Jun 28

California SB 459 Employment: Independent Contractors

By Beth Mesechoff Contingent Workforce Management Comments Off
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On June 23, 2011 bill SB 459 cleared another hurdle towards becoming law by passing the California Assembly Labor Committee by a vote of 4 to 2 to make its way to the Judiciary Committee. 

Bill SB 459:

  1. Makes it unlawful to willfully misclassify an individual as an independent contractor. If found guilty a company would have civil penalties of no less than 5K and no more than 10K per occurrence. If found guilty of repeated violations the result could be as much as 25k for each violation – willful is defined as with voluntary intent.
  2. The company must maintain records by completing a document developed by the EDD for each independent contractor retained.
    1. A notice indicating the individual will be engaged as an independent contractor
    2. What EDD factors were included to determine the individual is an employee or an independent contractor
    3. A statement explaining the impact the independent contractor status has on tax obligations and eligibility for labor and employment protections
    4. Notice to the individual that they can seek advice from EDD or the Labor Commissioner regarding whether they were properly classified
  3. Provides that any person who knowingly advises an employer to treat an individual as an independent contractor, to avoid employee status, shall be jointly and severably liable if the individual is found not to be an IC. (Lawyers and advice received internal to your company are exempt.)

This bill is just one in a long list of bills proposed by various states as well as the U.S. Senate (bill  S3254) to combat the misclassification of individuals as independent contractors.

With all the recent legislation and attention around independent contractors and the focus on documentation requirements that are included you need a partner like SourceRight Solutions who can help you navigate through the often grey waters of independent contractor compliance.

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May 19

New Measures in Veteran Hiring

By Rebecca Callahan Recruitment Comments Off
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The U.S. Department of Labor’s Office of Federal Contract Compliance Programs announced a proposed rule to strengthen affirmative action requirements for veterans protected under the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA) on April 26, 2011. Those protected include veterans: disabled, Vietnam-era, active duty and those recently discharged as well as anyone who served during a war, campaign or expedition.

The proposed rule clarifies mandatory job listing requirements, which a contractor must provide job vacancy and contact information for each of its locations to an appropriate employment service delivery system. The rule also proposes requiring contractors to engage in at least three specified types of outreach and recruitment efforts each year.  The rule would require that all applicants be invited to self-identify as a “protected veteran” before they are offered a job. Increasing data collection on job referrals, applicants and hires, and stabling hiring benchmarks to assist in ascertaining the effectiveness of affirmative action efforts are also proposed.

Clearly, this is a complicated area for government contractors as they’ll be required to maintain written action plans, train their managers, monitor compliance and meet other requirements. Working with a trusted experienced partner – such as SourceRight Solutions – will help ensure alignment and reduce audit risks.

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Apr 05

The State of Independent Contractor Relationships

By Beth Mesechoff Contingent Workforce Management Comments Off
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The use of independent contractors has come under increasing scrutiny in recent years at both the state and federal level. Many  states have chosen to adopt their own labor and employment statutes that differ from the federal standards, establishing classification criteria that must be satisfied in order for individuals who work or reside in those states to be treated as an independent contractor (IC). Many states have formed interagency task forces with each other and the Federal agencies to share information and have begun to aggressively audit businesses that use independent contractors in an attempt to replenish depleted state funds without increasing taxes on the small remaining population of working middle class W2 employees.  In contrast, recognizing the impact additional regulations have on businesses, other states have sought to minimize the regulatory burden, largely adhering to federal standards, and, if regulating in areas where federal law is silent, seeking a more business friendly, less  restrictive approach.

As more organizations seek to develop a business model that includes contingent labor and increase the use of independent contractors, it is critical to understand the wage and hour requirement of each state the business operates or sources talent to avoid costly re-classification, wage and hour and class action litigation, to ensure proper worker classification and regulatory compliance States that are move IC friendly, and less regulated include Florida, Mississippi, Nebraska, North Carolina, and Texas. 

California, Massachusetts, Michigan, Montana and New Jersey are examples of states that are more complex and aggressive in their rules governing proper classification of independent contractors. Under Montana law, a person may not perform work as an independent contractor without obtaining an independent-contractor exemption certificate from the state, unless the individual is not required to obtain such certificate pursuant to state law; or chooses to be bound personally and individually by the provisions of a workers’ compensation insurance plan. In California, the law requires independent contractors to report at regular intervals and mandates certain employment training.

