Hiring Temporary Employees In Today's Economy

In today's economy, small business owners need staffing flexibility more than ever. Not only are temporary employees a way for your business to deal with economic swings, workers themselves are also more interested in temporary positions. If you're hiring temporary employees for the first time or just need tips for managing the new post-pandemic environment, here's what to consider.

Standards for hiring a temporary employee

Temporary employees are those that you hire for less than a year. Seasonal workers who only come in for a specific period, like during the summer, are a common type of temporary employee.

Temporary employees could work part-time or full-time during this stretch. The key feature is that their contract has a set end date. This contrasts with ongoing part-time employees who may work fewer hours per week, but their contract doesn't have a set expiration date.

Another key feature for temporary employees is that you usually hire them for fewer than 1000 hours total in a year. The reason for doing so is that once they work more than 1000 hours, they start becoming eligible for workplace benefits like your retirement plan. You typically want to keep temporary employees off benefits to reduce your overall costs.

When it comes to payroll, temporary employees are still W-2 employees, which means you need to manage their tax withholding. In exchange, you have more control over their work and schedule versus hiring freelancers or independent contractors.

How the pandemic changed hiring

The COVID-19 pandemic showed just how quickly economic conditions can change. When the lockdowns went into effect, many small business owners were stuck with too much staffing overhead, putting them in a tough position where they had to consider layoffs.

On the other hand, once the economy reopened and demand picked up, those who only looked for long-term employees may have been too slow to staff up again, missing out on sales and growth during the rebound. By having some of your workforce as temporary employees, you stay flexible and can scale your business up and down more quickly.

Workers are also showing more interest in temporary roles. Millions are moving across the country post-pandemic and could use short-term jobs as they get settled. In addition, the rise of remote work has expanded the type of jobs that make sense for temporary staff. It's no longer just for blue-collar work as professionals could also be interested, especially if they can work remotely.

Hiring seasonal temporary employees

Temporary/seasonal workers are especially popular during the summer and winter months. 2022 is shaping up to be a boom for small businesses, especially for those in hospitality and tourism. Demand for vacations and travel is extremely high as people make up for the trips they couldn't take during the pandemic. This is all happening at a time when the economy is already running hot, with high inflation.

On the other hand, this boom may not last forever, with many economists expecting a possible recession in 2023. By hiring temporary employee(s) for this stretch, you can take advantage of the high summer demand now while keeping your options to cut back should the economy slow down in the future.

Tips for hiring temporary employees in today's economy

Streamline your process for hiring temporary employees

Temporary contracts are meant to be quick for both sides. These employees don't have the patience for an extensive interview and onboarding process. While you should still vet for candidate quality, keep interviews short and efficient. You should also make sure that the job will begin soon after you meet. If you spend too much time thinking, these workers could move on to their next offer.

Keep an open mind for these types of employees

In today's tight labor market, employers should keep an open mind for who they hire. Companies are hiring teenagers, between 16-19 years old, at the highest rate in over a decade, according to the Pew Research Center. Teenagers could be especially useful as summer temporary staff when students are out of school.

On the other end, retired Baby Boomers are re-entering the workforce now that it's safer and to deal with higher retirement costs from inflation. However, they also may prefer short-term temporary work, like to make money before they head to their Florida snowbird home, versus the strain of a full-time position. As you consider a wider range of workers, here's how to manage generational differences in the workplace.

Beware of compliance risks

Different tax and compliance rules apply depending on whether you're hiring temporary employees, full-time employees, or freelancers/independent contractors. If you misclassify a worker and treat them as the wrong group, it could lead to government fines and penalties.

As you expand your workforce to different types of employees, your payroll taxes could become more complicated. A payroll app, like Roll by ADP, can help you manage everything properly.

Consider faster payroll options

Workers have gotten used to being paid instantly thanks to gig economy jobs like Uber and DoorDash, which pay as soon as someone finishes a shift. If you're only hiring someone for a few weeks, they might not be pleased to hear that their paycheck only comes out once or twice a month. Anything you can do to speed up payment could improve your hiring. For example, giving employees paycards which you load up more frequently, even at the end of each daily shift.

Watch for full-time talent

A temporary contract is a chance for you and the employee to get to know each other. If you see someone talented who likes working for your business, be prepared to make them a full-time offer.

In today's uncertain times, temporary staff can keep options open for your small business. For more information on managing your employees and payroll, check out the Roll by ADP blog.