Hiring Temps, Permatemps and Staffers

Employers have a number of options when it comes to hiring. Temporary workers are a good option, but there are some snags.
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By Althea Chang

Employers, especially small businesses, are increasingly looking for temporary, contract and seasonal workers, according to the Bureau of Labor Statistics.

These days it pays to understand how the system works. Sometimes, it makes more sense to avoid temp workers. And the same is true for the workers themselves.

"When the economy is down, employers are more likely to use questionable employment practices," says David West, executive director for the Center for a Changing Workforce, an organization providing policy analysis on employment issues.

Here are a few things employers and employees ought to consider before committing themselves.

1. Securing health insurance:

Not many companies offer health benefits, or any benefits for that matter, says John Challenger, of executive search firm Challenger, Gray and Christmas.

Temp agencies and staffing firms are often used to fill temporary posts, especially lower-paid positions. The staffing firm is technically considered the employer, and they don't have to offer benefits, West says. That can save as much as 20% of a salaried position.

Some companies, such as

Starbucks

(SBUX) - Get Report

,

Walgreens

(WAG)

and

UPS

(UPS) - Get Report

are known for generous benefit plans even for part-timers. That's how they keep employees loyal. Small businesses may not need loyalty for short-term positions.

Workers with special skills may be able to negotiate for a better benefits package, says Challenger. So make sure an employee is worth the extra money.

2. Saving for retirement:

Employers don't have to offer a retirement plan. Workers can open an IRA.

3. Beware of non-compete agreements:

Small businesses ought to consider requiring workers to sign a non-compete agreement, promising they won't take a similar job at a competitor for a certain amount of time.

Such an agreement may be a hindrance, so only force the issue if it's necessary.

4. When to avoid temps:

Some workers who on paper are considered temporary or contract workers have been at the same job for years. They're known as permatemps, and they may go years without health, retirement and other benefits. Small businesses may want to bring on workers as full-time staff if they end up working out. It may benefit you in the long run.