Yes, We Understand That You Do Not Want To Pay Overtime

You just got the perfect temp person in place and things are going great. You received your first bill and it includes a line item for overtime pay. What? You didn’t know that you would be charged overtime. The truth is, a staffing company has no choice but to do it.

The Fair Labor Standards Act requires most employers to pay overtime to nonexempt employees who work more than 40 hours in a week. That rule applies to staff who work for the company directly as well as staff who are employed through a third-party agency.

If you’re thinking “My last staffing company did not charge overtime,” actually, they probably did, or else they were breaking the law. While there are certain exemptions, there are very few ways around the overtime requirement.

When temps go through a staffing company, your business gets some protection in that the staffing company is claiming them as their employee. So the IRS will not look at your business as being a co-employer.

What if you hire an independent contractor or have a temp service find independent contractors for you? In this case, certain criteria must be met to prove that the worker is truly independent. The best example is when you hire a plumber. They show up when it fits their schedule. They bring their own tools. You don’t tell them how to do their job because they already know. And you usually get a bill that’s based on an estimate. The government looks to see that each of these criteria are met before agreeing with you that this person is not simply an employee by another name.

To keep things simple, we find it’s best for businesses to avoid having their temps work more than 40 hours in a week. Maybe you or your employees can pick up the slack if you have busy periods once in a while. If you truly need temps to work overtime in your business, have a conversation with your staffing firm about it so that you know what to expect. Typically it is not that much of an added expense for a job well done.

 

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