Many small businesses are receiving financial assistance through the Payroll Protection Program (PPP), part of the CARES Act COVID-19 relief package.Some companies have expressed confusion regarding PPP rules and the use of temporary staffing.
There is no provision in the PPP expressly stating that temporary staffing cannot be used. Small businesses that receive PPP funds should be able to take advantage of the benefits of temporary staffing and payrolling services as they try to ramp up and re-open – as long as a few important points are taken into consideration and they are in compliance with PPP rules.
In this article, we’ll answer:
- Can you re-hire previous temporary staff?
- Can you hire new temporary staff as you ramp up your business?
- How does new FFCRA required benefits affect any temporary or payrolled employees you bring on?
Can you re-hire previous temporary staff?
Businesses that were utilizing our temporary staff prior to the COVID-19 shut-down can count those temporary employees in their headcount and should be able to re-hire them when re-opening their workplace. For example, if Company A had four Ledgent Ambassadors on assignment but had to end their assignments due to the pandemic shut-down, they would be able to re-start these assignments upon re-opening their workplace and count those temporary employees in their headcount for PPP.
Here at Roth Staffing Companies (the parent company of Ledgent), we are an organization with more than 500 employees, and, therefore, not eligible for the PPP, which means we are not claiming our temporary employees for purposes of relief under the PPP. Our clients will not face the issue of having more than one employer claiming our Ambassadors for PPP purposes.
The American Staffing Association (ASA) states:
“As the common law employer, the staffing agency generally will claim the temporary employees for purposes of the PPP. Clients, however, usually are considered joint employers of those employees and, as noted, must include them in their headcount under existing SBA guidance. Thus, in the absence of guidance, it can be argued that clients that rely on those employees in their business also can include the employees for PPP purposes. Of course, only one party – the staffing agency or the client – can claim the same employees for PPP purposes – not both. Assuming only one party in fact claims the employees for PPP purposes, the underlying policy of the CARES Act – to help keep employees working – is satisfied regardless of whether the employees are claimed by the staffing agency or the client.”
Can you hire new temporary staff to ramp up?
Given the uncertainty surrounding the immediate future of the economy, many businesses are opting for temporary staff as a way to gradually ramp back up to pre-pandemic operations. This allows for flexibility in case a business needs to reduce its headcount again without having to potentially do a second round of furloughs or lay-offs of its regular employees.
Businesses can utilize temporary staff as a means of gradually ramping back up to normal staffing levels, as long as you are in compliance with the PPP guidelines regarding re-hiring and maintaining your pre-pandemic headcount. You should check with your legal counsel about the specifics that apply to your business.
Another option that allows for scalability is to have your staffing partner payroll the employees you want to re-hire. The staffing company places your employees on their payroll and serves as the employer of record, is responsible for benefits and taxes, and you can bring these payrolled employees on and off a work schedule until your business ramps back up to a level where you feel secure about transitioning these employees back on your internal payroll.
How do FFCRA requirements impact your use of temporary staff?
The Families First Coronavirus Response Act (FFCRA) requires certain employers to provide their employees with paid sick leave or expanded family and medical leave for specified reasons related to COVID-19. FFCRA does not apply to temporary staff, so your business will not have to pay these benefits to any temporary staff you hire through a staffing firm. Businesses should be aware that they do not pay any benefits, taxes or other burden for temporary staff. The staffing firm covers this as well as the hiring and payroll processes for temporary employees.
There are several benefits to utilizing temporary staffing as companies begin the process of re-opening, from scalability to cost savings. Businesses receiving PPP assistance should be able to hire temporary staff provided they are in compliance with PPP regulations. We strongly recommend that our clients seek advice of their legal counsel for questions surrounding PPP requirements. If you have any questions about how we can assist with your staffing or payrolling needs, please contact your local Ledgent branch.