Because classification decisions may be questioned by one or multiple government agencies, including the IRS, state unemployment compensation agency, state worker’s compensation agency, state tax department and the U.S. Department of Labor, it is imperative to understand the specific requirements to satisfy all agency criteria to ensure all contingent workers are properly classified.

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Mar 14

Employee or Contractor? Misclassification Continues to be of Issue

By Beth Mesechoff Contingent Workforce Management Comments Off
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During January we  noted the government’s continued focus on proper worker classification, Although the two bills referenced – the Fair Playing Field Act of 2010 and the Employee Misclassification Prevention Act – were not enacted during the 2010 session, this is still a hot topic, and they will likely resurface in some form with the 2011 session. During President Obama’s recent State of the Union address the President made mention of his continued focus on efforts to eliminate tax loop holes and reduce the tax gap resulting from misclassified workers, and how this activity will also aid in balancing the budget.

There are many economic and business advantages of using independent contractors, freelancers, consultants, free agents and seasonal workers – but along with the benefits of independent contractor use, there are also pitfalls. Some businesses might knowingly misclassify employees as independent contractors, but other businesses may mistakenly misclassify workers. Regardless of whether or not misclassification is done with intent, any worker not classified as a W2 employee must be defended and if misclassified, the end result can be quite costly.

Companies that use independent contractors to supplement their workforce or rely on a business model that includes a large subset of independent contractors need to implement strategies to ensure proper classification to minimize their risk and the costly consequences of misclassification. While the precise extent of misclassification is unknown, estimates suggest that it affects 10 percent to 30 percent of all employers.  The DOL spoke of its partnership with the Department of Treasury to jointly coordinate efforts to detect and deter the misclassification of employees and to strengthen and coordinate federal and state efforts to enforce labor law violations arising from misclassification.

Conducting regular compliance audits ensure workers are classified correctly, implementing a contractor compliance program, building and maintaining compliance files for each contractor, and monitoring the landscape for changes in legislation and legal precedence, are critical to mitigating risk.  More and more companies are seeking compliance experts to conduct risk assessment audits and manage contractor compliance programs.

The use of independent contractors is a viable business strategy. As employee misclassification continues to be at the forefront of state and federal agencies as a mechanism to generate revenue and aid in balancing budgets, organizations must ensure they properly classify workers, build defensible files for all independent contractor, and manage independent contractors appropriately to reduce the risk of re-classification.

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Mar 14

How are you Handling the Insurance/Health Care Issue?

By Mary Anderson Contingent Workforce Management Comments Off
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The days of business as usual are numbered. As we discussed previously, health care reform will bring dramatic change for the staffing industry. Key provisions do not kick in until January 2014, but there’s no time like the present to develop a plan for managing change. 

Being prepared might prove tricky; each staffing company’s situation and circumstances are different and there’s no single answer how the law will apply. Regardless, you’re either the steamroller or part of the road. Rather than remain frozen by fear of the unknown, staffing firms can make sure they are handling the insurance and health care issue by having a clear understanding of the implications: 

*Determine if you are an applicable large employer. A large employer is defined as a business that has 50 or more full-time employees, but it’s a little more complicated than that. There are special considerations and definitions for seasonal workers as well as full-time equivalent workers. Applicable large employers will be required to pay the excise tax if one of their employees purchased health insurance through a state exchange and a tax credit or cost-sharing reduction is allowed or paid to the employee. 

*It is not mandatory to provide coverage. Firms can opt out of providing coverage, but if they elect that option, they need to be prepared to pay a penalty. 

*Grandfathered plans are good to go. During the health care debate, President Obama made it clear, “if you like your health plan, you can keep it.” Group health plans in existence when the law was passed are not subject to certain reform provisions. While employers can make some changes to demonstrate compliance, they also need to understand which changes could affect their grandfathered status, such as reducing contributions to employees’ health insurance premiums by more than five percentage points. 

*Consider the cost concerns. Will you need to raise rates in response to reform? Will those costs be passed on to clients? What impact will that have on service levels and profitability? Not only do businesses need to think through a potential rise in expenses, but how to adjust the business model so they can remain competitive. 

*Workforce management should be a priority for small businesses. A temporary worker who works with one agency for fewer than 120 days is considered seasonal. Companies do not need to include seasonal employees in their head count. Businesses with seasonal models will need to track and manage schedules to ensure compliance with hours and wages or risk paying fines for workers that work too many days.

