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Worker leasing vs. temporary staffing

Why proper classification is important

Oregon considers all staffing arrangements to be leasing, unless the staffing company can provide written documentation or other evidence that each worker is provided on a temporary basis. 

Temporary companies should maintain written records and are subject to audit by the Workers’ Compensation Division to ensure they are not leasing. The records should document the duration of the work assignment and provide sufficient detail to establish that the workers placed are being provided on a temporary basis, as defined by Oregon law and rules.

A temporary company that misclassifies a worker as temporary rather than leased subjects itself to civil penalties for leasing without a license. Failing to properly classify leased workers may also expose a temporary company to additional liability for claims filed by its client’s workers.

Here’s why: Policies for temporary staffing companies are underwritten to cover only the staffing companies’ workers. In a worker leasing arrangement, the leasing company’s policy must cover both the provided workers and any non-leased workers the client may have, unless the client has its own coverage. If the client carries the coverage, the client’s insurance must cover all of the employees, leased and non-leased.

Temporary staffing characteristics

Temporary workers must be hired for a stated duration to cover special situations, such as the following: 

  • To fill employee absences or leaves. This includes events such as family leave, vacation, jury duty, or illness for which the permanent worker will return. 
  • To fill professional skill shortages. These are usually licensed professionals such as nurses or engineers to provide for a shortage of that skill for a known duration. 
  • To staff for seasonal workload. This is not necessarily a season of the year, but a temporary increase in demand upon an employer’s normal workload that requires more help to meet the demand. When the demand is over, the extra positions are eliminated.
  • To staff a special assignment or project. A special assignment would be one that is outside of the routine activities of the business and where the worker will be terminated or reassigned when the project is complete. For example, a construction contractor may need help on a construction site to clear branches and other debris after a severe windstorm so the regular construction crew can continue its work. 
  • To hire a student worker paid through a work experience program.
  • To cover probationary employment, such as a “temp to hire” in which new workers satisfactorily pass a probationary period before becoming permanent employees. The client employer must have pre-established and documented employment selection program under which the temporary employee was placed. 

(See ORS 656.850 and OAR 436-050-0420 for full text.) 

Who is responsible for workers’ compensation coverage? 

A client using employees placed by a temporary staffing agency must have its own workers’ compensation insurance policy or be self-insured to cover its regular workforce. A temporary staffing provider covers the workers’ compensation insurance for the temporary workers. 

In a worker leasing arrangement, either the worker leasing company or the client may carry the workers compensation coverage, but either way, the coverage must be for all workers of the client, both leased and non-leased.

Contact

888-877-5670 (toll-free)
workerleasing.wcd@oregon.gov

Licensing
Sabrina Wright: 503-947-7544
sabrina.k.wright@oregon.gov

Compliance
Lorrie Baker: 503-947-7591
lorrie.d.baker@oregon.gov

Worker leasing notices, terminations, and update notices
Fax notices to: 503-947-7820
Questions:
Candice Blanchard: 503-947-7675
candice.s.blanchard@oregon.gov

Resources

List of licensed worker leasing companies​​​​​​​​
Independent contractors​​​​

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