Part-Time, Temp Hiring Boom Opens Door to Compliance Pitfalls

This article originally appeared in Bloomberg Law and is republished here with permission.

Employers are facing a glut of open positions and the trend is expected to continue. Foley & Lardner attorneys say the use of non-traditional employment relationships like part-time and temporary options has risen dramatically, but these trends bring new challenges for employers to stay compliant with federal, state, and local laws.

The tight labor market and another Covid-19 variant have left many employers struggling to hire and retain talent, with the glut of open positions expected to continue well into 2022. With total job openings well above their pre-pandemic peak, employers must adapt in this labor market.

Adapting means providing increased flexibly for workers, and the use of non-traditional employment relationships like part-time and temporary options has risen dramatically. But with these hiring trends comes both expected and new challenges for employers to stay compliant.

Pre-Employment Hiring Practices

The current jobs report confirmed the labor market remains hot. Unemployment fell to 4.0% while the economy added 467,000 jobs. Employers struggled to attract candidates even when offering incentives such as increased pay, vacation time, and bonuses for seasonal employees, and additional overtime incentives for regular employees.

To attract applicants, many employers are removing barriers to employment, such as educational requirements and pre-employment screenings. While many states and municipalities have regulated the use of pre-offer criminal background inquiries or limiting drug testing for marijuana, employers nationwide are increasingly dropping these screening measures to expand applicant pools. Eliminating these inquiries at the pre-employment stage, however, does not mean employers may never use them.

Subject to state law, employers may utilize drug screens in reasonable suspicion scenarios and can consider an employee’s criminal background where convictions are related to the employee’s job. These tools must be used in a neutral manner and employers need to ensure that discrimination—intentional or otherwise—does not factor into the screening process.

Moreover, employers must carefully follow the notification obligations under the Fair Credit Reporting Act relating to criminal background checks, and must carefully document the business reasons for in-employment drug testing.

What Laws Apply to Temporary Workers?

Temporary and part-time employees are covered by most federal employment laws, including wage and hour laws, anti-discrimination protections, and employment tax laws.

The protections of the Americans with Disabilities Act and the prohibition against religious discrimination apply to temporary and part-time personnel as well—including those who may wish to be exempt from an employer’s vaccine requirement.

Applicants and temporary workers seeking an exemption are entitled to the same consideration as regular personnel. Employers must engage in the interactive process to determine what, if any, accommodations are reasonable. What equates to a “reasonable” accommodation can vary, however, between temporary and regular workers.

For example, courts have held that a temporary employee’s requests for leave is not reasonable under the ADA, as the employee’s absence would require the company to place another temporary or “super-temporary” employee in the position.

Other laws simply do not apply to temporary workers. The Family and Medical Leave Act does not usually apply to temps, as it requires employees to be employed for a year and work a minimum number of hours in order to be eligible for job protected, unpaid leave. As issues arise, employers must carefully consider employment issues to determine what rules do apply.

Employee Misclassification as Enforcement Focus

While some employers lift barriers to employment, a recent Harvard Business Review poll showed that job ads list about 33% more skills in 2020 than they did in 2017. Unable to hire for these skilled positions directly, some companies are opting instead to hire outside contractors.

Employers should be wary of classifying workers as independent contractors, however, as errors can result in substantial liability. Simply because an employee works part-time or temporarily does not render the worker an “independent contractor,” exempting them from traditional employee protections like minimum wage and overtime requirements.

Misclassification is increasingly a target of federal and state enforcement. Indeed, the rise of the gig economy has subjected many employers to significant liability under state and federal wage and hour laws. For example, app-based delivery platforms are facing multi-million dollar claims that they misclassified drivers as independent contractors.

Moreover, the ever-changing—and widely varying— landscape of rules at the state and federal level create uncertainty about which workers are truly independent contractors.

The federal government has been sending mixed messages about contractor classification for years. Early in 2021, the Department of Labor published final rules on classifying independent contractors, a holdover from the previous administration.

Among other things, this rule adopted an “economic realities” test to determine a worker’s status and clarified the concept of economic dependence, the touchstone of the economic reality test. It also emphasized the worker’s control over the work and opportunity for profit or loss. However, shortly after President Biden took office, his administration withdrew the rule, finding it inconsistent with the purposes of the FLSA and Biden’s agenda to expand worker protections.

Until new guidance issues, employers should look to prior DOL guidance, including its published fact sheet. The DOL provides a seven-factor test that employers can use to guide their analysis.

Additionally, the DOL’s wage regulator and the National Labor Relations Board recently entered into a partnership to collaborate on investigations and share information on potential violations, specifically targeting contractor misclassification and retaliation against workers.

One agency that finds non-compliance can alert the other, potentially incurring additional, compounded liability for misclassification and other wage and hour issues.