The Texas Workforce Commission recommends that employers adopt best practices when hiring temporary employees.
In Texas, temporary employees may qualify as employees of a staffing firm and employees of the client business. Temporary employees have the same rights to fair and equal treatment under the Texas labor laws that regular employees have. The client company and the staffing agency must comply with the state's wage and hour laws. Texas law distinguishes between employees hired through staffing agencies and employees hired directly by employers.
Importance of Categorization
Texas is one of the few states that does not require employers to provide their employees with workers' compensation insurance. However, employers may have to provide benefits if their employees sustain work-related injuries and sue them. Employers are also responsible for paying payroll taxes for unemployment benefits to their regular employees. However, employers do not have to pay benefits to temporary employees and independent contractors. Employers who hire employees to work for them without going through a staffing company are liable for their unemployment compensation benefits. Employers who hire temporary workers through a staffing company do not have to pay their unemployment benefits. The Texas Legislature considers the staffing agencies as the employers of their temporary employees.
Independent Contractors
Texas law defines independent contractors as self-employed workers. Employers may hire temporary independent contractors to cover labor shortages or to perform additional services. Employers must avoid certain employment practices that will impute legal liability to them for unpaid wages, workers' compensation benefits and employment benefits. According to the Texas Workforce Commission, "red flags" which indicate independent contractors are actually employees of a company include requiring them to wear company badges, giving them company e-mail addresses, having them sign personnel handbooks, giving them company fringe benefits, inviting them to company events or having them sign non-compete contracts.
Liability for Wages
The Texas Workforce Commission is responsible for ensuring employers within the state comply with the state's wage and hour laws. If the Texas Workforce Commission finds the staffing company was merely responsible for "payrolling" or compensating temporary employees, and the employer attempted to evade the Texas wage and hour laws by shifting responsibility to the temporary staffing agency, the Texas Workforce Commission can require the client business to pay back wages and benefits.
Best Practices
The Texas Workforce Commission recommends that client companies adopt best practices to ensure they are not held accountable for wage claims filed by temporary employees. The Texas Workforce Commission recommends that employers require temporary employers to fill out employment paperwork with their staffing agencies before hiring them, ensure their benefits and paychecks are paid directly by the staffing agency, request that their temporary employees sign forms acknowledging the staffing agency as their employer and require that staffing agencies complete necessary tax forms and pay unemployment benefits as necessary.
Considerations
Since state laws can frequently change, do not use this information as a substitute for legal advice. Seek advice through an attorney licensed to practice law in your state.
