Permatemp is a United States term for a temporary employee who works for an extended period for a single staffing client.
In the United States, these agencies are required by the US Internal Revenue Service (IRS) to pay the employer portion of Social Security and Medicare taxes (FICA) and Federal Unemployment Tax (FUTA) in accordance with IRS Publication 15A.
Misclassification of employees can lead to severe tax liabilities (IRS PUB 15 Circular E) and civil penalties as in the case of Vizcaino v Microsoft.
In addition to their wages, they may receive benefits, such as subsidized health care, paid vacations, holidays, sick time, or contributions to a retirement plan.
Even when employment is "at will," regular employees of large outfits are sometimes protected from abrupt job termination by severance policies, like advance notice in case of layoffs, or formal discipline procedures.
These public sector cases generally involve violation of ordinances or rules limiting the length of service of such workers.
In an Albuquerque, New Mexico, case[citation needed] a federal district judge ruled that an employee who worked full-time for the City of Albuquerque for more than ten years as a "seasonal" supervisor and recreation leader (never earning more than $7.00 per hour and with no benefits) might have had a "property interest" in his employment such that he could not be terminated without a hearing.
Most recently, General Motors and its subsidiary, Delphi, announced plans to rely on temporary employees.
In 1996, a class action lawsuit was brought against Microsoft representing thousands of current and former employees that had been classified as temporary and freelance.
In other words, a plan need not adopt or incorporate the common law definition of an employee in delineating the scope of its coverage.
Simultaneous with Vizcaino, the United States Internal Revenue Service issued a ruling that Microsoft owed millions of dollars in payroll taxes.
As a result of the legal and tax rulings, human resources organizations at many companies changed their policies towards temporary employees.
Other companies have created policies stating that temporary workers can be assigned to only specific projects that last just a few months.
The IRS continues to warn many companies they may owe employment taxes for their temporary workers and employee lawsuits over temping repeat the same arguments.
Due to the 365-day rule, high value contractors (typically in IT) who choose to accept the risk of not receiving benefits and of contract termination in exchange for higher hourly rates are forced out of standard business relationships.
Other critics note that the constant job turnover mandated by human resources department policies has the effect of increasing the unemployment rate, which has led to wage deflation in fields with large numbers of permatemps.
In the wake of employee lawsuits, most companies have not increased hiring of staff in positions typically held by permatemps.
[1][2] Frequently permatemps are highly skilled, excellent workers, particularly in the IT field,[citation needed] but are still not allowed to participate in company events or receive bonuses for work well done.
Depending on the staffing firm and corporation policies, permatemps may discover themselves in one of several positions, all of which require the same level of work from them as from their coworkers: Comprehensive Employment and Training Act