Tuesday, August 23, 2011

Are Temporary Employees Entitled to Unemployment in Pennsylvania?

Absolutely - provided certain requirements are met


The most critical requirement is that you have to be an employee - as opposed to an independent contractor.  Under this prong of the analysis, it is, to be sure, often difficult to prove that you are an "employee" (as opposed to being an "independent contractor")  if you are paid on a 1099 basis [Note:  Skip this analysis if you are paid on a W-2 basis!]  That is so because one who is paid on a 1099 basis is presumed to be an independent contractor UNLESS the employee can prove that the temporary agency (not the client of the temporary agency) controlled the manner and means of the employee's day to day work activities.

Thus, if your relationship with the temp agency consists of sending in time sheets every week, and reporting to them when you are sick, etc., then you will be unable to prove that the temporary agency controlled the manner and means of your daily work activity.  In fact, the only reliable way you can prove that the temporary agency controls the manner and means of your daily work activity is if they are on the premises, supervising you, on a regular basis.

To make matters even worse, the other traditional defense to a finding that one is an independent contractor, that the individual is not engaged in self-employment, is also virtually ignored by the Pennsylvania courts when analyzing whether 1099 employees of temporary employment agencies are in fact independent contractors.  To learn more about the self-employment test, Click Here

I say this because a leading court decision in Pennsylvania on the issue found that an ordinary person who had never incorporated a business, or advertised via the Internet, who simply took a job for a temporary agency, was nevertheless "self-employed" because, even though he worked all day for the client, "he was permitted to provide services to...other employers."  That conclusion was reached even though the individual never did work for anyone other than the single client for whom he worked full-time over an 11 month period!

Although the above analysis is a pretty clear statement of Pennsylvania law, it nevertheless widely misses the mark, and bends over backwards to support corporations at the expense of individuals.

After all, when considering whether someone is an independent contractor, the test is supposed to be about the individual - not the employer.  Is the individual an entrepreneur?  Does the individual work for more than one client?  Does the individual have employees working for him/her?  Has the person incorporated?  Does the individual advertise his/her services? Does he/she have a Website, a Blog?  Do they use their own equipment and materials in performing the job?  Are they free to accept or reject work assignments without ramifications?  Is the person free from direction and control while performing they're day to day tasks?  If the answer to many of these questions is "Yes," then the person is typically deemed to be engaged in self-employment (and thus is a 1099 independent contractor).  The converse is also true (if the answer to most of these is "No," then the person is in fact an employee who should be paid W-2 wages and is entitled to unemployment).

The above constitutes the traditional analysis courts throughout the country have consistently applied when considering independent contractor status; indeed, the IRS applies this basic test to the issue, and has done so for many years.

Yet, for some reason (which I cannot fathom), Pennsylvania courts completely ignore all of these principles when confronted with the issue in the context of temporary agencies and unemployment benefits.  In fact, the test applied by Pennsylvania courts where temporary agencies are concerned virtually ignores all of those factors, instead electing to focus on whether the temporary agency controls the manner and means of the employee's work - an inquiry the courts are well aware will most frequently result in a finding against the employee, since most temp agencies do nothing more than find people and send them to work for their clients.

A better test would be whether the CLIENT controls the manner and means of the employee's daily work life - but the courts know that application of that test would almost always result in a finding that the claimant is in fact an employee - because the management team on site of the employee's actual work place most assuredly controls the manner and means of their employment.

Or, at a minimum, the courts should at least fairly and honestly apply the traditional, time-honored "self-employment" test even if they intend to persist with analyzing the direction and control angle from the temp agency's perspective.

Alas, the courts have so far refused to do so (the Pennsylvania Supreme Court has yet to rule on this issue - I am waiting for the right client to come alonmg to take the matter up witht he Court). So, we have yet another a legal "fiction" designed to help companies at the expense of individual rights and interests. Shocking...

But, I suppose I digress (soap box can be so comfortable)....

Assuming you are a W-2 employee, or a 1099 controlled by the temp agency, then you would be entitled to unemployment benefits provided that, once the assignment ends, you are not offered suitable work.


The "suitable work" conundrum often arises at the conclusion of the temporary assignment.  If an employee rejects a subsequent assignment that is comparable to his/her previous assignment, then benefits will be denied.  If, on the other hand, no suitable work is offered, the employee is entitled to unemployment even if he/she remains "an employee" of the temp agency (i.e. remains on their books as an employee).  This latter situation is analogous to a layoff situation for the ordinary worker.

This can be a tricky situation, since temporary employment agencies often try and make it difficult for people to claim unemployment by creating an impression that suitable work has been offered, even when it has not.  Please Click Here to read more about this critical issue.

More Questions about Pennsylvania Unemployment Law?  Click Here to read our answers to FAQs


Daniel Gleckler said...

That was a superb article. I found it very helpful, and it has brought up a question.

I currently receive unemployment, and have been offered a temporary position directly from a corporation (not a temp agency) on a 1099 basis. The answer to every single question above is NO. I will work on equipment provided to me in an office of one of their employees, under his direction. Can I collect unemployment after this temporary position is over in 6-8 months? If not, should I demand a w-2?

Anonymous said...

do u have any office in pittsburgh area

Employment Lawyers said...

Dan;- thank you very much. As far as your question goes, I hesitate to provide specific advice on specific questions on this Blog because the law is very fact specific....

Employment Lawyers said...

I do not have any Pittsgurgh locations - just two daughters attending Pitt! Go Panthers!

SuniDi said...

My daughter was hired three years ago as temp part-time (20 hrs a week, for 3 months) for a reputable company. Last August they asked her to assist with another department and work full-time hours, 40 hrs a week. She has been working 40 hours a week since then. But is told she is still considered Temp part-time, and therefore is not entitled to benefits. However, our comptroller said if she is working full-time hours, she is entitled to holiday pay, as everyone else gets. But our HR Dir. says she is still a temp part-time employee. Plus they pay her an hourly wage, much less than others hired in the same position as full-time. Is this legal? Is there a time limit on having an employee work as a temp? Is there a law about equal wages for the same position/title.

Recruitment Agencies London said...

Thats really very great opportunity, i were just searching for a job since 2 weak, you really helps me .

James Coll said...

This was incredibly helpful. Thank you!

James Coll said...

This was incredibly helpful. Thank you!

Lauren wilson said...
This comment has been removed by the author.
Lauren wilson said...

Thankyou! Very well written article.
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