LOCAL NEWS AND TRENDS – EMPLOYMENT, STAFFING

What Our Clients Need to Know About the Affordable Care Act

by Jeanne Knutzen | June 28, 2013

0 ACA Affordable Healthcare, Blog, Healthcare Staffing, What's New in Staffing? Affordable Care Act, Affordable Healthcare – ACA Smart, American Staffing Association, ASA, Benefits, Healthcare, Seattle Staffing, Seattle Temporary Staffing, Temporary Staffing

What two years ago seemed like an event too far off to care about, the launch of the Affordable Care Act (ACA) this coming January 1st is now just around the corner. While there are still significant gaps in the clarity needed to fully comply with the 2700+ page law,  we now know that most of the regulations that are going to be activated in January have been written. It’s now time for employers to make decisions about how they will comply with the key provisions of the Affordable Care Act. Because we are still hearing our client’s asking questions about the basic components of the law, we wanted to share information provided to us by our national trade association, the ASA (American Staffing Association), which we think does a good job of outlining the key elements of the ACA and what it means to our clients. Since the staffing industry is significantly impacted by ACA mandates, our industry worked closely with the DHSS throughout the writing of the ACA regs. Key ACA Definitions 1. (Eligible) Full Time Employee: Any employee who averages at least 30 hours per week (130 hours per month; 1560 hours per year). 2. Seasonal Employees: Employees working less than 120 days in a year. Generally excluded from ACA coverage because not considered full time. 3. Healthcare Plan—Minimum Essential Coverage (MEC): References the requirement that a compliant healthcare plan after January 1st must cover healthcare basics, “the diagnosis, cure, mitigation, treatment or prevention of disease.” Many of the so called “mini med”, wellness, and preventative plans will not meet the MEC requirement. 4. Healthcare Plan—Minimum Value: References the requirement that a compliant healthcare plan cover at least 60% of the overall costs associated with 1) physician and mid-level practitioner services, 2) hospital and emergency care, 3) pharmacy costs, and 4) laboratory/ imaging services. Many high deductible plans will not meet Minimum Value requirements.

