A few weeks ago, Angela Snyder wrote about the DOL’s new guidance regarding interns. In her article, Angela discussed considerations related to intern pay. Another issue that often arises with regard to interns is employment status—should the intern be hired as a “regular” or “temporary” employee? That’s the topic of this week’s WWYLD.
Question: Our handbook indicates that a “temporary” employee is someone who works for the organization for three months or less. A manager has asked if we can hire an employee on a temporary basis for a 4-month engagement. Are there any legal restrictions on what constitutes “temporary” employment?
In general, “temporary” is defined by the employer not the law. Legally, employees are “at will” (which means employment can be terminated at any time by either the employer or the employee) unless a contract or agreement assures otherwise. A temporary status or probationary period does not affect the at will status. But, there are other legal considerations for temporary employees. Let’s start there and finish with some operational considerations.
The Affordable Care Act (“ACA”): Many employers have policies that state that certain benefits, including health insurance, are not made available to temporary employees. The ACA requires that employers (with 50 or more employees) offer health insurance that is affordable and provides minimum value to their full-time employees. The ACA states that a waiting period of up to 90 days is permissible. Therefore, if a full-time (defined as working 30 or more hours/week), temporary employee remains employed beyond 90 days, he or she is legally entitled to benefits, regardless of company policy. This is one reason many employers limit temporary employment to three months or less.
Title VII: It is lawful and nondiscriminatory to provide different benefits and privileges to different employees based on employment status (regular vs. temporary, exempt vs. non-exempt, full-time vs. part-time). But an employer could open itself up to claims of discrimination if employees doing similar jobs are categorized differently and, therefore, receive different benefits and privileges. Let’s say, for example, that employee A and employee B have the same job title and both have 6-months of tenure. Employee A is “regular” and employee B is “temporary.” The employer only provides benefits to regular employees with at least 90 days of tenure. Employee B could assert a claim that he is being retained at the temporary status to avoid providing benefits, and this is an adverse action that relates to the employee’s membership in a protected class. Again, this is not to say that temporary employment, or that providing different benefits to temporary employees, is unlawful or discriminatory. Employers must ensure they have legitimate non-discriminatory business reasons for classifying employees as they do.
- Ensure you have well-documented policies regarding temporary employees. Consistently apply the policy.
- Ensure you have well-written job descriptions that clearly outline the duration of the specific assignment.
- Before the job is posted, clearly document the business need for hiring an employee on a temporary, rather than regular, basis.
- Monitor the duration of the assignment to ensure it aligns with policy and the job description. Where the assignment goes beyond the scope of the policy/job description, consider changing the employment status—moving to regular employment or moving to termination.
- Monitor the hours worked to ensure compliance with the ACA.
Questions about employment status? Please reach out.