Permatemp

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Permatemp is a portmanteau of the words permanent and temporary. There are two types of "permatemp" employment relationships. In the first form, a public or private employer hires employees as "temporary" or "seasonal" employees but retains them, often full-time for year after year, at low wages and without any benefits. These employees often do the same work as "permanent" "classified" employees, but without the benefit of being officially employed by the company where they work. The second kind of "permatemp" is commonly an employee of a third-party payroll agency or other employer, who sends workers to work in a long-term, on-site position for a private company or public employer. The employee receives pay and (sometimes) benefits from the agency, rather than from the primary employer. Such employees are frequently referred to as contractors.

Contents 1 Definition 2 Legal issues 2.1 Vizcaino v. Microsoft 2.2 IRS tax rulings 3 Changes 4 Permatemp job stability 5 Permatemp culture 6 External links 7 Notes

[edit] Definition

Neither of these forms of employment is traditional. A truly "temporary" employee is just that, "temporary." Often such an employee is hired to fill in for an employee out on leave, or to substitute for someone who is ill. Similarly, a "seasonal" employee will normally be hired for a limited time, such as a lifeguard, hired for the summer. The normal practice of temporary employment for an agency is one in which the employees have a close relationship with the agency from whom they receive their pay. Their work may range from day labor to high-priced consulting. The employee may work for one or several companies, and the working periods may be for days or months at a time, but the working periods come about irregularly. Temporary agencies may or may not provide benefits (such as subsidized health care) to their employees. However, it is relatively common for such workers to draw higher pay in exchange for the benefits afforded to the regulars.

Regular, "permanent" employees work for a single employer, and are paid directly by that employer. In addition to their wages, they often receive benefits like subsidized health care, paid vacations, holidays, sick time, and contributions to a retirement plan. Regular employees are often eligible to switch jobs within their companies. Even when employment is "at will," regular employees of large outfits are generally protected from abrupt job termination by severance policies like advance notice in case of layoffs or formal discipline procedures. They may be eligible to join a union, and may enjoy both social and financial benefits of their employment.

The use of permatemps generally thought to be the most abusive, results when a worker classified as "temporary" works alongside regular employees doing similar work for a long period, and by claiming that the employee is only temporary, the employer avoids paying for benefits and employment taxes. The employer also tangentially benefits because it has no responsibility to the employee--permatemp employees can be fired or laid off at any time, as they have no career service protection or seniority. Policies regarding temp workers tend to differ between companies, and range from being regarded as abusive to little different from policies applied to the regular employees. At some companies, temporary employees are ineligible to apply for jobs open to regular employees. On the other hand, other companies use temp arrangements to "test drive" prospective employees. At the end of the contract period, good workers can be retained for another contract period or hired as regular employees, and underperformers can be let go with minimal proceedings.

When a staffing agency is involved, the permatemp may have little relationship with the agency that employs him. The staffing firm may have a national contract with the worksite company. Although the staffing company may be thousands of miles from the job location, it can find job candidates to fill positions through Internet job websites, with interviews occurring over the phone and paperwork filed via fax machine or e-mail. It is not uncommon for a permatemp to never actually meet anyone at the staffing company.

The staffing firm provides a wage to the employee, but may or may not provide any benefits. Often, if benefits are offered, they come at a direct decrease in the pay rate. In order to pay the employee, the staffing firm receives money from the worksite company at an agreed upon bill rate, which can be 50 to 100 percent higher than the pay rate. Bill rates are rarely disclosed to the employee, and the staffing firm may in fact be contractually prohibited from disclosing it.

[edit] Legal issues

When a worker is actually employed full-time, year round, but called a "temporary" or "seasonal" employee, the employee is being exploited by being denied the wages, benefits, and employment rights enjoyed by other employees. While it is unknown how common this kind of exploitation is, two cases, one involving the City of Seattle, Washington, the other involving King County, Washington, have resulted in two class action lawsuits and settlements for substantial amounts. These public sector cases generally involve violation of ordinances or rules limiting the length of service of such workers.

Two California cases address the issues of public employees who were improperly considered "temporary" when they were actually employed as regular, permanent employees. The first case involves the Los Angeles County Firefighters; the second such case concerns the employment practices of the Metropolitan Water District. These cases are both class actions that have been litigated over a number of years. Both cases are near, or in the process of, being settled.

In an Albuquerque, New Mexico, case a federal district judge has recently 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) had a "property interest" in his employment such that he could not be terminated without a hearing. The judge also certified a conditional class of "similarly situated" City employees employed as "temporary" or "seasonal" employees in violation of City ordinances, which limited "temporary" employees to two years and limited "seasonal" employees to nine months or less each year.

Staffing through "temporary" agencies became common in the Silicon Valley technology companies. Permatemping came into vogue simultaneously with the economic bubble of the 1990s. Most recently, General Motors and its subsidiary, Delphi, have announced plans to rely on temporary employees. Whether these will be long-term temps, or permatemps, remains to be seen.