  • The IRS and DHSS are developing a Minimum Value Calculator and a safe harbor checklist that employers can use to see if their plan meets the Minimum Value test.
6. Affordability: Refers to the ACA requirement that the employee’s share of the costs associated with single-only plan can be no more than 9.5% of the employee’s income. 7. Play: Refers to the decision an employer might make to offer a healthcare plan that provides Minimum Essential Coverage to 95% of its full time employees and their dependent children under age 26 (NOTE: It is not mandated that spouses be offered the plan). Even employers who “play” may be subject to penalties if 1) their plan is not affordable, 2) they fail to offer the mandated coverage to at least 95% of their eligible employees, or 3) if they do not offer coverage that meets the Minimum Value test. 8. Pay: Refers to the decision an employer might make to not offer the Minimum Essential Coverage, making them subject to “failure to offer” penalties. 9. Administrative Period: Refers to the first 90 days of a new hire’s employment within which their employer is required to offer an eligible full time employee the mandated benefits. 10. Exchanges: The mechanism through which insurers will offer small employers (less than 100 employees) and individuals the ability to purchase health insurance. If a state doesn’t provide an exchange, the federal government is required to do so—Washington, Oregon and California have created exchanges. 11. Subsidies: The credits available to individuals who qualify for assistance in order to purchase coverage through an Exchange. The subsidy assists the individual but is provided directly to carriers Key ACA Requirements 1. Employer Requirements: Employers with 50 or more full time employees (and full time equivalents) must offer a healthcare insurance plan that provides minimum essential coverage (MEC) to 95% of their full time employees and their dependent children (the play option) or be subject to penalties (the pay option). 2. Employer Penalties:  Employers are subject to penalties whether they pay or play. The amount of the penalties varies: 3. Penalties for Employers who Play—“Inadequate Plan” Penalties:  If the plan offered is “unaffordable” or does not provide “minimum value” the penalty is $250/month (up to $3K annually) per impacted employee who seeks and is granted a government subsidy. 4. Penalties for Employers who Pay—“Failure to Offer” Penalties:  If the employer does not offer a MEC plan to 95% of their full time employees and their dependent children, the monthly tax is $167 (up to $2k annually) on ALL full time employees (minus their first 30). NOTE: Pay Penalties apply to all employees, not just the employees not covered and are not tax deductible. 5. Individual Requirements: Individuals must enroll in a healthcare plan that provides them and their dependents minimum essential coverage or pay penalties. If they do not obtain insurance through their employer or Medicaid, they are required to purchase an individual plan that will be offered to them through Exchanges. 6. Individual Penalties: The penalty for failing to have insurance is either a flat dollar amount per person or a percentage of household income.
  • 2014: $95 per person (up to 3 or $285) or 1% of household taxable income
  • 2015: $325 per person (up to 3 or $975) or 2% of household taxable income
  • 2016: $695 per person (up to 3 $2085) or 2.5% of household taxable income
  • 2017 and beyond – same as 2016 with Cost of Living increases
7. Individual’s Eligibility for Subsidies:  Individuals with household incomes determined to be 100-400% of federal poverty levels may be eligible for government funded subsidies that they can use to buy insurance through public health exchanges.  NOTE:  Employees are not eligible for coverage if they are on Medicaid or have been offered a healthcare plan that is both affordable and meets Minimum Essential Coverage by their employer and refused it. 8. State and Federal Public Health Insurance Exchanges
  • Provide a place for individuals or small employers to purchase of compliant healthcare insurance. Available plans will be categorized into one of four groupings: Bronze, Silver, Gold and Platinum, plus a catastrophic plan.
  • Determine an employer’s or individual’s eligibility to purchase through the Exchange.
  • Determine the affordability of a plan offered to an individual through their employer.
  • Determine an individual’s eligibility for exemptions or subsidies.
9. New Discrimination Mandates
  • The regulations relating to the new discrimination provisions embedded in the ACA are not yet written and likely won’t be before 2015.
  • 2014 will allow differentiation in the plans offered to different employees and will allow different levels of employer contributions to those plans. Tiered/pay up plans are allowable in 2014.
  • Discriminations in favor of lower paid employees will remain permissible after 2014. Any employer can pay more for their lower paid employees to ensure what they offer meets “affordability” standards.
The ACA and Staffing - Unique Applications  1. Variable Hour Employees: Refers to employees working in a job where the length of employment or the hours of work each week is uncertain. The Variable Hour employee definition is assumed to apply to the majority of temporary or contract workers represented by the staffing industry who work on 1) an undetermined number of “short term” assignments, 2)  with a variety of clients, and 3) likely to be gaps between assignments.
  • Estimates are that only 10% of the current temporary and contract workforce will be benefit eligible.
  • The ASA is advising its members that assignments targeted to last less than six months will not be challenged if classified as “variable.” Assignments intended to last longer than six months are subject to “common sense” interpretations of the requirement of “uncertainty.”
2. Specific Rules for Variable Hour Employees:
  • Measurement Periods and the Look Back Rule: A look back/measurement period is a time period (ranging from 3 to 12 months as selected by the employer) during which a variable hour employee is determined to meet the test of full time status. To become eligible for coverage, an employee must average at least 30 hours per week during the measurement period.
3. Stability Periods. Stability periods must include the same number of months as the elected measurement period but are counted on a go-forward point from date of benefit eligibility. Employees working full time during the look back period will be benefit eligible during the go-forward stability period as long as they stay employed. NOTE: Employee must be covered during their stability period even if their hours of work are reduced to part-time status. 4. Staffing Firm Costs to Play include:
  • The cost of an affordable plan for 95% of eligible employees.
  • Minus the costs that would otherwise be associated with employees who opt out because they have coverage elsewhere
  • Plus the cost of penalties for any employees that receives subsidies because the plan offered is not affordable.
5. Staffing Firm Costs to Pay include:
  • A nondeductible monthly tax assessment of $166.67/month on all eligible employees (over the first 30). Penalties would be applied to ALL employees, covered or not.
6. Impact of Increased Costs on Clients
  • Expect 1-5% increase in bill rate
7. The Staffing Industry Challenge – “There are not a lot of Health Plans Designed for Temporary Workers“
  • Mini med plans no longer allowed. Fixed dollar indemnity plans—do not qualify as providing “minimum value;” preventive and wellness plans—won’t provide “Minimal Essential Coverage.”
  • New plans are expected to be developed between now and January 1st but with unknown costs and coverage.
The American Staffing Association and the ACA The American Staffing Association played an active role in writing ACA regulations. The ASA supports compliance with the law and urges its members not to participate in practices that violate either the substantive components of the law or its intent. The ASA strongly urges its members to avoid any arrangements with clients aimed at avoiding coverage or penalties. Activities the ASA believes will trigger an IRS audit include: 1) splitting hours of work between two entities when the employee is doing one job, 2) reducing employee headcounts below 50 for the purpose of avoiding ACA requirements, and 3) terminating, refusing to reassign, or limiting the hours of work for employees if the purpose is to deny coverage or penalties. Staffing can continue to be used for valid business reasons; fluctuating workloads, staffing special projects, managing turnover, auditioning processes, and legitimate part time work. For more information on the ACA and how it will impact your temporary workforce in 2014, contact us at infodesk@pacestaffing.com.

