Permatemp

Permatemp is a United States term for a temporary employee who works for an extended period for a single staffing client. The word is a portmanteau of the words permanent and temporary.

It can also describe a semi-permanent structure or structural repair.

There are two types of permatemp employment relationships. In the first form, a public or private employer hires employees as "temporary" or "seasonal" employees, but retains them, often full-time for year after year, often with less pay and without any benefits. These employees often do the same work as permanent employees, but without the same pay, benefits, and labor rights. The second kind of permatemp is an employee of a staffing service provider, payroll agency or Professional Employer Organization, which sends workers to work in a long-term, on-site position for a private company or public employer. The employee is paid by the staffing service provider or agency rather than by the primary employer.

In the United States, these agencies are required by the US Internal Revenue Service (IRS) to pay the employer portion of Social Security and Medicare taxes (FICA) and Federal Unemployment Tax (FUTA) in accordance with IRS Publication 15A. U.S. leasing organizations are also required to provide employees with health coverage by the United States Department of Labor, the requirements of the health care offered will change in 2014 to comply with the Affordable Care Act (ObamaCare). Long-term full-time leased employees in the U.S. may also be offered a retirement benefit package with a minimum (leasing) company contribution of at least 10%, IRS Form7003.

Definition

Traditionally, a temporary employee is hired to substitute for an employee who is on leave or vacation or to staff a project for which there are insufficient permanent employees to carry out the task. A seasonal employee is hired for the limited time because the work is necessary only for a certain part or season of the year. The normal practice of temporary employment for an agency is one in which the employees have a close relationship with the agency from which they receive their pay. Their work may range from day labor to high-priced consulting. The employee may work for one or several companies, and the working periods may be for days or months at a time, but the working periods often come about irregularly.

"Permatemps" are often distinguished from temporary employees by working for the same company for a long, possibly indefinite amount of time, working the same schedules and hours of regular employees, and by requirements such as "company" training or required attendance at "company" meetings. This is where many Leasing Agencies in the U.S. run afoul of the IRS and US Department of Labor. The IRS, in an effort to close loop holes which allow companies to hire temporary employees and thus avoid federal employee taxes have created a very clear definition of a "Common Law Employee" versus a "permatemp". The IRS definition of a common law employee rests on who actually controls the work done by the leased employee. IRS Publication 15A explains "Under Common Law Rules anyone who performs services for you is generally your employee if you have the right to control what will be done and how it will be done...What matters is you have the right to control the details of how the services are performed". IRS 15A also defines the role of staffing services with "The staffing service has the right to control and direct the worker's services for the client, including the right to discharge or reassign the worker. The Staffing Service hires the workers, provides them with unemployment insurance and other benefits, and is the employer for employment tax purposes." Further clarification for U.S. employees can be found in IRS Publication 15A Section 2. Misclassification of employees can lead to severe tax liabilities (IRS PUB 15 Circular E) and civil penalties as in the case of Vizcaino v Microsoft. Furthermore, if a "permatemp" actually qualifies as a common law employee, they are entitled to the same fringe benefits their co-workers receive either after one year or after the qualification standard set for regular employees, IRS Publication 15B.

Legal issues in the United States

Arguments have been made that when a worker is actually employed full-time, year round, but called a temporary or seasonal employee, the employee is being exploited by being denied the wages, benefits, and employment rights enjoyed by other employees. While it is unknown how common this kind of situation is, class action lawsuits have been decided against Seattle, Washington and King County, Washington. These public sector cases generally involve violation of ordinances or rules limiting the length of service of such workers.

Two California cases address the issues of public employees who were improperly considered "temporary" when they were actually employed as regular, permanent employees. The first case involves the Los Angeles County Fire Department; the second such case concerns the employment practices of the Metropolitan Water District of Southern California. These cases are both class action lawsuits that have been litigated over a number of years. Both cases are near, or in the process of, being settled.

In an Albuquerque, New Mexico, case a federal district judge ruled that an employee who worked full-time for the City of Albuquerque for more than ten years as a "seasonal" supervisor and recreation leader (never earning more than $7.00 per hour and with no benefits) might have had a "property interest" in his employment such that he could not be terminated without a hearing. The judge also certified a conditional class of "similarly situated" city employees employed as temporary or seasonal employees in violation of City ordinances, which limited temporary employees to two years and limited seasonal employees to nine months or less each year.

Staffing through temporary agencies became common in the Silicon Valley technology companies. Permatemping came into vogue simultaneously with the

Legal changes

As a result of the legal and tax rulings, human resources organizations at many companies changed their policies towards temporary employees. Microsoft, for example, decreed that an individual could not be a temp for more than 364 days, and that individuals must be separated from Microsoft for more than 100 days between temporary assignments with the company. Other companies have created policies stating that temporary workers can be assigned to only specific projects that last just a few months. Individuals are often prohibited from taking back-to-back assignments within an agency client company.

When a company requires a break in service of its permatemps, the result is often that those employees regularly cycle between two companies instead of having back-to-back assignments. Other permatemps plan for personal breaks and simply use the time as vacation. In most cases, they are eligible for unemployment insurance as long as they nominally look for work. This form of permatemping may be attractive to those not wanting a steady, full-time, or year-round position, or not wanting to be committed to one position or one employer.

Another arrangement to avoid long-term serial temporary assignments is to "in-source" the work to be done, and not the position that does the work. In this arrangement, a company does not hire a staffing firm to fill a position, but rather hires it to do the work. The staffing firm still must hire the permatemp to do the work, still on-site at the corporation.

Some of these alternative arrangements barely differ from the pre-Vizcaino format for permatemping. Laws and legal rulings continue to define the permatemp-employee relationship. The IRS continues to warn many companies they may owe employment taxes for their temporary workers and employee lawsuits over temping repeat the same arguments.

Due to the 365-day rule, high value contractors (typically in IT) who choose to accept the risk of not receiving benefits and of contract termination in exchange for higher hourly rates are forced out of standard business relationships.

Culture

In Microsoft's corporate culture, the presence of permatemps created a caste-like system.[1]

Many corporations hire temporary employees to do work they deem low-skilled or unimportant. Permatemps hired to do that work may not get the resources that a regular employee would. Permatemps might be forced to share office space, cubicles or phones when regular employees have their own. Employee badges for permatemps might be a different color, and permatemps may be recognized in the corporate e-mail system by dashes or other identifiers appended to their login ID. By declaring positions filled by permatemps to be low-skilled and making it easier for regular employees to identify their co-workers who are permatemps, companies create a sense of elitism in their regular employees. Permatemps, as a group, might be known by epithets such as "dash trash" (referring to an identifier and a dash prepended to an email user account) and Microsoft employees were referred to as "Blue Badges".[1][2]

Frequently permatemps are highly skilled, excellent workers, particularly in the IT field, but are still not allowed to participate in company events or receive bonuses for work well done. If they earn over the

See also

• Employment agency
• Independent contractor
• Independent contractor-employee distinction
• Labour hire
• Temporary work
• Contract attorney

External links

• IRS definitions of employer relationships, including common law employees.
• Seattle Post-Intelligencer summary Microsoft "permatemps" win
• Washington Alliance of Technology Workers, a permatemp rights organization.
• Center for a Changing Workforce, a research and policy organization on permatemps, nonstandard employment, and health insurance.
• Boralnd, John. "Microsoft 'permatemp' checks finally arrive". CNet News. October 21, 2005
• Ninth Circuit Court of Appeals Opinion dated May 12, 1999, by Tech Law Journal.