School administrators in Dothan, Ala., decided to hire substitute teachers through Kelly Services to avoid possible health-cost obligations if they were to employ them directly.
Dothan subs don't get medical coverage now, and the district pays about $700 per month for the full-time teachers who do. "You multiply that times 300 [substitutes] and you've got a big expense," said Dell Goodwin, personnel director for Dothan City Schools.
Little-known, complex rules developed by the Internal Revenue Service could also allow some full-time jobs placed through temp agencies to come without health benefits.
Manpower, Robert Half and other staffing specialists are giant companies, with far more than 50 employees. So they are subject to the same health act requirements as other companies to offer coverage to full-timers.
But in regulations issued last year, the IRS left an opening for employers of "variable-hour" labor such as temp agencies. If it's not clear upon hiring that an employee will consistently work more than 30 hours weekly, companies get up to 12 months to determine whether the person is full-time and qualifies for health benefits — even if the employee does end up working full time. Few temps last 12 months.
"The overwhelming majority of temporary help workers, even if they were working full-time on a weekly basis for a number of months, wouldn't be covered because of that 12-month look-back period," said the Upjohn Institute's Houseman. The rules, she added, "were written in a very favorable way for the temporary help industry."
There are good arguments for exempting new, variable-hour workers from health-coverage obligations, she said: Tracking who worked 30 hours during which weeks for health-plan eligibility would cause confusion for employers and insurers alike.
The upshot, however, is that most temporary help workers — nearly 3 million on any given day — won't have employer-sponsored medical coverage even if they are working more than 30 hours, she said.