The Affordable Care Act and Your Flexible Workforce

by Jeanne Knutzen | May 15, 2013

0 ACA Affordable Healthcare, Blog, Human Resource Roles, What's New in Staffing? ACA regulations, Affordable Healthcare – ACA Smart, Health Insurance, Obamacare, PPACA, Seattle Staffing, Seattle Staffing Agencies, Seattle Staffing Agency, Seattle Temporary Staffing, Seattle WA Staffing, staffing, Temporary Staffing And The Affordable Care Act, Temporary Staffing In Seattle

While we have always known that the Patient Protection and Affordable Care Act (aka: PPACA, ACA, AHA, Obamacare) would impact the temporary staffing industry and its customers, the regulatory information that has been surfacing over the last several months is starting to reveal the impact of some of the details embedded in the law. We are finding both good and bad news in the newly published regulations—new requirements that will increase the costs of temporary and contract workers; nuances in those requirements that will make flexible workforce strategies an even more attractive model for driving down operating costs. While the law is still very confusing, the reality is that most of the regulations that will be written, have been written to the point where more and more cost conscious employers are starting to re-think how they get work done—what types of employees to put to work when, where,  and how. The following information is being provided to PACE customers as a way to lay out the facts of the ACA and its regs, prepare you for what lies ahead, and offer some ideas for not only staying compliant, but mitigating some of the cost increases we are all anticipating. Our comments will focus primarily on the impact of the ACA on our client's non-W2 workforce, which includes not only your temporary and contract workers but any workers performing work on your behalf through the services of a third party employer. ACA Overview Under the ACA, all “large” employers are required to do three things to stay in compliance with the law as of January 1st, 2014.