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Mar 08

Should Temporary Workers be Excluded from Mandatory Coverage?

By Mary Anderson Contingent Workforce Management Comments Off
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Staffing services firms that provide contingent, temporary and temp-to-hire workers may find themselves with a permanent problem if an excise tax is imposed on employers with more than 50 full-time employees. The tax will require applicable firms to pay the tax per employee, even if only one purchases health insurance through a state exchange program.

Full-time and full-time equivalent employees are included in the calculation determining whether an employer has 50 or more employees. Full-time equivalent is determined by dividing the total monthly hours of service of employees who are not full-time employees by 120. An employer will not be considered to have 50 or more employees if its workforce exceeds 50 employees for 120 days or less during the year and the employees more than 50 are “seasonal workers.”

However, a reform measure could undermine the benefits of temporary and contract work or discourage staffing firms that already offer health insurance coverage from continuing to do so.

According to the American Staffing Association, U.S. companies employ more than 11 million temporary and contract workers annually. Many staffing firms offer employer-paid health insurance coverage, but few temporary employees participate because the majority of them work for short periods of time. Participation in staffing firm plans is highest (49%) among contract employees—who tend to work in professional, health care, technical, and information technology occupations, and who generally earn higher wages and work on longer-term assignments.

Temporary work is a key factor in reducing unemployment and creating new jobs—and it provides a vital pathway to permanent employment. The majority of staffing employees (77%) view temporary or contract work as a good way to find a permanent job. Likewise, employers benefit from a try-before-hire scenario because they can observe skills, innate talents and cultural fit in potential full-time employees.

A reform measure that imposes a penalty on temporary workers will hamper the ability to find permanent work. That’s why any health care reform proposal should include appropriate provisions that exempt short-term temporary employees from mandatory coverage. The House version of healthcare reform could have imposed large costs on temporary staffing firms. The Senate’s healthcare bill was amended to take into account the nature of temporary employment relationships and offered a degree of relief. Hopefully any new version of healthcare reform will make exceptions for temporary staffing.

In the mean time, employers should review their current health plan arrangements to weigh the various alternatives to comply with health care reform going forward or to opt for paying a penalty in lieu of providing coverage.

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Feb 24

Recent Research Study Predicts Increased Demand for Temp Workers

By Rebecca Callahan Contingent Workforce Management Comments Off
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According to the Palmer Forecast™, demand for temporary workers in the United States is expected to increase 20.3% for the first quarter of 2011. This prediction comes on the heels of the same firm’s Q4 2010 forecast of 20.9%, which was very close to accurate (19.2%). The first quarter prediction is the fifth-consecutive quarter of year-over-year increases in demand for temporary workers.

At SourceRight Solutions, we’re seeing this trend, coupled with an emerging trend of increased permanent hires. The blended workforce – the reality of today’s workplace – will continue to include temporary workers, free agents and traditional employees.  Contingent talent is one of the first job categories to improve as the economy rebounds but we believe these post-recessionary times have forever redefined what constitutes a worker. Stay tuned for further posts on this rapidly evolving business-critical topic.

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Feb 24

Web series, Bestsellers, proves innovative media is the back door to engaging workers with a targeted message

By Rebecca Callahan Global Talent Acquisition Comments Off
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On a scale of one to 10, how innovative would you rate your talent sourcing strategy? If you are of the camp that believes conventional sourcing methods reign supreme, you could be missing a huge opportunity. The way companies reach and relate to workers today is drastically different than say, three years ago. Why? Two words: social media.

The embracement of social media has led to a rampant increase in web-based dialogue with mass audiences—creating a unique opportunity for companies to socially interact with workers through clever, online media. This is precisely what SFN Group has done through its targeted web series, Bestsellers.

The company launched the online dramedy in a strategic effort to engage working women of all ages and stages of their career with real-life scenarios that poke fun at the chaos that keeps life interesting. Disguised as a book club, five professional women come to discover the characters in their books are far less interesting than the issues bombarding their own personal lives.

SFN Group saw the series as a creative means of engaging, relating and interacting with working women. And, that’s exactly what it’s doing. But, fostering candidate relationships through web-based media was nothing new to these workforce thought leaders. Five years ago, they launched the online comedy series, The Temp Life—a spoof about terrible temp job experiences. The new online series quickly went viral, garnering more than 2 million views since its inception, and winning multiple industry awards.

