LOCAL NEWS AND TRENDS – EMPLOYMENT, STAFFING

Full Time Employees or Outside Consultants? The Benefits and Drawbacks of Each

by Jeanne Knutzen | April 30, 2013

0 Blog, What's New in Staffing? Full Time Employees Or Outside Consultants, Seattle Staffing, Seattle Staffing Agencies, Seattle Staffing Agency, Seattle WA Staffing, staffing agencies in seattle, Staffing And Hiring Decisions, Temporary Staffing In Seattle, The Benefits Of Outside Consultants

Non-standard working arrangements between employees and the companies that hire them are on the rise. At this point, data suggests that about 30 percent of employer-employee working arrangements in the U.S. fall outside the traditional 1099 model defined by details like eight hour days, onsite task completion, taxes directly withdrawn from paychecks, and employer-provided health insurance. And this number appears to be growing rapidly. As you staff your open positions and search for the most efficient ways to pair workers with vital tasks, how can you decide between traditional employment contracts or consulting agreements with independent providers? Here’s a quick list of pros and cons that can help you move forward. Salary Costs You’ll usually need to pay your outside consultants more per job/hour/project than you would pay a full time employee. But there are several benefits you’ll receive in return for this increase. For example, consultants don’t need to be paid between jobs or kept on board during lulls in your business cycle. They typically show up, provide the skills sets needed, and then move along to the next job when company demand scales back. And they don’t require standard benefits like health insurance and retirement savings plans. In the long run, the amount you save on HR costs, benefits, hiring expenses and the stability that shelters an employee from market highs and lows will equal the extra amount you pay the consultant for his or her services. Skill Sets Consultants can usually offer a higher level of a specific required skill than you may find among your full-time employee pool. So they’re usually called upon to tackle work that’s time critical, skill specific, or too complex for companies to complete themselves. Because they make a living this way, consultants are wise to continually and aggressively build new skill sets, unlike employees who may be less motivated to personally investigate new corners of the industry. But at the same time, employees offer years of experience within their own areas, and they possess intangible institutional knowledge that consultants don’t have. Tax Complications Employers are responsible for deducting all applicable taxes from the paychecks of their traditional employees, which may include federal taxes, unemployment insurance, social security, and state and local taxes. This can add bureaucratic hassle to the full-time staffing process, while outside consultants don’t require this service, since they typically handle tax issues on their own. But again, the more labor and energy the consultant puts into a specific job, the higher the rate he or she can charge an independent employer. And employers will still need to collect W9 forms from consultants and report their earnings to the IRS. This list of pros and cons is by no means comprehensive, but the choice between traditional vs. non-traditional hiring contracts can mean the difference between success and failure for companies with narrow margins. So don’t face these challenges alone. Hiring a full-time or temporary employee can be beneficial to your business. Before you make your decision, reach out to the Seattle staffing and employment experts at PACE. We have the resources and network to help you manage your staff and draw in new talent.

Your 1099 Employees – Avoiding the High Costs of Misclassifications

by Jeanne Knutzen | April 24, 2013

0 Blog, Human Resource Roles, What's New in Staffing? 1099, 1099 workforce, Independent Contractors, PACE Staffing Network, Seattle Staffing, Seattle Staffing Agency, Seattle Temporary Staffing, Temporary Staffing, Workers Compensation

While companies who have effectively used independent contractors to provide quick and easy access to specialized talent or consulting expertise are often considered amongst our most nimble, some of these same companies have recently found themselves facing hefty bills for back taxes, or complicated law suits stemming from workplace accidents or injuries involving a member of their 1099 workforce. Here’s the deal, if the IRS determines that a worker originally considered “independent” was actually an employee, companies can find themselves liable for unpaid Social Security, Medicare, and Unemployment taxes. The IRS couldn’t be clearer, they see “employee misclassification” as a source of hidden revenue, and has budgeted several billion dollars to “identify and prosecute” employee misclassification issues. But unpaid taxes aren’t the only risk associated with the 1099 workforce. Additional issues have developed around workplace accidents where, because a worker was classified as an independent contractor and not covered under the employer’s Workers Compensation policies, the employer was not protected from the limited liability provisions of Workers Compensation and found themselves sued for double and triple damages. A nuance in Washington State law is that employers who use Independent Contractors are required to pay the Workers Compensation insurance and the state’s SUTA tax on hours and dollars paid to their 1099 workers. Not all states have this provision, nor do all employers in the State of Washington abide by this little known component of our state law. Bottom line, employers are at risk of incurring serious damage costs from a workplace injury by an “independent contractor.” One of the confusions we have seen employers make regarding their use of “independent contractors” stems from the mistaken notion that if the “contractor” is legal, meaning they have a business license or legitimate UBI (tax ID)  number, then they automatically pass the “test”, and can be considered “independent”.  The IRS, on the other hand, makes it clear that the “legality” of the claim of independent contractor status lies with the nature of the work to be performed and the degree of control the employer has over how and when it is performed.   The IRS offers several tests an employer can use to determine a worker's status:

