
Another way to utilize part-time
or temporary
help is to treat them as independent
contractors.
They are not employees on your
payroll, but
you pay them an agreed-upon hourly,
daily
or weekly sum. They are responsible
for their
own benefits, and for the full
amount of
payroll tax (Social Security,
Medicare, etc.).
You are generally not responsible
for tax
withholding, but you must provide
them with
a Form 1099 at the end of the
year.
Before attempting to utilize any of these
staff management strategies, consult with
your legal and tax advisers. In some cases,
"temporary" employees might be
deemed to be de facto employees of yours by government agencies,
especially if they are on board for an extended
period. Likewise, "independent contractors"
also may be declared de facto employees if you are their sole, or even
primary, source of income for an extended
period. In this case, all the benefits you
sought to obtain would be undone, perhaps
at extra expense to you. |
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