Laws Concerning Temporary Services & Unemployment Benefits

As the permanent workforce goes through phases of contraction, many workers turn to temporary services to earn a living. Laws are in effect to protect temporary workers and ensure they may be eligible for unemployment between assignments.

W-4

In most states, temporary agencies are required by law to classify employees placed on assignments as W-4 employees rather than independent contractors. The Federal Unemployment Tax Act (FUTA) mandates that all employers, including temporary agencies, pay unemployment taxes on their W-4 employees. These taxes are used to fund unemployment benefits.

Accepting Temporary Work

Accepting work through a temporary agency will not jeopardize the worker's eligibility to receive unemployment benefits during periods of unemployment. The amount the worker earns through temporary work will be deducted from their benefits for that work week, but it will not be deducted from their overall claim balance.

In Between Assignments

Workers are eligible to collect unemployment benefits in between assignments, provided the assignment ended through no fault of the worker. Workers must also meet their state's requirements for wages earned during previous quarters in order to be eligible for unemployment benefits.

References

• The Legal Aid Society: Employment Law Center
• The IRS: Federal Unemployment Tax
• U.S. Dept. of Labor: State Unemployment Insurance Benefits, Employment and Training Administration
• Texas Workforce Commission: Unemployment Insurance Benefit Information