  • The degree of control over the worker’s behavior, which addresses the extent to which an employer controls the work performed. The more control an employer has over how a worker performs the work—specifying where, when, and how the work is done—the less likely the worker will be considered “independent.” Employers who place their independent contractors on work teams with required hours of work, mandatory attendance at meetings, required collaborations around work products, etc., often put an independent contractor at risk of being re-classified as an employee, subject to all the provisions and benefits available to an employee.
  • The degree of control over a worker's financial opportunity, which relates to how a worker gets paid for the work performed or reimbursed for the costs they incur in performing the work. The more control an employer has over a workers total source of income, the less likely that worker will be considered “independent.” An agreement to pay a regular wage/salary for example, can be just as suspect as is an agreement to pay a worker hourly, but with an estimated work schedule of 40 hours each week. Work agreements that tie a worker to an employer who then becomes their sole source of income, suggests a less than “independent” relationship with that employer. A related financial consideration is how much personal investment the worker has in the tools they use.  Are they using their own tools/equipment or the company’s tools/equipment?
  • The type of relationship that is formed between worker and company, oftentimes construed as the exclusivity of the relationship, or the duration of the work commitment. Case law around the permanency of a relationship suggests that work assignments intended to last six months or longer better support the notion that a worker is an employee, compared to shorter term work arrangements. A related factor is whether or not the worker is free to pursue other business opportunities during the term of their agreement to provide their personal services to a company. If an employer is asking or assuming someone will work 40 hours/week on their behalf, it is hard to make the argument that they are free to pursue business opportunities elsewhere.
Unfortunately, case law on the use of these IRS tests to determine employee or independent status is riddled with inconsistent outcomes, making it hard for businesses to make quick, definitive classification decisions. An employer who wants to fully protect themselves can file IRS Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. The downside, it often takes several months to get a response on a particular request. In light of the growing number of state or federally generated tax audits, we are seeing more and more companies who have historically relied on independent contractors for specialized work in the IT, engineering, or other professional services areas now looking differently at that staffing solution. Some companies have elected to hire these workers directly; others have elected to end long term relationships with 1099 contractors, sometimes leaving significant expertise holes in their organizations. A third option involves a new category of staffing service that allows an employer to continue to utilize their highly valued but flexible 1099 workforce, while avoiding the legal or financial risks being created by the revitalized audit efforts of state and federal agencies. The PACE Staffing Network now offers a full range of  Employer of Record services that can quickly and cost-effectively convert a client’s current 1099 workforce into a “legally compliant” W2 workforce without adding the additional costs normally attributed to a core workforce. The PACE Staffing Network regularly provides Employer of Record services to customers who are looking to optimize workforce flexibility, while avoiding the risk of unforeseen liabilities. For a complimentary discussion about how your company currently uses 1099 contractors and the options you have to mitigate the risk of misclassification, contact infodesk@pacestaffing.com.

Employment Background Checking – What’s happening?

by Jeanne Knutzen | March 13, 2013

0 Blog, What's New in Staffing? Background Checks, Credit Reports, Employee Screening, Employment Background Check, Equal Employment Opportunity Commission, Fair Credit Report Act, Seattle Staffing, Seattle Staffing Agency

While more and more PACE customers are requiring an increased number of background checks prior to allowing even their short term temporary employees to work on-site, recent trends are starting to reveal just how slippery a slope we’re all on. Here are the trends we see and want our clients to know about. 1. The EEOC is watching closely. With 9 out of 10 employers conducting criminal background checks on some, if not all job candidates, the Equal Employment Opportunity Commission (EEOC) has been paying increased attention to the employer communities’ improper use of arrest and conviction records as part of their hiring process. Their concern?  Making sure that an employer does not check for criminal history too early in the process or reveal the results to all players in the hiring process—thus creating unfair or discriminatory barriers for ex-offenders. Don’t expect them to be definitive—just pay special attention. 2. New Regulations (Re: Credit Reports). Seven states, Washington being one of them, currently have laws limiting the use of credit report checks by employers for employment purposes. Washington’s law, passed in 2007, prohibits employers from obtaining a credit report as part of a background check unless that information is substantially job related.  It requires employers to state in writing their reasons for using this information—for example, could their credit information be relevant to their job performance. 3. Social Media – Increasingly prevalent, but still controversial. While some employers have been found negligent by not tapping into information readily available to them via social media venues, employers have also learned to tread with caution.  The information you read is not always 100% accurate and you could face issues related to violation of privacy and possible discrimination.  A recent study by social media thought leader, Jobvite, suggests that 86% of recruiters will, on occasion, view a candidate profile on a social media venue—61% say they do so regularly.  By searching these social media venues for possible job candidates, employers are potentially facing a slippery slope. 4. Automation – Balancing efficiencies with risk. While technology advances have created a robust landscape for employers to select their screening providers—who advertise fast, accurate and inexpensive results–the risks of misusing unfiltered or inaccurate information continue to increase. Whole new industries and services are being created to certify a vendor’s use of “best practices.” For example the National Association of Professional Background Screeners (NAPBS®) has created an accreditation rating for its screening provider members. Employers are urged to select their background check vendors against measured forms of knowledge and process execution. 5. Lawsuits – More coming on all fronts! With the advancement of Fair Credit Report Act (FCRA) regulations, employees and their attorneys are now looking closely at how those regulations have been implemented inside specific employer organizations and how they have impacted specific employees applying for work. Not unexpected, however, are the increasing number of FCRA infractions and other related lawsuits. The result is the “perfect storm”—with employers facing the risk of being sued by their own employees for workplace crimes committed by other employees that were negligently hired, while also facing lawsuits from job applicants complaining of inaccurate reports or failures to meet FCRA disclosure requirements.

