*This story was originally published in the October 2017 issue of Marijuana Venture, on sale now at a store near you.
The harvest season is just around the corner and the holiday retail surge is following close behind. Producers and retailers in the cannabis industry, like those outside the cannabis space, may be looking to bridge short-term staffing shortages with temporary or seasonal employees.
These temporary employees can provide companies with flexibility, as well as saving time and money, especially if hired through an agency. But using temporary or seasonal employees is not a magic bullet that relieves employers of all the headaches and exposure that come with hiring people. Employers need to understand both the advantages of using temporary or seasonal employees, as well as the limitations of the temporary employment model.
Fear of Employment
Employing people can be scary. Business owners hear horror stories from speakers at conferences, from reading articles like this one, or from just speaking with other employers.
Lawsuits can cost businesses dearly and employment laws are generally written in favor of the employees. If an employee sues his or her employer for violation of employment laws and wins, that person can often collect not only the actual damages that were suffered, but also penalties and attorney fees which can run into the hundreds of thousands of dollars. On the other hand, even if the employer wins a lawsuit outright, the business still has to pay attorneys. And the law does not provide the employer with an avenue to recover those costs from the losing litigant.
People go into business because they love their product, believe in the community, see a potential for profit or some combination of these reasons. Most employers are not human resources professionals, and they certainly did not start a business because they really just wanted to hire and manage employees. Yet, as operations grow, owners know they need employees to meet demand. Plus, leveraging the work of employees maximizes profits and the return on their sizable investment of time, anxiety, money and effort.
So, workers are a must, but maybe having employees is not. Is there an alternative? It’s usually at this point that a business decides to classify everyone as an independent contractor to avoid the whole employment mess. Unfortunately, this is not a good solution.
Businesses need workers who show up every day to do the same job consistently, as defined by the employer. The law says these kinds of workers are employees, not independent contractors, and businesses cannot legally treat someone as an independent contractor if they are actually employees subject to the employer’s control. Misclassifying employees as independent contractors opens businesses up to significant damages and penalties, so it is not a viable alternative.
The next thought might be getting temporary or seasonal employees from a staffing agency. Some employers might believe the legal requirements would be the temp agency’s problem. After all, agency workers are properly classified as actual employees, meaning, hopefully, they are paid overtime appropriately and the staffing agency pays payroll taxes and unemployment and workers’ compensation insurance premiums properly. However, the mere fact that employees are deemed to be “temporary” or they come from an agency does not mean that the business managing the worker is free from all exposure. Hiring employees on a temporary or seasonal basis has definite advantages, but risk remains.
Long lines on opening day, like this one at Pakalolo Supply in Alaska, influence stores to enlist temporary help.Advantages
The main advantages of hiring temporary or seasonal employees relate to time and cost savings. A business can save significant money by employing temporary or seasonal employees, particularly through an agency. Temp agencies are experts at hiring and they know how to evaluate resumes, conduct pre-employment screening and find the right talent to fit a firm’s needs. Also, many of the agencies handle the administrative tasks associated with employment, including human resources, payroll and withholdings, administration of benefits and maintaining unemployment and workers’ compensation insurance. This alleviates the employer from handling these time-consuming tasks.
Temporary and seasonal employees may also help businesses lower costs and provide less exposure to litigation than “regular” employees. Often, temporary employees are hired for less pay than regular, full-time employees, and businesses are not required to provide temporary employees with the same benefits. That savings, of course, is partially offset by the premium paid to the agency, but it still usually results in a net cost savings.
Hiring employees on a temporary or seasonal basis also helps set expectations and reduces the risk of wrongful discharge claims. According to the U.S. Department of Labor, a temporary employee is one who will be with the employer for less than a year and who has a specific expiration date. Having a set termination date severely undermines temporary employees’ ability to claim they were fired for an improper reason and cuts off their claim for lost wages.
Fired employees tend to search for an improper reason to explain their termination (such as their race, gender or sexuality, or because they complained about something) rather than admitting their performance was lacking. Having a set expiration date for employment reduces the likelihood of hurt feelings and misunderstandings.
Finally, temporary employment allows a business to adjust quickly and flexibly to fluctuations in demand and it provides an opportunity to evaluate an employee’s performance without commitment. If a temporary employee is really a good fit, the business may be able to hire that individual full time after the temporary assignment expires. In an at-will employment state, this “long interview” is of slightly less utility, but it still allows employers to establish the expectation with the employee that the position is short-term and it still provides businesses a chance to hire those workers who really impress.
There are disadvantages and pitfalls that businesses considering hiring temporary employees should avoid. The most important thing employers need to understand is that temporary and seasonal employment does not relieve the employer of its obligations to comply with local, state and federal employment laws. Under almost all applicable statutes and doctrines, both the temp agency and the client employer can be held liable to employees for violations of the law.
The temp agency and the on-site employer are considered “joint employers,” meaning both are responsible for ensuring compliance with the law. For example, if an employee is not paid overtime correctly or is not provided leave to which he or she is entitled, the employee can sue and often recover from both the on-site employer and the temp agency. Therefore, it is very important that the temp agency’s responsibilities, including, potentially, an obligation to indemnify the employer in the event of a lawsuit, are clearly spelled out in the contract for temporary employment services.
As long as the on-site employer understands and abides by its obligations to the employees and delineates the responsibilities and liabilities with the temp agency, using temporary employees mitigates against the risk of employing people.
There are, however, a few additional common pitfalls and disadvantages employers should know. Employers should understand that no matter how unskilled the position being filled, every employee will have to be trained to some degree, which is a drain on resources. Also, having a large contingent workforce can lower worker morale due to the regular turnover and lack of lasting relationships. Finally, employers should be very careful not to change the at-will status of employment. The employer should make the end date of the temporary employment clear. The employers also should not promise any specific length of employment or guarantee that the employee will remain on staff for the specific period of time or through the season. Rather, the employee is employed on an at-will basis, and the only guarantee is that the employment will end on the date specified.
Temporary and seasonal employment continues to grow in popularity among U.S. businesses because of the flexibility and cost savings they offer.
Employers, however, should understand that they still need to properly train temporary employees and not cut corners when it comes to hiring short-time help. Employers who properly understand their responsibilities can, indeed, save significant time and money, but temporary employment can pose a trap for the unwary.
Good luck in the upcoming busy season, and may all those employees be productive and problem-free!
Alex Wheatley is an attorney in the Portland office of Fisher Phillips (www.fisherphillips.com), a national law firm committed to providing business solutions for employers’ workplace legal problems. He defends employers in employment-related administrative claims and lawsuits. He specializes in representing businesses in the cannabis industry to implement effective workplace policies.[contextly_auto_sidebar]