What is a Temp Agency Contract Template?
Temp agency contract templates are pre-drafted documents that outline the key terms and conditions of a temporary employment relationship between an employer and a temp agency. These templates provide a framework for how the agency will match and place workers with the employer, and the terms under which the temp workers will be compensated for their work. The primary purpose of a temp agency contract template is to help ensure consistency and fairness for both the employer and the temp agency in this relationship.
Employers who use temp agencies must maintain a relationship with the agency . Typically, the employer pays a fee to the agency for each worker placed with the company, and the agency is responsible for the payroll and any withholdings or taxes for the worker. In return, the agency will assign a temp employee for a period of time to the employer for use for the particular job.
Temp agency contracts are essential to ensure that both the employer and the agency understand their rights and obligations. In addition, it should set out the basis of compensation for the temp employee including payment for overtime and breaks. The contract should also contain a variety of other terms.
Essential Elements of a Temp Agency Contract
A number of critical components should be considered for inclusion in the template contract. First and foremost, the document should clearly lay out the specific duties and responsibilities of the temp agency employee. It should also specify the duration of the employment under the temp agency contract. Although employment with a temp agency is typically at will, the parameters of the contract should also be described. The payment terms for services rendered should be provided in detail, including the hourly or weekly rate. In addition, the document should contain a confidentiality agreement to protect certain information about the business from the prying eyes of the temp agency employee. Finally, clarification of the respective obligations of the client and the temp agency is essential to the preparation of a solid temp agency contract template.
Legal Aspects of Temp Agency Contracts
There are a number of legal considerations to consider when drafting the terms of a temp agency contract. First and foremost, the employee needs to be properly classified as an independent contractor. If they are not, the employer could be liable for a number of different financial penalties under a number of federal and state laws. This includes the employer matching the taxes that the employee would have paid had the relationship been one between an regular employee and employer, worker’s compensation costs, unemployment insurance costs, etc.
Second, Rules of the Fair Labor Standards Act (29 U.S.C. 201 et seq.) must be followed. Per this Act, it is tenants to classify the temp as an independent contractor if they pay him or her overtime, deduct income or social security taxes from his or her paycheck, or treat him or her like an employee in any way. Lastly, the contract must be clearly defined and not filled with ambiguous terms that could make the contract itself null and void.
Advantages of Employing a Temp Agency Contract Template
Employers that use a contract template for temporary staffing will undoubtedly save both time and money. A consistent and reliable temporary staff contract template will reduce the time spent by employers on the administrative tasks associated with hiring temporary employees. Employers will be further benefitted by a contract template being generally more consistent and comprehensive than a non-standard temporary employee contract. The consistency of the contract template is beneficial in that it allows a company to bind its practices and policies on both its temporary staff and its regular employees. Moreover, most contract templates will be reviewed and approved by lawyers, reducing the employer’s legal risk and liability.
Customizing Your Temp Agency Contract Template
While the use of a template agreement is a great start, it is important for the document to be tailored to the specific needs of your business. To start with, the employer should:
• Consider whether there are other clauses that need to be included in the agreement:
o Termination – You should not be tied to one agency for multiple years if you don’t want to be. Therefore, the agreement should allow the employer to terminate at-will upon notice.
o Confidentiality – If the employees hired by the agency will have access to the employer’s confidential information, the confidentiality provisions in the template should be expanded to provide greater protection. Likewise, when an agency employee is permitted to use the employer’s computers or network, the employer should be sure to address the admissibility of their incidental use—not the agency’s technology but the agency worker’s technology.
o Non-Solicitation/Non-Recruit – The employer should consider adding non-solicitation/non-recruit clauses as well if they do not already appear in the agreement.
• The employer should also consider whether there are provisions in the agreement that need to be stricken:
o Indemnification- the agency should be solely responsible to indemnify the employer if it does not pay its taxes or withholdings . If the employer is actually providing the services, rather than an agency worker, the agency should be solely liable for worker injuries or claims.
o Liability- Check the state laws to see which party is liable for worker injuries. Many times state laws prohibit shifting all liability for workers’ injuries to an agency. This is a good example of the need for customization.
• Once the legal provisions are squared away, the employer should consider whether the following commercial terms work for its business:
o Rate- how much is the employer willing to pay for its employees?
o Term- how long will the employer use the agency and how will extensions be handled?
o Date of hire- when will the agency employee become the employer’s employee? What type of temperature conversion will be used and how will that affect the rate increase?
o Rates and Benefits- How much will the employer have to pay in order for its agency employees to receive any benefits? Will those benefits be misclassified (e.g. will the agency’s health insurance be considered a group health plan)?
Common Errors To Avoid
Most commonly, clients of temp agencies overlook that both the agency and the client are potentially liable for the actions of the temporary employee. They tend to focus more on whether the temp can do the work and whether the temp agency is infallible. The reality is that if they go to trial, juries tend to think the two are one in the same. In trying to prevent liability, temp agencies often fail to address casual or social interaction between their temp and the client’s permanent employees. We have seen many times an individual at the client site who is not working with the temp invite the temp out for drinks after work, or even take the temp to lunch since they happen to be going there that day themselves. While this is seemingly harmless, it causes a significant amount of damage to the agency’s and the client’s liability defense in the event that something happens on that outing – you can bet the plaintiff’s attorney would love to use this as a weapon against both. This is why the temp agency must be aware that it does not allow or even encourage its employees to socialize with clients’ permanent employees. Now in many cases, the temp and the client’s employee become friends through their temporary arrangement and they go out after work. There is no way, however, to control what people may do. The agency could take the temps’ cell phones, the client could stop the temps from having any interaction with the client’s employees, etc. The best way to protect clients and agencies when a client insists on taking the temp out is to stipulate in the agreement that any interaction outside of the work-related duties is at the permanent employee’s own risk and that neither the temp agency nor the client is liable for any injury that occurs.
Where to Obtain Trusted Temp Agency Contract Templates
Just as with any other contract, there are numerous places you can go to for good, sound information to help you make an informed decision about whether your temp agency contract is ok.
A good place to ask for a temp agency contract sample is the Society for Human Resource Management website. They have a large number of samples for numerous topics, including records retention, hiring and firing, and not surprisingly, a temporary agency contract.
Another good, free source of good material on employer’s issues in general, but especially regarding the workplace, is Findlaw. They are not only a leading law publisher, they have an entire section devoted to employment law news. They provide good content to background issues such as why should you have a written salesperson commission plan (Specifically talking about a temp agency salesperson). Once again, they have a sample for you to use as a temp agency contract.
A paid-up service for sample forms (including temporary employee issues) is used by many employers. The site is very user friendly, including a search feature. Whether you type in temp agency or temporary employee, I got the same results . This site offers approximately twenty different temporary employment agreements to choose from. Plus, you’ll get the benefit of the "members only" section of the site, which is regularly updated.
Another excellent source for reliable, dependable material regarding employment law issues is the American Bar Association. They have a business section, specifically saying that membership in the ABA business section provides members with access to a vast array of networks, discounts and benefits. I found a temp agency agreement to view, along with 1,000s of other fine samples. Plus they too will send you an email roughly once a day telling you that there’s just a great new resource for members.
The HR World is another good resource to find a temp agency contract. They have several templates to choose from, and have great links too.
Just remember, regardless of the quality of the form or the source for where it came from, you will still need to carefully review all of the language and make certain it fits exactly what you are looking to do. And if the contract is too complicated, hire a lawyer, but not me.