75% of Your Workforce is “Always Looking”

by Jeanne Knutzen | March 12, 2013

0 Blog, INFO AND RESOURCES FOR JOB SEEKERS, What's New in Staffing? American Staffing Association, American Workforce, Facebook, Job Seekers, Jobvite, LinkedIn, Seattle Staffing, Seattle Staffing Agency, Seattle Temp Staffing, Social Media Recruiting seattle, Twitter

According to social media thought leader, Jobvite, in their 2012 Social Job Seeker Survey, 75% of US workers are constantly looking for work—a number that is up six percentage points over the comparable count in 2011. While 1/3 of these job seekers feel less optimistic about finding a job today than they did a year ago, 41% of employed job seekers believe they are overqualified for the jobs they currently hold.  Jobvite's Social Job Seeker Survey 2012 polled over 2,100 adults, 1300 of that number were either currently employed or unemployed and considered themselves actively looking for work. According to the Jobvite survey, Facebook is the leading social network in the American workforce with 83% participating at some level in Facebook activity. Both Twitter and LinkedIn enjoyed major increases in 2012 compared to 2011 with Twitter now being used by 46% of the workforce; LinkedIn used by 41%. Not surprising, those people considered job seekers were shown to be more social than the overall workforce—88% had at least one social networking profile; 64% had accounts with at least two networks and 44% using three or more. With 1 in 4 job seekers (24%) indicating that they were asked for their social media profiles as part of an application process, more workers reported they had updated their profile content with professional information in 2012 than they had in the year prior. In previous studies, Jobvite has found that 86% of recruiters occasionally look at social profiles for candidates they interview, with 48% reporting they always do so.  According to press releases by Jobvite, Dan Finnigan, President and CEO said that “maintaining an online presence and keeping employment top-of-mind at all times are vital to professional success.” Facebook Stats

  • 52% of job seekers use Facebook to help find work, up from 48% in 2011
  • 14% searched for jobs on Facebook
  • 17% provided their Facebook profile on a job application or during an interview
  • 70% of Facebook-using job seekers are male, 63% are under the age of 40, 40% earn more than $75,000 and 36% are college graduates
LinkedIn Stats
  • 38% of job seekers use LinkedIn to help find work; up from 30% in 2011
  • 19% had a contact share a job on LinkedIn (vs. 8% in 2011)
  • 11% searched for jobs on LinkedIn
  • 9% provided their LinkedIn profile on a job application or during an interview
  • 60% of LinkedIn-using job seekers are male, 62% are under the age of 40, 51% earn more than $75,000 and 50% are college graduates
Twitter Stats
  • 34% of job seekers use Twitter to help find work; up from 26% in 2011
  • 11% had a contact share a job on Twitter (vs. 7% in 2011)
  • 10% searched for jobs on Twitter
  • 10% provided their Twitter profile on a job application or during an interview
  • 67% of Twitter-using job seekers are male, 69% are under the age of 40, 46% earn more than $75,000 and 44% are college graduates
Jobvite is a leading recruiting platform for the social web, providing companies with applicant tracking, recruiter CRM and social recruiting software.  Information on their press release was provided by the American Staffing Association. For more information on Jobvite and their 2012 Social Media Survey, visit www.jobvite.com.

IT Employment Grows Briskly in January

by Jeanne Knutzen | February 19, 2013

0 Blog, IT Staffing, What's New in Staffing? Information Technology, IT Employment, IT Employment Opportunities, IT Staffing Seattle, Seattle IT Staffing, Seattle Staffing Agencies, Seattle Temporary Staffing

According to a press release from TechServe Alliance, a collaboration of IT service firms, clients, consultants and suppliers, IT employment set another all-time high in January with an increase of 15,800 jobs. IT employment has grown by over 4% since January 2012. "Despite the lingering uncertainty with the U.S. and global economies, I anticipate demand for IT professionals will remain robust throughout 2013," said Mark Roberts, CEO of TechServe.

Employee? Independent Contractor? Somewhere in between?

by Jeanne Knutzen | February 13, 2013

0 Blog, PACE News!, What's New in Staffing? 1099 Workers, Employer of Record, Employer of Record services, Independent Contractor, Seattle Sick and Safe, Seattle Temporary Staffing, staffing agencies seattle, staffing Seattle, W2 Employees

With healthcare costs rising and mandated benefit requirements either already in play (e.g. Seattle Sick and Safe) or just around the corner (e.g. ObamaCare), employers are contemplating their staffing decisions related to the use of Independent Contractors compared to W2 employees. … Read More »