After How Long Should It Take for a Temp Worker or Contractor Become a Permanent Employee?

MANY COMPANIES contract out certain parts of their work functions to either temporary staff or independent contractors but, if someone is working for your company full time for an extended period, the question arises of when that person ought to be considered a permanent employee.

The issue is important because the longer someone is working for you, the more the line blurs between contractor and employee – and getting it right can save you plenty of financial and legal headaches if a government agency questions the relationship.

There are a number of laws and regulations that you can run afoul of for not classifying a worker or contractor properly, including the Fair Labor Standards Act, workers’ comp and unemployment (premium payment obligations required for employees) rules, IRS rules and the Employment Retirement Income Security Act if benefits are required for employees under your company policy.

There are no specific laws or regulations that limit that amount of time an employer may classify a worker as temporary. However, if a temp worker has been in their position performing the same job duties as regular full-time employees for an extended period and is not eligible for company benefits that other employees are entitled to, it could set an employer up for legal liability.

There is legal precedent where courts have ruled against employers who kept workers on a “temporary” status for years as they worked alongside full-time company workers, performing the same tasks.

The employment law firm of Foley & Lardner wrote in a circular to its clients that “six months is usually recommended as a safe duration and one year should usually be considered an outside limit, assuming that the other independent contractor criteria are met.”

Every extra month the contracting relationship is extended, the worker starts to look more and more like a W-2 employee, according to Foley and Lardner.
The law firm offers some guidance for employers: Temp workers should be doing the same work as your regular, full-time employees for an indefinite period. You should be hiring temp workers to fill in when you have lost staff or have employees on vacation or leave.

To protect themselves, employers should specify in writing how long someone can work in a temporary position before being eligible for company benefits. This includes defining the scope of their job duties.

If you are relying on a temp worker indefinitely or need them to keep operations going, you may want to consider bringing them on as full-time staff who are eligible for company benefits like other workers.