Tag: Temporary Staffing

Call Them Temps. Call Them Contractors. Call Them Consultants. Whatever You Call Them – You Need Them!

by Jeanne Knutzen | September 22, 2015

0 Blog, Flexible Staffing Strategies Employment Agency Bellevue, Flexible WorkForce, hiring, PACE Staffing Network, Recruiting, strategic staffing, Temporary Staffing, Temporary Staffing In Seattle, workforce solutions

Call Them Temps. Call Them Contractors. Call Them Consultants. Whatever You Call Them – You Need Them! Employers who have mastered the management of large and strategically focused flexible workforce's, and have learned to embrace this workforce rather than see it as a necessary evil, know that the workforce strategies represented by these workers are anything but temporary. … Read More »

To Rise “Above the Crowd” You Must “Make a Difference”

by Jeanne Knutzen | September 3, 2015

0 Blog, Human Resource Roles, INFO AND RESOURCES FOR JOB SEEKERS above the crowd, differences, employers, Employment Agency, Employment Agency Bellevue, hiring, Hiring Seattle, jobs, jobs seattle, make a difference, Seattle Staffing Agencies, Staffing Agency, temp jobs, Temporary Staffing

“Above the Crowd” is just one more way for us to talk about “making a difference” which has been a watchword for our company, the PACE Staffing Network, since its founding over 35 years ago. Being different by finding people for our clients who “make a difference”, and by helping our clients differentiate their businesses from their competitors, is, for us, the one and only way to truly rise “above the crowd”. … Read More »

A Quick Look At Flexible Staffing Strategies 2009-2014

by Jeanne Knutzen | April 2, 2014

0 Blog, What's New in Staffing? contract staffing, contract worker, Job Growth, Seattle Staffing, Seattle Staffing Agency, Temp to hire, temp worker, temporary agencies, Temporary Staffing

As we have been reporting for the last several years, the “industry category” that has been consistently growing since the 2007 recession ended is the “temporary help” industry, which includes employees of agencies providing temp and contract workers to employers. Current indicators suggest that this trend will continue into 2014, with the Department of Labor projecting that the number of flexible employees who work in short term temporary jobs will grow at double the rate of core jobs over the next decade. In the years between 2009 and 2013, “temps and contract” workers accounted for 15% of all job growth in the US. In 2013, 2.9 million people worked in temporary roles, representing an increase of 28% since 2010 compared to a 5% growth rate for all other jobs. In many regions across the country, the share of job growth credited to temporary and contract jobs were even more significant. In Cincinnati, for example, the increased number of temp and contract workers accounted for over 65% of overall job growth, 51% in Milwaukee, 46% in Kansas City, and 40% in both Chicago and Philadelphia. In fact in most metro areas of the US, a significant percentage of local market job growth came from temporary or contract jobs. According to a recent Career Builder survey, the temporary/contract jobs that will grow at the highest rate in 2014 will be:

  • Human Resource Specialists, which is a job category that will grow by 4%, representing the folks the temporary help industry hires to provide services to their clients. Average earnings for these HR professionals are targeted to be close to $27/hr.
  • Customer Service Reps will grow by 3%, with an average pay rate of $14.70/hr.
  • Admin Assistants will grow by 3%, with an average pay rate of $15.58/hr.
  • Help Desk personnel will grow by 3%, with an average pay rate of $22.32/hr.
Other temporary job categories scheduled to grow by 3% or more include Construction Workers, Registered Nurses, Bookkeeping or Accounting Clerks, Maintenance and Repair Workers, Inspectors/Testers, Truck Drivers, Machinists, and Sales Reps... which speaks to the growing diversity of the new flexible workforces. NancyA different Career Builder survey found that 42% of employers plan to use (more) temporary and contract workers in 2014, with 43% intending to hire their temporary employees into full time permanent staff. The “temp to hire” employee auditioning strategy is definitely alive and well. There is no question that since our last recession, the growth in flexible workforces and the staffing strategies that are creating them has far outpaced the growth in core employment. This trend is targeted to continue and suggests the need for employers to expand their use of flexible workforce strategies as a way to stay competitive both in terms of costs and profits. The drivers of this shift to workforce flexibility are the usual culprits—the need to optimize workforce productivity, to lower fixed operating costs, and to move quickly and nimbly in volatile markets. For more information about how to create a temporary workforce, and/or develop or apply flexible workforce strategies in your work environment, contact our Vice President of Partnership Development at nancys@pacestaffing.com or call Nancy Swanson at 425-454-1075 ext. 3010.