  1. Offer “minimum acceptable” healthcare insurance to 95% of their eligible fulltime employees (leaving a 5% margin of error).
  2. Ensure that the cost of the plan they offer is “affordable” (i.e. will not require any employee to pay more than 9.5% of their annual pay towards the costs of an individual plan), and
  3. Ensure that the plans(s) offered and the employer’s contribution to these plans is not set up to favorably treat highly compensated employees.
Large employers will be required to pay the costs for meeting these three requirements (what is often called the “play” option) or face substantial penalties for non-compliance (what is often called the “pay” option). The definition of a “large” employer applies to any employer with fifty or more fulltime employees. A fulltime employee is someone working 30 hours a week or 1560 hours per year. The Bad News for Staffing Companies and Their Customers Some clients have asked “does PACE have to be compliant with the law?” The answer is a resounding yes. And for PACE, like most staffing providers, our bad news is that the types of healthcare benefit packages typically available to the staffing industry will no longer meet the new federal standards for “minimum essential coverage.” Most staffing companies are making decisions now to either “play” (pay the additional costs associated with compliant coverage), or “pay” (pay the penalties for non-compliance, i.e. $2000/year per uncovered employee). Both options mean that as of January 1st, 2014, the direct costs associated with using third party staffing services will increase. We are anticipating that the costs to become fully compliant with the law will require most staffing companies to ask for a 2-4% increase in client bill rates, just to break even; anywhere from $.16 to $.35 cents per hour. Cost increases for all types of staffing - core and non-core—represent the bad news that is part of the ACA and will impact all "large" employers on or about January 1, 2014. Some Good News for Users of Staffing Services—the Variable Worker and Look Backs! All of the news embedded in the ACA is not bad! While an employer’s requirement to provide coverage applies to all full-time employees (individuals who work 30 hours a week, 1560 hours a year), there are special rules that apply specifically to the types of “variable” workers who work for temporary and contract staffing companies. We believe these rules will create new opportunities for cost savings for PACE customers. As the ACA regulations have rolled out, we now know an employer can stay in compliance with the law and still delay offering the mandated benefit packages to some employees who can be legitimately classified as a "variable" worker. A variable worker is someone working in a job that is subject to change, or with an uncertain duration or end date—a condition that is pretty much a given in most temporary or contract staffing environments. The period of time between when the variable worker starts work and the date when they are evaluated for benefit eligibility is called the “look back period” , and can be 3, 6, or 12 months—each employer gets to decide. Staffing companies who go through the administrative process to confirm their workers are  “variable"  and therefore subject to the “look back” provisions in the law, will be able to generate significant cost savings for their customers. While most of our client’s W2 employees will not qualify for variable worker status, and must, therefore, be offered the mandated benefits within an administrative period that cannot exceed three months, most temporary or contract workers will be considered  "variable" and not eligible for insurance coverage until they have reached the required 1560 hours (9 months or more). This variable worker “look back” provision in the ACA creates considerable opportunity for companies like PACE to offer our clients “variable” workers at significantly less cost than would be required for the client to hire an employee directly. The differentials in the direct costs of these two types of employees will be dramatic—creating compelling reasons to rethink their use of third party employers in the early stages of a new hire. The Impact of New Anti-Discriminatory Regulations on Our Clients Benefit Costs One of the more significant impacts of the ACA, not often discussed, are provisions in the law that tighten up opportunities to treat different types of employees differently.  Consultants to our industry are advising us that the anti-discrimination components of the ACA will obsolete any plan that differentiates coverage or costs in favor of highly compensated employees. For the staffing industry, this means that whatever benefit programs offered to our temporary employees needs to be offered to our regular employees. For our customers this means that whatever healthcare benefit package offered to their highest paid employees must be offered to their lowest paid employees. To be compliant with the “affordability provision” of the ACA, no benefit eligible employee in your workforce can be asked to pay more than 9.5% of their gross pay for the cost of your plan’s individual coverage. For a worker earning 20K in a year, this means they cannot contribute more than $1900 a year or $158.33/month in order for the plan offered by their employer to be compliant. How this compliance benchmark is achieved is what will get tricky for many employers. When the compliance calculations are based on what the employer can legally pay for the lowest paid employees, it limits the amount of employer contribution that can be applied to the highest paid employees. If the amount contributed to all employees is based on the amounts of the employer contribution made available to higher paid employees, overall costs of benefit coverage will skyrocket. This is the dilemma the law intends. Employers will be challenged to create benefit programs that will be equally appealing and affordable for all employees. We are already talking to some employers who will elect to outsource their W2 relationships simply to avoid the risks of discrimination. Employer of Record Services—Minimizing the Impact of the ACA! The following are some ideas for PACE customers who are open to looking at new staffing strategies built around the special provisions in the law designed specifically for staffing providers. You will notice that we have laid out these ideas from the perspective of a third party employer service provider, not just a temporary or contract labor provider. The PACE Staffing Network has recently added a new “employer only” service, what we call an Employer of Record Service, partly in anticipation of the service needs of our clients following the implementation of the ACA in January. Employer of Record Services are particularly attractive to employers with strong internal recruiting capabilities because they offer highly discounted bill rates that carve out all extra costs (for recruiting, screening, etc.) to include only those costs associated with providing W2 employer services. Employer of Record Service packages are customized to the unique needs of each client, but the following represents a few ideas of how these services might be applied to your workplace as a way to shave workforce costs.

1. Employers can use a third party employer solution to avoid compliance requirements. For employers who need to add staff, but also want to remain below the 50 FTE (fulltime equivalent) threshold that exempts them from the ACA regulations, using a third party employer solution to channel employees to another employer can delay the point when they must become compliant with the law.

The Employer of Record Service option is ideal for employers who have located an employee they want to hire, but don’t want to absorb the costs or administrative hassles of employing that worker directly. Employer of Record Services is especially ideal for companies who want to either avoid or delay the compliance requirements of the ACA.

We are encouraging our smaller clients to plan now for what lies ahead. We’ve heard stories of regulatory agencies getting ready to target companies who have been sending large numbers of already existing employees to a third party employer as a way to avoid ACA regulation. We do not recommend this strategy. 

But for employers who haven’t yet reached that 50 FTE benchmark, a third party employer solution applied to your near term hires can successfully delay when your company falls under the ACA.

Word of caution: using a third party employer solution is considered a short term (one-two year) solution. The administrative rules of the ACA dictate that after one year, all workers in your facility, regardless of who employs them, will be counted as part of your FTE.

2. Employers Can Use a Third Party Employer Solution to Mitigate the Costs of Adding Staff.  If you’re an employer who needs to hire but is reeling from the high costs currently associated with each new hire (and targeted to increase after January 2014),  it may be time to seriously consider using a third party employer solution as an extended (6-12 month) onboarding strategy.

