Rise of the Permatemp

You used to spot a temp a mile away. He would show up at the office for a day, asking too many questions, trying to remember the firm's name when answering the phone, unable to find the coffeepot or get the copier to work.

In the flexible workforce of the 1990s, though, temps tend to stick around longer and end up blending right in, doing everything from developing complex computer software to editing magazines. Since they often stay in one (sometimes high-level) position for the long haul, they've earned the name "permatemps." The deal is supposed to benefit both parties; the workers aren't tied to the job, and the company doesn't shell out for costly benefits. But many temps feel like second-class corporate citizens, denied company perks like health insurance and 401(k)s.

Now many of them are fighting to change that status. Just two weeks ago, a class action was filed against Atlantic Richfield for allegedly misclassifying oil-field workers as temps in an effort to exclude them from company health- and retirement- benefit plans. ARCO denies the charge and says the plaintiffs do not work for them but for oil-field service firms. In May, as Microsoft was handing full-timers a pay raise, a federal appeals court in San Francisco ruled that as many as 10,000 former temps should have been allowed to take part in the employee stock-purchase plan. "Labels don't matter. It's what you're doing, not what you're called," says Cathy Ruckelshaus of the National Employment Law Project.

Meanwhile, media giant Time Warner (parent company of TIME's publisher) is facing federal labor charges for allegedly denying benefits to hundreds of writers and artists by misclassifying them as temporary workers. Time Warner denies the charges and says the Labor Department is trying to make new law with the suit. Some longtime temps at another publisher, McGraw-Hill, just started pleading their case to management, joining the ranks of "contingent" techies, truckers, bellhops and professors who feel they're being shortchanged.

"We want to make sure there isn't a two-tier workforce," says Chris Owens, assistant director for public policy at the AFL-CIO, which is pushing a bill in Congress to make it harder to classify full-timers as independent contractors. On any given day, there are about 3 million temporary workers in the U.S.

Permatemps got their start after the vast restructurings of the past decade, when slimmed-down companies found themselves shorthanded as business picked up. Initially they were reluctant to hire full-time workers in case business turned down again. But "hiring qualified temporary employees has evolved from a stopgap measure to a competitive imperative," said Brian Bohling, a senior vice president at staffing giant CDI Corp. in a report, The New Nomads. Besides saving money on benefits, firms prize the flexibility of keeping only a small core of full-timers and ramping up for specific projects. Silicon Valley, with the ebb and flow of its product cycles, relies heavily on permatemps; a new report shows the temp industry has been California's leading job creator for the past five years. No wonder the Information Technology Association of America says the Microsoft ruling would "serve to undermine the information economy."

Many high-tech firms contend that workers like flexible arrangements. They sometimes earn better wages than their full-time peers and can often buy a package of benefits from their agency. With their services in great demand, the argument goes, permatemps can job-hop at will and learn skills at each stop. There's no denying that many free agents prefer it that way; yet there are many more who would jump at the offer of a full-time gig.

Those are the people Marcus Courtney represents. A former Microsoft permatemp, Courtney is the founder of WashTech, a new union trying to organize high-tech workers. "The courts have said the charade is up," says Courtney. A band of 16 Microsoft permatemps has formed a collective-bargaining group allied with WashTech. The larger fight at Microsoft is far from over. The company is appealing the ruling; class-action claims over access to its 401(k) plan and health and other benefits are pending.

Microsoft insists that many permatemps don't want their freedom jeopardized. Says spokesman Dan Leach: "In many cases, we find someone who turns down a permanent position because he's not interested in a pay cut." Kamal Larsuel, a software tester at Microsoft, would have no such reservations. Like many of the 6,000 other temporary "Microserfs," Larsuel has virtually no contact with her agency--yet she can't even attend work "morale" outings to the movies. She admits to being excited about the recent court decision. But she and others in her situation share an overriding concern: the ruling could backfire, and Microsoft could be the first of many companies that decide to get rid of permatemps permanently.