The latest newsletter from features an article by Eric H. Rumbaugh about contingent labor. The author discusses the pros and cons of setting pre-defined limits on how long a temp can work before their contract is terminated. Some employers fear that having two different sets of compensation structures (one for contingent workers and one for regular employees) leads to ongoing morale problems. They also believe that not setting term limits can result in bloated departmental headcounts. Managers might simply keep temps on indefinitely to sidestep thorny budget discussions that actually creating a new full-time position would entail.

What’s the Downside of Term Limits for Contingent Labor?

When letting one temp go means you have to bring in another, the turnover costs can be substantial. Sure, you don’t have to spend as much on recruiting since most of that responsibility is handled by the staffing agency. However, there are the following costs to consider:

  • Transactional onboarding and other HR administration tasks
  • Acculturation and orientation resources
  • Training (and loss of productivity for any employee assigned to help with training)
  • Losses incurred from errors made by the new temp
  • Disruption to the team as a whole as they adjust to a new member
  • Perception of unfair treatment for terminating a temp arbitrarily
  • Lack of support for term limit policy by managers who don’t want to lose trained workers

Rumbaugh also correctly points out that employers who set term limits in an attempt to decrease their liability as a co-employer are actually not protected by this action. For most situations in which DOL violations might arise, the length of time a temp works at a particular location has no bearing on whether co-employment status exists. The employer and the staffing agency are generally both responsible for ensuring adherence to the law.

Universal Onboarding and Contingent Hiring

Because the transactional onboarding process is different in some ways for temps than it is for direct hires, employers who use contingent labor may require two distinct onboarding workflow processes. With Universal Onboarding, each company’s internal business rules can be incorporated into the software and enforced every time. This ensures that contingent new hires are presented with the correct paperwork to define their legal relationship to their co-employer.