While you may have already reviewed and walked away from the more traditional temp-to-hire staffing models, the lower cost, Employer of Record Service model offers all the cost savings advantages of categorizing employees as variable, while providing a very behind-the-scenes model of W2 employment.

Whether you use the full service temp-to-hire service model, or the considerably streamlined Employer of Record Service model, the opportunity to onboard a large number of workers at substantially lowered worker costs compared to the costs of hiring directly is the outcome of either choice.

3. Employers Can Use a Third Party Employer Solution to Avoid Administrative Hassles. The ACA is not just a regulation that adds additional direct costs, but is a regulation rich in administrative detail and reporting requirements.  Administering healthcare benefits where you have to apply definitions of variable workers, calculate look back, measurement and stability periods, and do e “affordability” testing, is going to be a daunting task for whoever takes it on.

And the penalties for not doing the right administration correctly will be significant.

As a staffing company with a large “third party employer” workforce, one of our core competencies is our ability to manage all federal and state staffing regulations, including the ACA. We are getting ready now to be fully compliant with all regulations by January 1st, 2014 and will be ready to help our customers manage through the transition.

jeanneFor a better understanding of how the ACA will impact your company and what you need to know about the options available for you to mitigate the costs associated with the new mandates, contact infodesk@pacestaffing.com to arrange for a personal consultation. Our approach to the ACA is not only to be fully compliant by January 1st, 2014, but to help our customers take full advantage of all aspects of ACA provisions that can drive down staffing costs. This article was prepared by Jeanne Knutzen, Founder and CEO of the PACE Staffing Network using information from a variety of legal, staffing, and other professional sources.

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 Workforce – 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.

More on Employee/1099 Misclassifications – The New “Right to Know” Proposal

by Jeanne Knutzen | April 16, 2013

0 Blog, What's New in Staffing? 1099, 1099 Misclassification, Department of Labor, HR Professionals, PACE Staffing Network, Seattle Staffing, Seattle Staffing Agency, Staffing Agency, The Society for Human Resource Management

As part of our watch on the governments crack down on employee misclassifications and the impact on the 1099 workforce, we thought our readers might be interested in the latest efforts of the Department of Labor to expand its attack on all forms of employee misclassifications that impact a workers access to taxable levels of pay and benefits.  The DOL’s Wage and Hour Division has proposed to conduct a survey to collect information from employees on 1) whether they are classified as an employee, independent contractor, or some other status, and 2) whether or not they understand the implications of their classification status on access to certain pay or benefits.   CommunicationThe survey is being tagged as a first step in the larger “Right to Know” initiative, which they consider a way to “foster more openness and transparency in demonstrating an employer’s compliance” with  certain recordkeeping requirements associated with the Fair Labor Standards Act.  When fully implemented, “Right to Know” regulations would require HR professionals to disclose to their workers how they determined their classification and how their pay and access to benefits will be calculated.     The Society for Human Resource Management (SHRM) has been asked to comment on the survey proposal and will question the necessity for the survey, its format, and its use.  For more information on the DOL Misclassification Initiative you can visit their official website at www.dol.gov/whd/workers/misclassification. For information about the impact of a 1099 misclassifications and how to avoid the hidden liabilities of misclassifications in general, contact our infodesk@pacestaffing.com.

The Job Market – March 2013

by Jeanne Knutzen | April 10, 2013

0 Blog, What's New in Staffing? Job Growth, Job Market, PACE Staffing Network, Seattle Staffing, Seattle Staffing Agency, Staffing Firms, Temporary Jobs, Unemployment, Unemployment Rate

March was another big month for the temporary help industry. Staffing firms added between 20k-50k new jobs between the end of February and end of March. Year-to-year, the number of temporary jobs grew by 6-7% when compared to temporary jobs in March 2012. The growth in temporary jobs is explainable in the context of the broader market where the economy added 88,000 jobs in March. This is the lowest rate of job growth in nine months and far below the 200,000 or more jobs predicted by many economists.  This is just another example where growth in temporary jobs often goes hand-in-hand with a slowing down or increased volatility in the larger job market. Overall employment growth was primarily driven by new jobs in professional and business services (+51,000), health care (+23,000), construction (+18,000), and leisure and hospitality (+17,000). The overall U.S. unemployment rate took a small dip downward from 7.7% in February to 7.6% in March. Other negative news came from tracking layoffs where March reported companies announcing over 49,000 in layoffs. While this represents an 11% downtick of announced layoffs from February, it is a 30% increase over layoffs reported in March 2012. The first quarter of 2013 saw more announced layoffs than any quarter since 2011. A recent survey by PNC Financial Services Group indicates that the owners of small and midsized businesses planned to delay hiring new employees despite what is otherwise their cautious optimism about the economy in general. Three out of four small and midsized businesses expect their staffing to remain unchanged for the next six months. It would appear that the optimism with which most businesses started this year is now being tempered by ongoing reports of actual results falling short of expectations. For more information about the local job market and the availability of employees for temporary or direct-hire, contact infodesk@pacestaffing.com

