Time to Rethink Arbitrary Tenure Limits for Temporary Workers

Setting tenure limits for temporary workers is not the best way to protect your company from legal issues. Learn exactly what you and your staffing partner should do to reduce legal risks.

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What are tenure limits?

Tenure limits are self-imposed, predefined, length of assignment limitations. There are no federal or state guidelines, and while more than 95% of Adecco clients do not use tenure limits, those who do vary significantly from nine months to 18 months being the average. In addition, some companies choose to offer one-time extensions with the extensions ranging from three months to one-times the original limit.

Why do companies set tenure limits for temporary workers?

Even though there is no specific federal law that governs tenure limits, it is often to prevent legal issues, similar to those that Microsoft once faced.

In December of 2000, Microsoft Corp. agreed to settle a federal lawsuit for $97 million. The lawsuit was filed by employees who claimed Microsoft kept them as temporary workers for years in order to avoid offering them benefits such as health insurance and investment options. Part of the plaintiff’s argument was that they do the same work in the same location as Microsoft’s permanent employees.

Needless to say, this lawsuit sent a ripple effect across the world of work. Informed temporary workers began to fight for treatment equivalent to that of permanent employees. And reactive companies began to further delineate temporary workers from permanent employees via tenure limits, in order to protect their company from similar lawsuits.

What are the problems with tenure limits?

There are two main problems.

There are better ways to prevent legal issues.

Ever since the Microsoft settlement, many companies think that tenure limits protect them from legal problems, but they do not. It is true that if there are tenure limits in place, they are one factor among many factors that deal with co-employment; however, the fact that tenure limits do or do not exist is never outcome determinative. In other words, the law does not shield companies from claims brought by temporary workers simply because companies have tenure limits.

Because of this, and especially because of ever-changing local and state employment laws, the best way to steer clear of legal issues related to direct and co-employed temporary workers is to partner with a staffing company that has a robust compliance program and empowers its team with knowledge and training. These staffing experts can prevent their clients from ending a temporary worker’s assignment for a reason that may run afoul of a local, state or federal law, and know exactly what to do if a temporary worker complains about workplace mistreatment.

Also, after the Microsoft settlement, companies started making so many changes to temporary workers’ terms and conditions of employment (in an effort to treat them differently from their permanent workers) that temporary workers started to feel overlooked. Today, organizations must not only navigate a labor market fueled by optimistic expectations around culture, pay and workplace conditions, they must also traverse obstacles such as attorneys and unions who are dedicated to looking out for temporary workers.

As such, staffing companies and their clients should not only have programs in place to ensure associates are being treated lawfully, but they should also be dedicated to valuing their temporary employees. This means making sure their workers have the tools they need to succeed, fostering their skills, providing performance feedback, and making them feel cared about as human beings. This way, you are minimizing legal risks as much as possible, making tenure limits a secondary concern, and maximizing operational efficiencies.

They serve as a costly form of turnover.

If an organization implements tenure limits simply to separate temporary workers from permanent employees, a result is turnover. When a six-month customer service representative or lab technician reaches the end of their tenure, the company is often left with a hole to fill. Even if an internal talent acquisition team or staffing vendor has a new associate ready to take the position, there is an expensive, time-consuming training need. Depending on the position, training a new hire can cost several thousand dollars. Not to mention, the simultaneous loss in production.

These costs and productivity issues are often magnified for more tenured temporary workers. For instance, if you have a consistent, skilled associated leave after his or her 18-month tenure limit is reached, you are now losing a proven worker laden with the potential to become a permanent fixture and even rise through the ranks. In this case, you must also absorb an otherwise avoidable opportunity cost.

In certain cases, it may be prudent—both from financial and operations perspectives—for some temporary workers to become permanent workers. This is especially true when there is an obvious long-term talent need, and the repeated replacement costs of temporary workers exceed the administrative costs of transitioning a worker to permanent status.

See how much turnover can cost for hourly-paid workers.

What is the ideal solution for your organization?

We already gave it away, but yes, finding an experienced staffing company like Adecco is the ideal solution to not only dealing with tenure limits but managing your contingent workforce in general. By doing this, you will receive the following benefits.

Expertise on removing tenure limits

We have dealt with—and nixed—countless clients’ tenure limits for temps over the last two decades, with no ill effect on their workforce planning efforts.

Accountable team of HR and legal professionals

Like we have alluded to, when you work with Adecco, who has a best-in-class HR staff and an in-house legal team with years of employment law experience, you get these protections.

  • Avoidance of lawsuits – Inconsistent enforcement of tenure limits—or hastily ending assignments on the spot—can make you susceptible to lawsuits. Instead of taking that approach, a proven HR and legal team can ensure you take a law-abiding approach.
  • Adherence to laws – Temporary workers are protected by advancing labor laws. There are laws around wages and workplace conditions, along with the Affordable Care Act (ACA) and Employee Retirement Income Security Act (ERISA). The latter two mandate that employers offer “common law employees,” including temps who reach certain hour thresholds, health benefits and retirement plans.
  • Less turnover – Like mentioned above, tenure limits = turnover. In today’s candidate-driven labor market, why would you enforce tenure limits to put you and your staffing partner in a compromised position where you must find yet another qualified worker?
  • Measurable cost savings – By reducing turnover, you can avoid recruiting and training costs and maintain productivity. We can even measure the effect and show you your return on investment.

Final Thoughts

It is time to evaluate how you are using, or plan to use, tenure limits. If you implement them only as a means of delineating temporary workers from permanent employees—with little attention paid to changing labor laws, and no consideration for turnover—they will likely do more harm than good.

Additionally, we cannot emphasize enough how much it would behoove your company to work with a staffing company that not only finds your temporary talent, but also helps manage talent in a co-employment situation—taking over the administrative and compliance headaches so you can focus on your day-to-day.

Today’s employer-employee relationship is far too complex and risky to tackle on your own. Does your company have the support it needs?

If you have any questions or concerns about managing your contingent workforce, we’re here to help.

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