What is a temporary employee?

A temporary employee is hired for a limited period or project, either directly or through a staffing agency. Short-term does not mean fewer rules: hours still have to be recorded and paid correctly.

In shortA temporary employee works for a set period, to cover a peak, a project or an absence. There are two common setups. A direct temp is on the company’s own payroll with an end date. An agency temp is employed and paid by a staffing agency and works at the client’s site, with the client directing the daily work. In the agency setup, both companies can share legal responsibilities in some situations, which is why contracts usually say who handles pay, overtime, safety training and complaints. Temporary employees are employees, not independent contractors, and non-exempt temps are owed overtime like anyone else.

Direct temp vs. agency temp

Two ways to bring in temporary staff
Direct temp Agency temp
Who pays wages Your company The agency
Who directs the work Your company Your company, day to day
Cost Wage plus your payroll costs Agency bill rate, which includes its markup
Hiring speed Your own process Usually faster
Time records Your system Agency timesheet, often confirmed by your site

For seasonal peaks that repeat every year, see seasonal employee.

Week 3, hours for 6 temps344046384340Grey: agency timesheet (40). Color: site clock-ins
The agency billed 40 hours a week. The site’s own records told a different story.

Worked example: two sets of hours

Agency temps at a warehouse

A warehouse brings in 15 agency temps for an 8-week peak. The agency bills $26 an hour per temp; a direct hire at the same job earns $18 plus payroll costs. The agency handles payroll from timesheets the temps fill in.

In week 3, the site manager compares agency invoices with the site’s own clock-in records. Agency timesheets show 40 hours for most temps every week; the site records show anywhere from 34 to 46. Some temps are being billed for hours they did not work, and others are not being paid for overtime they did.

From week 4, the agency invoices from the site’s clock-in data, approved weekly by the site manager. Billing drops by a little, and three temps get overtime they were owed. Both companies now have one set of hours to defend.

Mistakes that are specific to temporary employees

Onboarding temps quickly and safely

Temps are often thrown into work with less training than permanent staff, which is when accidents and mistakes happen. A short, standard onboarding for every temp helps: site safety and emergency procedures, the specific hazards of their task, who their lead is on each shift, how to clock in, and where to find break areas.

Write it as a checklist and have each temp sign it on day one. If the temp comes through an agency, agree in the contract who covers what, and keep your own record of the site-specific training you gave.

Second example: covering a leave with a direct temp

A dental office’s billing coordinator goes on a 12-week leave. The office hires a direct temp for 12 weeks at $24 an hour, 32 hours a week, about $9,216 in wages plus payroll costs.

Before the leave, the coordinator writes a one-page procedure for each recurring task and spends 2 days training the temp. The office tracks claims submitted per week; it stays within 5% of the normal level during the leave. When the coordinator returns, the procedures stay in use as backup for future absences.

Invoice from your own clockAsk the agency to bill from your site’s clock-in records instead of its own timesheets. You approve one set of hours each week, and disputes about who worked when mostly disappear.

Questions people ask

What is the difference between a temporary and a seasonal employee?

Seasonal employees work during a predictable peak every year. Temporary employees can be hired for any limited need, such as a project or covering a leave.

Do temporary employees get overtime?

Non-exempt temporary employees are owed overtime like other employees. In agency setups, the contract should say who pays it.

Who is responsible for agency temps?

The agency is usually the employer of record, but the client directs the work and can share responsibilities in some situations, such as safety.

Can a temporary employee become permanent?

Yes. Agency contracts often include a conversion fee or a minimum period before the client can hire directly.

Do temporary employees get benefits?

It depends on the employer, the plan rules and the laws that apply, such as paid sick leave laws in some states. Agency temps get any benefits through the agency.

How long can someone be a temporary employee?

Your policy or the agency contract usually sets the length. Long temporary assignments can raise questions about benefits eligibility and how the person is classified, so review them periodically.

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Disclaimer: This explanation of temporary employee is general information, not legal, payroll or tax advice; rules differ by state and city and change over time, and the examples are fictional.