Everyone knows somebody who has worked at a job without decent health or pension benefits. Many of these workers don't get benefits because they are called temporary or contract workers even though they've been at the same job for years.

These workers are permanent temporary workers, or permatemps. Many receive no benefits, not even sick days or paid holidays.

Even when they do receive insurance or pension benefits, they are mostly employee-paid, with high deductions, limited benefits, and many exclusions. Even with this coverage, these workers are underinsured. Permatemp pension coverage is equally bad. A typical agency pension contribution is $100 per year to an employee's 401(k) plan.

Permatemps work in every industry, in nearly all occupations. They work in public sector and private sector jobs. They usually are in low-to-middle wage or salary jobs, but even some highly-paid workers are misclassified to deny them benefits given to other workers.

Meanwhile, often working right beside them and doing the same jobs are so-called regular workers who receive better pay and benefits.

The laws on who is an employee and employee classification are spread throughout state and federal statutes and court decisions, with some of the case law dating back more than 100 years. The laws also vary depending on the specific topic; the definitions of employee are different for questions on wages, benefits, unions and collective bargaining, discrimination, and workplace safety, among others.

Common Law

The most important laws applying to mislabeled workers (permatemps) are in several sources. State and federal court decisions (case law) define what is known as "common law" employment. Common law employment hinges on the question of who controls or supervises the employee. In addition to control, there are numerous other factors: hiring, training, location of workplace, who supplies tools and equipment, etc. This common law is the basis for the IRS's recently simplifed "3-factor" test, and was also the basis for the landmark Microsoft Vizcaino decision. The common law also determines whether employees labeled as "independent contractors" are really employees or true contractors.  See Independent Contractor page.

Private Sector-ERISA

When employees are mislabeled, the most common result is lower pay and the denial of benefits that regular employees receive, including health insurance, retirement and paid sick, holiday and vacation leave. The laws are different for public sector (government) and private sector (companies). When private sector permatemps receive lower pay, less paid leave, or are not allowed to participate in an Employee Stock Purchase Plan, state statutes or state case law may be violated. When private sector permatemps are denied participation in the employer's health insurance or retirement plans because of their label, these benefits are governed by the Employee Retirement Income Security Act (ERISA). 

Public Sector

State and local government employee classification, pay and benefits are governed by local ordinances, state statutes, and state court decisions. Federal statutes and court decisions govern federal employees, however it is difficult to bring legal action against the federal government on employment issues.

Webster's New Third International Dictionary

Permatemp - noun {new word} Also written perma-temp. 1.  temporary employee who is rehired periodically, especially to lower overhead costs to the employer and to offer greater flexibility in scheduling work and vacations for the employee. Also shortened to temp. Also called long-term temp.


  • Have you worked for a year or more for the same employer?

  • Are you paid through a contractor, staffing agency, or temp firm?

  • Are you labeled as temporary, contractor, seasonal, or something similar?

  • Are you working side by side, doing the same job with regular employees, or are regular employees doing the same work elsewhere in the company?

  • Do the regular employees receive higher pay and/or better benefits than you do?

  • Do regular employees of your company effectively supervise you?

  • If you are paid through an agency or contractor, is your main contact with this agency the paycheck they provide you?

  • Are you called part-time but really work full-time?

  • Are you called seasonal but really work most or all of the year?

If you answered "yes" to most of the questions above, you could be a permatemp.

Here are some suggestionsfor action:

  • Contact a Union - If your employer is unionized, contact the union to see if they are familiar with your situation. They may be able to address the issue through arbitration or collective bargaining. If your employer is not unionized, contact your local Central Labor Council for information and assistance.

  • Contact an employment attorney who represents employees. If you work for a company,it is important to find an attorney and law firm that have experience with ERISA (see above) cases, class actions and handling complex federal litigation. 

  • If you are being labeled as an "Independent Contractor,"contact the IRS District Office for a determination as to your employee status.   See Independent Contractor page.

  • Contact the US Department of Labor (DOL) - The DOL's Employee Benefits Security Administration (EBSA) is responsible for enforcing ERISA laws that govern pension and health benefits. Contact the EBSA Branch Office in your area and ask how to file a complaint against your employer. The DOL filed  a class action lawsuit in 1998 against Time-Warner for misclassifying employees (see Legal Developments).

  • Contact a reporter at your local newspaper. If your newspaper has a "workplace" or "labor" reporter talk to them, otherwise talk to an investigative reporter. If you are still employed at the same company, you can ask that your name not be used. The reporter can contact the Center for a Changing Workforce for more information.