General Motors has used "permatemps' for a long time in its lowest management level, Level 6 Supervisor, under a national contract with Kelly Services.

One legal issue and one tax issue, both having to do with permatemps at Microsoft, defined permatemping and also changed it.

[edit] Vizcaino v. Microsoft

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." The monetary value of the suit was determined by how much the misclassified employees could have made if they had been correctly classified and been able to participate in Microsoft's Employee Stock Purchase Plan. The case was decided on the basis that the temporary employees had had their jobs defined by Microsoft, worked alongside regular employees doing the same work, and worked for long terms (years, in many cases).

The case and subsequent appeals were heard in the United States Court of Appeals for the Ninth Circuit. Before a final ruling could be issued, Microsoft settled the case for $100 million. The Microsoft permatemps collected their money almost 10 years later.

[edit] IRS tax rulings

Simultaneous with Vizcaino, the United States Internal Revenue Service issued a ruling that Microsoft owed millions of dollars in payroll taxes. The IRS determined that permatemp employees were common law employees of Microsoft and the staffing firm's role was simply that of payroll processor.

See also: IRS Reclassification

[edit] Changes

As a result of the legal and tax rulings the human resources organizations at many companies changed their policies towards temporary employees. Microsoft, for example, decreed that an individual could not be a temp for more than 365 days, and that individuals must be away from Microsoft for more than 100 days between temporary assignments. Other companies have created policies stating that temporaries can only be assigned to specific projects that last just a few months. Individuals are often prohibited from taking back-to-back assignments within a company.

When a company requires a break in service of its permatemps, the result is often that those employees regularly cycle between two companies instead of having back-to-back assignments. Other permatemps plan for breaks and simply use the time as vacation. In most cases they are eligible for unemployment insurance as long as they nominally look for work. This form of permatemping may be attractive to those not wanting a steady, full-time, or year-round position, or not wanting to be committed to one position or one employer.

Another arrangement to avoid long-term serial temporary assignments is to "in-source" the work to be done, and not the position. In this arrangement, a company does not hire a staffing firm to fill a position, but rather hires it to do the work. The staffing firm still must hire the permatemp to do the work, still on-site at the corporation.

Some of these alternative arrangements barely differ from the pre-Vizcaino tradition of permatemping. Laws and legal rulings continue to define the permatemp-employee relationship. The IRS continues to warn many companies they may owe employment taxes for its temporaries and employee lawsuits over temping repeat the same arguments.

[edit] Permatemp job stability

In many surveys, those in permatemp situations readily state that they would prefer to be regular employees of the companies they work for. Not all permatemps agree with this, however--many enjoy the on-again/off-again lifestyle and do not need the guarantee of a stable income.

Some permatemps also disagree on the effectiveness of lawsuits and new laws to regulate hiring. Even those who would prefer to be regular employees recognize that the policies instituted after lawsuits make their employment less, not more, stable. Before Vizcaino, many Microsoft permatemps could be certain they would find a new assignment at the end of a project, but mandatory breaks put arbitrary deadlines on how long they can work a new assignment.

Other critics note that the constant job turnover mandated by HR 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. In fact, rather than risk lawsuits, many firms have decided not to hire within their own country at all, instead turning work formerly done by their pools of permatemps over to outsourcing firms in other countries.

[edit] Permatemp culture

In corporate culture the presence of permatemps creates a caste system. That permatemps had socially integrated into the corporate culture and that the company had included permatemps in morale events and gift giving was evidence both in Vizcaino and to the IRS that permatemps were common-law employees. Policy enforcement that now restricts permatemps from participating in morale events, employee social clubs, and the like create a second class division between regular employees and permatemps.

Many corporations do not hire regular employees to do work they deem low-skilled or unimportant. Permatemps hired to do that work may not get the resources that a regular employee would. Permatemps might be forced to share office space (or cubicles) and phones when regular employees have their own. Employee badges for permatemps might be a different color, and permatemps may be recognized in the corporate e-mail system by dashes or other identifiers appended to their login ID. By declaring positions filled by permatemps to be low-skilled and making it easier for regular employees to identify their co-workers who are permatemps, companies create a sense of elitism in their regular employees. Permatemps, as a group, might be known by epithets such as "dash trash" (referring to an identifier and a dash prepended to an email user account).^[1]

[edit] External links

• Permatemp cases including Vizcaino, litigated by the law firm Bendich, Stobaugh and Strong.
• IRS definitions of employer relationships, including common law employees.
• OrangeBadges.com, a message board for current, past, and future contractors at Microsoft.
• Washington Alliance of Technology Workers, a permatemp rights organization.
• Center for a Changing Workforce, a research and policy organization on permatemps, nonstandard employment, and health insurance.
• [2] Microsft checks arive

[edit] Notes

1. ↑  [3] "On Microsoft's Redmond campus, the distinctions between various classes of workers are clear, and part of the company lexicon. Permanent staffers are called "Blue Badges," the color of their magnetic passes. Temporaries hired from employment agencies are known as "A-dashes," the preface on their e-mail addresses...."