Why “Hands Off” Always Starts with “Hands On”

by Jeanne Knutzen | January 20, 2014

0 Blog, Management.Supervision direct hire, Seattle Temporary Staffing, staffing agency Bellevue, staffing agency kent, staffing agency seattle, staffing partnerships, Temp to hire, Temporary Staffing

Part of our “How to Get the BEST from your Staffing Partner” Tool Kit       While many staffing companies, the PACE Staffing Network included, will advertise their services as a  “hands free” staffing solution, in reality we all know that getting to  “hands free” always starts with our customer’s “hands on” commitment to building a staffing partnership.    Here are 7 “hands on” things you can do to get the best out of PACE or another staffing partner of your choice, when it comes time to use our services to hire the “just right” employee. 1. COMMIT TO A PARTNERSHIP, NOT A SCRAMBLE.  Some hiring managers believe that the best way to ensure hiring success is to bomb the market - to send out written job descriptions to multiple staffing agencies, post their job on multiple job boards, and then sit back and wait for the response. The motive for this approach is to hire quickly and efficiently, finding the employee amongst the sea of candidates that will be uncovered using this approach.   In reality, the result is often an unintended and unwanted opposite. Here’s why… Most high performing staffing companies will not commit internal resources to work on requests where they believe success is either not likely or determined more by luck than skill. They are also reluctant to represent jobs that have been commoditized, i.e. widely available in the candidate marketplace. They know that when multiple agencies are asked to scramble for candidates, the candidates that are assembled quickly are often not the right fit, lengthening the hiring process and expanding the time spent screening unqualified candidates The alternative? Select one, possibly two, staffing companies who have a financial incentive to invest in the time necessary to ensure quality screening. Spend YOUR time making sure your staffing partner has the information they need to source the right candidates and screen them according to your criteria. Let your staffing partner decide how best to source for the right candidates, so that you no longer have to worry about job postings. If you have given your staffing partner enough time to do their work in a quality way, and they don't perform in the timeframes needed, you've likely selected the wrong partner—a staffing company that doesn't have the resources you need. The right staffing partner will align their services with your work style and standards. 2. PLAN FOR SUCCESS. One of the best ways to start a partnership is to spend time at the beginning of your HIRING project, planning for a successful outcome and all the steps in between. Share all you know about the job you need filled and the type of candidates you believe are most likely to be successful in the job. Your pre-hire homework should include talking to those people who know what the job entails; who have a perspective on what type of candidates will do the job well, and where there have been problems with certain types of candidates in the past. Make sure the information you are providing to your staffing partner captures current work content and all the nuances important to placement success. Job descriptions are helpful, but typically need to be updated when it's time to replace an existing employee.  And if you’re hiring a temporary or contract worker to fill a job formerly filled by a core employee, make sure you assess exactly what you need from that temporary or contract worker. The work to be done and the skill requirements for the right candidates are typically quite different for temporary compared to core hires.   Create a realistic timeline for each step in the hiring process—sourcing, evaluating, interviewing, selecting and onboarding the right candidate. Know what’s at stake if the steps in the timeline aren’t completed as planned so all eyes stay focused on addressing the business need, knowing where you have wiggle room and where you don’t. Memorialize your timeline so that both you and your staffing partner know exactly what’s expected, and by when. Reach agreement about how, when, and what will be communicated throughout the hiring process so that you stay in sync throughout the process – no surprises for you or your staffing partner. 