A small business guide to hiring temporary employees

Quick insights

At some point, many small businesses need extra help for a season, a project or leave coverage. Bringing in temporary employees can offer flexibility without the commitment of a permanent hire. Let's explore what temporary employees are, ways to bring them in and what to know about employer of record and benefits.

What are temporary employees?

A temporary employee is a worker hired for a fixed period, often less than a year or fewer than 1,000 hours. They can work full-time or part-time and typically fill roles tied to a specific need, such as seasonal demand or short-term project coverage. Common examples include administrative support, customer service, retail and warehouse roles. Unlike permanent staff, temporary employees have a defined end date built into their arrangement.

Bringing in temporary help

There are a few ways to add temporary staff, and the right choice for your business can depend on your timeline, budget and how much of the process you want to handle yourself.

Hiring through a staffing agency

A staffing agency can recruit, screen and place temporary workers for you. This can speed up the hiring process since agencies often have pools of prequalified candidates. In exchange, you typically pay a fee that covers the worker's wages plus the agency's service charge. For businesses managing human resources with a small team, this hands-off approach could save time.

Hiring directly

You can also hire temporary employees on your own. This gives you more control over the selection process, but it means handling screening, payroll and compliance yourself. If you're hiring a part-time employee or bringing in seasonal help, the direct route could make sense if you have the time to manage it.

Who serves as the employer of record?

The employer of record is the party responsible for payroll, withholding and workers' compensation. When you work with a staffing agency, the agency typically acts as the employer of record. It handles payroll administration, pays unemployment insurance and carries the workers' compensation policy. If you hire a temporary employee directly, your business becomes the employer of record and takes on those responsibilities.

Benefits eligibility and waiting periods for temporary employees

Benefits for temporary employees can depend on several factors, including your company policy, the staffing arrangement and state laws.

Reviewing your benefits policy

Discretionary benefits like paid time off and holidays generally follow your written policy. A policy that excludes temporary staff is often allowed, but it can help to review the details carefully. Some states have paid sick leave laws that accrue based on hours worked from day one, regardless of job title.

Understanding waiting periods

Health coverage eligibility often depends on hours worked rather than the temporary label. If your business is an applicable large employer (e.g., it employs at least 50 full-time employees, full-time equivalent (FTE) employees, or a combination of both), an employee averaging 30 hours a week may qualify as full-time. Retirement plans follow their own eligibility terms, which can vary by plan. Checking these details with a professional could help you stay compliant.

Making the most of temporary hires

Getting the most out of temporary staff often comes down to clear communication and preparation.

Defining the role clearly

A detailed job description with the title, responsibilities, required skills, duration and pay rate gives candidates a clear picture of the role. If you're hiring employees for a temporary role, clarifying whether it could become permanent could also help set expectations.

Onboarding efficiently

Even short-term staff can benefit from a brief orientation. A simple onboarding checklist for new hires can help them get up to speed quickly. Understanding employee onboarding costs could also help you budget for the temporary arrangement. Temporary staff may need time to learn your processes, so building in a brief training period could help them contribute sooner.

Planning the transition

If a temporary role might become permanent, having a plan for the transition can help things go smoothly. A temporary arrangement can also give both you and the employee a chance to evaluate fit before committing to a permanent role.

In conclusion

Hiring temporary employees can give your small business flexibility to handle short-term needs without a long-term commitment. Whether you work with a staffing agency or hire directly, understanding employer of record and benefits eligibility could help you feel more prepared.