For businesses in California and throughout the nation, temporary workers translate into cost savings.  For one thing, those businesses don’t have to pay temp workers medical or dental benefits, vacation and sick pay or contribute to their retirement plans.  In addition, employers who need workers with particular skill sets can hire skilled temporary workers, saving on training costs.  Finally, according to the U.S. Department of Commerce, “temp workers generally earn a lower hourly wage than their directly-hired counterparts in the same occupation.”

It’s understandable that employers are focused on the bottom line, and it’s reasonable that they would occasionally hire temp workers to save money.  All too often, however, employers game the system, skirting established law to exploit temporary workers and maximize cost savings.  Temp workers, typically happy just to bring home a paycheck, tend not to push back or complain.  That’s a mistake.

Microsoft’s Big “Permatemp” Gamble

In the late 80’s and early 90’s, Microsoft began hiring thousands of temporary workers.  The $20 billion tech giant was looking for a way to save money.  The new workers were required to wear orange badges to distinguish them from permanent workers (who wore blue badges).

The arrangement worked out well for Microsoft, which retained many of these workers for years.  The trouble began when those “temp” workers tried to take advantage of the company’s employee discount stock purchase program. Microsoft said “no,” arguing that, as temp workers, they didn’t qualify.

In 1992, the workers decided to fight back, filing a class-action lawsuit which argued that, given their length of time with the company, they were not in fact temporary workers and were therefore being denied benefits to which they were entitled.  The lawsuit wound its way through the courts for eight years.  At the end of the day, the workers won.  Microsoft paid a $97 million settlement, which amounted to an average settlement of $10,000 for each of the plaintiffs.

What Is the Law Governing Temporary Employees?

Most temporary workers are hired by staffing agencies, which then ferret those workers out to client companies.  Many of the legal issues which surround temporary workers have to do with this nebulous arrangement.  When violations of worker rights (such as discrimination) occur, for example, who is liable, the staffing agency or the client firm?  Are temporary workers “employees” of those client firms, or “independent contractors” who work for the staffing agency?

Are Both Staffing Agencies and Client Companies Liable for Discrimination?

According to the Equal Employment Opportunity Commission (EEOC), both staffing agencies and client firms can be sued for discrimination:

“Staffing firm workers are generally covered under the anti- discrimination statutes.  This is because they typically qualify as “employees” of the staffing firm, the client to whom they are assigned, or both.   Thus, staffing firms and the clients to whom they assign workers may not discriminate against the workers on the basis of race, color, religion, sex, national origin, age, or disability (emphasis added).”

Essentially, what this means is that client firms can’t defend discriminatory actions with the argument that they are not the employer.  In the same way, if a client asks a staffing agency for “only white women in their 20’s” to fill sales positions during the holiday season and the agency complies, both the agency and the client firm are liable under anti-discrimination statutes.

Are Temporary Workers Employees of the Client Firm or Independent Contractors?

Many of the abuses which temporary workers suffer are due to misclassification of their employment status.  Workers who are classified as employees of the client firm have rights which don’t apply to independent contractors who work for the staffing agency.

When a client firm controls a worker’s hours, wages or working conditions (for example, telling him what his weekly work schedule is), that worker should be classified as an employee even if the staffing agency has classified him as an independent contractor.  As such, the worker is entitled to a number of employee rights, including legally-compliant meal and rest breaks and paid overtime.  When such misclassification occurs, employees can sue the client firm for back wages and penalties.


The laws covering the rights of temporary workers change frequently.  For example, in 2014, California Governor Jerry Brown signed a landmark new law, AB 1897, that holds corporations in the state accountable when workers hired using labor contractors are cheated out of wages or forced to work in unsafe conditions.

All employees have rights, including temporary workers.  If you are a temporary worker and suspect your rights are being violated, you need to take action and seek competent legal assistance.  The attorneys at Aiman-Smith & Marcy have won millions in settlements on behalf of California employees.  They will work as team and in close collaboration with you to defend your rights.  If you need help because your employer is violating those rights, contact us today.

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