H-1B Visas 2014!

by Jeanne Knutzen | March 26, 2013

0 Blog, IT Staffing, What's New in Staffing?

Here is a heads up to our customers and suppliers in need of employees working on H-1B Visas. We received the following information in regards to the process used in applying for 2014 Visas. The US Citizenship and Immigration Services (USCIS) will begin accepting H-1B petitions for FU 2014 cap on Monday, April 1st, 2013. The cap, which is the numerical limitation on H-1B petitions that will be accepted for 2014, is 65,000. The first 20,000 H-1B petitions from individuals who have received a master’s degree or higher will be exempt from this cap. If USCIS receives more petitions than it can accept, they will use a lottery system to randomly select the number of petitions allotted to reach the numerical limit. The lottery method was last used in April, 2008. In light of the volume of petitions that are anticipated to be filed in the first few days of April, USCIS has temporarily adjusted its current premium processing practice. While petitioners may still request premium processing for cases filed on April 1st, the 15-day adjudication period will not begin until April 15th, 2013. For more information about how your company can access high quality IT talent, with or without H-1B status, contact our 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 and Healthcare – Where the Jobs Are!

by Jeanne Knutzen | March 8, 2013

0 Blog, IT Staffing, What's New in Staffing? Healthcare, Healthcare Industry, Healthcare Jobs, IT, IT Job Market, IT Marketplace, IT Professionals, PACE Staffing Network, Seattle Staffing, Seattle Staffing Agency

According to the US Bureau of Labor Statistics, the IT job market added 62,500 jobs in 2012, a good start, but not yet a number that returns the sector to its pre-recession highs. But for those of us staffing IT professionals for the healthcare industry, we have seen an exceptionally robust demand for IT talent over the last three/four years. In 2012, IT jobs in healthcare and healthcare insurance lead the way as the fastest growing segments of the IT marketplace. 2013 is shaping up to look the same. Part of the reason for healthcare-related IT growth is driven by an overall growth in healthcare services in general—the growing patient population fueled by our aging baby boomers. Overall healthcare employment rose by 338,000 jobs in 2012, and is expected to surpass that number in 2013. According to the Center for Health Workforce Studies one in nine Americans will be working in a healthcare related job by the year 2020.  IT growth is also being fueled by changes directly impact the healthcare industry. Two of the primary drivers of growth in healthcare IT have been the 2009 American Recovery and Reinvestment Act and the 2010 Affordable Care Act, (ObamaCare). The Recovery Act set new technology standards for medical providers, requiring that hospitals, clinics and insurers adapt standardized electronic systems for storing and sharing patient health records. The new ICD-10 billing and coding standards are being implemented now. In similar fashion, the Affordable Care Act has created a whole new set of IT jobs stemming from the state-based online health insurance marketplaces that must be operable by January, 2014. By all counts, the basic infrastructure that needs to be in place just to meet the new service needs of the millions of new patients/consumers who will be entering the healthcare marketplace between 2013 and 2020 ensures strong growth in the IT job market for several years to come. As healthcare providers have been turning more and more to new forms of virtual care as a way to lower their operating costs, IT professionals have been expanding the quantity and quality of ways patients and providers can interface virtually. In the last two years, those interfaces have had to accommodate an increasingly mobile population of healthcare customers, requiring constant changes in mobile friendly interfaces. Other IT projects have been focused on improving clinical data searches, business intelligence, and the development of systems to allow various software, apps, databases and clinical hardware to share and exchange information. Big data has definitely been a trend alive and well in healthcare IT. With some variation between surveys, IT salaries have been slated to grow somewhere between 1-5% over the next 12 months, with the bulk of the higher percentage increases being earned by the IT professionals who are involved with healthcare. For more information about jobs in IT, healthcare, insurance and financial markets in particular, contact infodesk@pacestaffing.com—please include IT jobs in the subject line.

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 »