Are Employees of Temp Agency Your Employees?

[Lynn Campbell]

Dentist client uses temp service, but the service requires that all temps be on the Dentist's payroll from day 1. The Dentist withholds taxes, pays FICA etc. Dentist pays the agency a fee each month for these temps. If one of these temps is hired by the Dentist on a permanent basis, what is the date of hire?

[Guest]

I think the first day they were on payroll is the first day they were employees. Under common law employment rules, Why would it be anything different?

[KIP KRAUS]

I agree with dsilver, and in my opinion if these temps. meet any of the dentist's eligiblity rules for benefits, they should be put on the benfits, unless temps. are specifically excluded.

It sounds like the temp. agency has already figured out how to avoid any responsibilities to provide benefits to people they place with employers.

[Guest Derrin Watson]

You may want to check out some of my Q&A's in my Who's the Employer column here at http://www.benefitslink.com/qa_columns/who...yer/index.shtml

I have several that relate to the question of whether the staffing firm or their client is the employer under common law. These issues are discussed in more detail in Chapter 4 of my book, Who's the Employer?.

Generally, I think that of all the various flavors of staffing firms, temp agencies have the best shot at having their workers regarded as common law employees of the temp agency. I also note that in the 1940s the Supreme Court decided that employer status as between two possible employers was not determined by the agreement between the two of them, but rather by normal common law principles.

It is impossible to give a hard and fast rule, because there are many varieties of arrangements. You have to look at all the facts and circumstances. It is entirely possible that the temp agency is absolutely right in their treatment of things. It is also possible that they are dead wrong. Unfortunately, to administer a plan, particularly if you have a worker who satisfies the eligibility requirements, you have to determine which it is, or have an attorney or the IRS do so.