So, what’s the bottom line? When companies tap into the innovative opportunities that the social media craze has created, they are in essence, laying the foundation for a strong sourcing strategy that reaches the workforce in a very relevant, relatable way. Moreover, the hype this type of media generates will not only build brand awareness, but it will make the task of attracting talent to your organization an effortless initiative.

View the Bestsellers series now! www.thebestsellers.tv

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Feb 24

Will Health Care Reform Spark the Beginning of the End for Staffing Services Firms?

By Mary Anderson Contingent Workforce Management Comments Off
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We all knew it was coming, but now it’s finally here: health care reform legislation has been signed into law in the U.S. and the first of its changes are going into effect this year. This will bring a sea of change for employees and employers, but what are the ramifications for staffing firms?

Right now, there is a great deal of uncertainty regarding the expected changes. The law is under debate both in congress and in the courts, but what is known is that health care reform will increase access to care for millions of Americans. Starting in 2014, individuals must maintain “minimum essential coverage.” Minimum essential coverage includes coverage under a qualifying or grandfathered insurance company or employer-sponsored plan, government-sponsored program such as Medicare or Medicaid or a state-based exchange.

The Patient Protection and Affordable Care Act adds a new federal requirement, referred to as “employer responsibility,” that also takes effect in 2014. Applicable large employers must pay a non-deductible excise tax penalty if any of their full-time employees are certified as having purchased health insurance through a state exchange with respect to which a tax credit or cost-sharing reduction is allowed or paid to the employee. The excise tax will either be $2,000 or $3,000 depending the employer’s situation. For staffing services firms, the potential of paying an additional annual cost of $2,000 per employee either means incurring a cost they cannot recover, mandating employees to pay for company-offered coverage thus reducing their wages, or passing along the expense to clients.

It’s important to think through the widespread implications of this free rider surcharge. For staffing firms that already have a fairly low profit margin, the need to absorb this cost could put them out of business. For employees, it may lessen the appeal of temporary work or decrease opportunities to “audition” for a full-time job. Employers also may rethink their approach to how work gets done. Right now, the contingent workforce is growing and a viable source of talent for many businesses. Increased fees may render its cost structure unsustainable, and as a result, contribute to a fresh spike in unemployment numbers.

President Obama has scheduled a healthcare summit for Republicans and Democrats on February 25 to discuss healthcare reform legislation. To ensure temporary and temp-to-hire positions continue to provide a desirable work option for both employees and employers, make your voices heard and talk to your elected federal official.

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Dec 13

SourceRight Advisor MarketTrends Bulletin: Staffing Growth Forecasts Counter Slow 2011 Outlook

By Mary Anderson Contingent Workforce Management, Managed Service Programs, SourceRight Advisor Bulletins Comments Off
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According to recent press reports, the consensus view of 50 economists surveyed in the most recent Aspen Publishing’s Blue Chip Economic Indicators survey, is that gross domestic product (GDP) will rise an anemic 2.5% in 2011.  The Conference Board is less optimistic presently forecasting 2011 Real GDP at 1.7%.  At these rates of growth, pre-recession levels of unemployment will not return until sometime late in 2013 or beyond.

But even with “anemic” GDP growth prospects the staffing industry is forecasted to experience healthy market demand in the near-term.  Staffing Industry Associates is forecasting that temporary staffing revenues will grow at a range of 9% to 12% over the next few years. G. Palmer & Associates have published a 2010 fourth quarter forecast of 20.9% compared to the same period in 2009.

Part of this growth activity is beefing back up temporary workforces that were naturally flexed down during the recent recessionary period.  This was, and remains, a major competitive workforce structural benefit to those organizations that employed temporary workforce strategies to deliver their required business production.

Hence, another major element of the forecasted growth of the temporary staffing marketplace is more and more businesses are engaging temporary staff and independent contractors as they experience some growth but remain uncertain about long-term, sustainable business levels.  Meaningful full-time employment growth will not return until businesses have a more confident view of their future prospects.

Additionally, Littler Mendelson predicts that up to 50% of jobs “re-filled” after the recession will be contingent.  Further claiming that “the workplace of tomorrow will feature small, core management teams for key corporate functions such as management and strategic direction.” This will leave production and service requirements to independent contingent resource relationships and/or partnerships.

Businesses strategic leverage of temporary staffing and independent contractors is very evident in the current and near-term growth forecasts of the staffing industry.  The open questions are how permanent will this workforce restructure be, moving beyond the near-term, and how best to manage/optimize this evolving blended workforce structure?

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