Hiring temporary employees is a powerful staffing asset all businesses should consider. But because it’s a different employment model, hiring temps involves unique legal considerations. When labor laws change, businesses can quickly find themselves facing compliance risks.
In recent years, labor laws have evolved significantly, from employee classification to managing salaries and benefits. This article explores the most relevant legal changes affecting temporary hiring—and offers actionable steps to navigate them.
Major Changes in Labor Laws HR Leaders Should Know
Avoiding grave legal consequences starts by being more aware of relevant laws, especially those that have evolved in recent months. Here are the ones that will most likely affect the way you hire and manage temporary workers.
Overtime Pay Rule
What You Need to Know: A federal judge has blocked a new rule that would have expanded overtime pay eligibility for millions of salaried employees. Now, the old 2019 rule is in effect.¹
For years, the law required hourly workers to receive overtime pay for hours worked beyond the 40-per-week standard. Meanwhile, many salaried employees were exempted unless they earned below a specific income level. In 2019, the government set that threshold at around $35,500. Then, it was further raised to around $44,000 recently.
Now, a Texas court has blocked this new rule from taking effect. This decision keeps the 2019 threshold in place for now and pauses the planned increases.
How Will It Affect Temporary Hiring: This ruling may limit the number of temporary or contract workers who qualify for overtime based on salary alone. HR teams hiring salaried temps must continue using the old 2019 threshold when determining overtime eligibility. Also, employers should keep monitoring any legal developments regarding overtime pay as changes are still very likely in the near future.
Pay Transparency
What You Need to Know: Pay transparency laws are expanding across the U.S., requiring employers to reveal a job offer’s salary to candidates.²
Many states have recently created and passed their own laws on making salaries more visible to job hunters. These regulations usually require employers to show the salary ranges of their open jobs. The numbers will either be included in their job ads or communicated during the hiring process. Some versions even ban recruiters from asking about a candidate’s previous salaries.
There is no current single federal law on pay transparency. But the number of participating states makes it an increasingly important labor law. It’s expected that at least 15 states will have active pay transparency rules before the end of the year. This includes California, Illinois, New Jersey, Maryland, and Colorado.
How Will It Affect Temporary Hiring: Employers working with staffing agencies or hiring temp workers must stay updated on any applicable state transparency laws. HR teams should also ensure that their staffing partners comply with these new requirements.
Classifying Employees vs. Independent Contractors
What You Need to Know: The Department of Labor (DOL) has established a new rule on categorizing workers whether as employees or as independent contractors. It became effective in March 2024.
Previously, employers relied on two main factors when determining whether a worker was an employee or an independent contractor: the worker’s control over their work and their opportunities for profit or loss.
Today, the DOL has replaced this rule with a broader test based on six factors, designed to align more closely with decades of court decisions.
According to the DOL, these are the six factors:³
- Opportunity for profit or loss depending on managerial skill
- Investments by the worker and the potential employer
- Degree of permanence of the work relationship
- Nature and degree of control
- The extent to which the work performed is an integral part of the potential employer’s business
- Skill and initiative
How Will It Affect Temporary Hiring: HR teams that hire independent contractors for temporary roles will need to apply this new six-point test. If they misclassify a worker, it could result in back pay or penalties.
Retirement Plan Eligibility
What You Need to Know: Beginning in 2025, employers with retirement plans must include long-term part-time employees as long as they worked for at least 500 hours per year for two consecutive years.⁴
For many years, many part-time employees were not included in company retirement plans unless they worked at least 1,000 hours every year. The original SECURE Act in 2020 started to change this by including part-timers who met specific hour thresholds. The latest version is the SECURE 2.0 Act. This reduces the requirement to just 500 hours annually for two consecutive years.
How Will It Affect Temporary Hiring: Employers who hire temporary workers should carefully monitor how long those workers have been on the job. They must take note of the ones who have worked for at least 500 hours a year for two years and grant the right retirement plan under the SECURE Act.
Best Practices for Staying Legally Compliant When Hiring Temporary Employees
Handling legal changes can be daunting. But you can start with a few safety measures and by asking for help. Here are a few actionable steps you can take:
1. Make It an Official Task for Your Team to Be Updated on Legal Developments
Staying informed shouldn’t be an afterthought—make it a defined responsibility within your team. This can mean assigning a staff member to monitor these developments and holding meetings whenever there’s a relevant change. Additionally, make sure to follow the most trustworthy sources, like the DOL and the Equal Employment Opportunity Commission.
2. Get Advice from an Employment Law Expert When Needed
No matter how much you stay updated, some situations can get legally tricky. Instead of guessing, work with an employment lawyer who understands staffing and temporary work rules. They can help review your job descriptions, contracts, and pay practices to prevent legal problems before they happen.
3. Use Software Tools to Stay on Top of Hiring Paperwork
Once you have a clear protocol for following the law, the next concern is making sure all the paperwork stays compliant. To help reduce errors and maintain efficiency, consider digital tools that organize paperwork, collect electronic signatures, and keep records centralized, reducing the risk of human error.
4. Automate Tracking Systems
You can also use technology to help you keep track of important employee information, such as work hours, salary, and benefits. This helps lessen errors as you comply with regulations like SECURE 2.0.
Related reading: Compliance, Contracts, and AI Agents: What HR and Staffing Leaders Need to Know About This New Tech Frontier
5. Build a Clear Co‑Employment Agreement
Work with your staffing partner to draft a written co-employment agreement that defines exactly who handles payroll, workers’ compensation, benefits, and supervision. Having these roles in writing protects both parties and prevents confusion if legal issues arise. This underscores the importance of working with a reputable staffing firm that prioritizes legal compliance. Your own compliance is directly influenced by theirs.
With Raso360, you stay compliant with a trusted staffing partner!
Since 2019, Raso360 has been a trusted staffing partner of various businesses across multiple industries. From direct hire placements to complex onshore consultancy, we’ve seen and handled just about every staffing situation you can imagine.
From worker classification to wage laws and co-employment risks, we stay on top of federal regulations so you don’t have to do it alone. Compliance isn’t just a box we check—it’s a priority built into how we work.
Connect with us today to discover how we can support your business with compliant, reliable staffing solutions and expert contingent workforce management.
References:
- Wiessner, Daniel. “US Judge Strikes Down Biden Overtime Pay Rule.” Reuters, 16 Nov. 2024, www.reuters.com/world/us/us-judge-strikes-down-biden-overtime-pay-rule-2024-11-15/.
- Hayduk, Jacqueline A. “Pay Transparency Laws Are Trending: What’s Coming in 2025 Q2 & Q3.” Foley & Lardner LLP, 28 Apr. 2025, www.foley.com/insights/publications/2025/04/pay-transparency-laws-trending-whats-coming-2025-q2-q3/.
- United States Department of Labor. “Frequently Asked Questions – Final Rule: Employee or Independent Contractor Classification Under the FLSA.” U.S. Department of Labor, Accessed 27 June 2025, www.dol.gov/agencies/whd/flsa/misclassification/rulemaking/faqs.
- Bonds, Kyle. “Long-Term Part-Time Employees: SECURE 2.0 Act Considerations for Companies.” Warren Averett, 17 Jan. 2024, warrenaverett.com/insights/long-term-part-time-employees-secure-act/.