3. DEDICATE THE TIME NEEDED! In today’s job market, the competition for talent often translates into the need for hiring managers to give the hiring process their undivided attention. Once your staffing partner has sourced, recruited, evaluated and submitted candidates, there are critical steps in the process—interviewing, evaluating, and deciding—that, only you can do. Trying to sandwich in resume reviews or candidate interviews in-between other work you consider more important, is not a formula for hiring success. So, we like to make sure our client’s work schedules are arranged to have enough time to review submittals, conduct interviews and provide timely feedback. Because the best candidates are typically in the job market for short periods of time, we recommend that you stay prepared to respond to candidate submittals within 24 hours of receipt and be available for a candidate interview 1-3 days from their submittal.    You also must be available to provide feedback, field questions, or address issues with your staffing partner as they come up. Your staffing partner’s recruiters need to know that the work they are doing to attract candidates to their client's jobs will have a payoff for themselves and their candidates. In the staffing business, we refer to customers who request and then don’t respond to candidate submittals, as “black holes.” Too many “black holes” and even the most sought after clients can lose recruiter attention, reducing the chances of a positive outcome. 4. GET CLEAR ON KEY REQUIREMENTS – REALLY! It’s easy to create a long list of “attributes” that you’d like to see in the hired employee. It’s much harder to prioritize that list so that you know which requirements are key to placement success! If you ask your staffing partner for candidates lucky enough to have “everything” on your list, be prepared either to get no candidates or too many candidates, who perhaps more problematically, lack the requirements you believe to be key. Make sure you are clear on the difference between attributes candidates “must have” and the attributes that are better left as “would like.” The take away from any planning process is full agreement with your staffing partner on a SHORT LIST of candidate attributes considered “key” to placement success. And here’s an important tip, once you’ve agreed on key requirements, ask your staffing partner to present prospective candidates using a summary worksheet of how each candidate meets your key “must have” requirements. Don’t let yourself get distracted by impressive resumes or cover sheets that cover up a lack of skills or experiences in areas considered key—a common cause of hiring errors.     5. MAKE SURE THE CANDIDATE YOU REQUEST IS THE CANDIDATE YOU CAN AFFORD. The candidates who CAN DO the job come in a wide variety of shapes, sizes and costs. They will have different skill sets, work experiences, each dictating the amount of money they will request as their pay and benefit package. Be prepared for your staffing partner to share information about the realities of the current job market—things you need to know about what type of candidate’s are available in the marketplace, at what price. If you find that the information you are getting differs from what you thought, don’t shoot the messenger or ignore their message by continuing to insist on the impossible. To make the right hiring decision, the type of candidate you are looking for has to be available in the marketplace and meet the parameters of your budget. Sometimes this requires both discovery and negotiation. For example, let’s say you need to hire an administrative employee to manage your calendar, schedule appointments, and remind you of upcoming tasks. This is a job requiring a very specific set of mechanical skills and a mastery of calendaring technology. If, in addition to these skills, you want to hire someone who will work independently, use their own judgment to arrange meetings and activities on your behalf, keep others informed of projects you are managing, etc. that’s a different set of skills and experiences. Do you need to pay for the higher of the two skill levels? Only you can decide. However, your staffing partner should be able to point out the impact of each requirement on the required pay package. Some employers will simply elect a “developmental” strategy and hire the lesser skilled candidate in order to stay within budget requirements. Others will spend the money on the more highly skilled employee because they need the services of an assistant, not just a technician. 6. BE PREPARED TO BE FLEXIBLE – TO ADJUST THE PLAN. While pre-hire planning is important to an organized, efficient, hiring process, some of the steps in the process or plan often need to be adjusted when faced with the nuances of candidate needs and availability. A candidate who needs to relocate in order to accept your job offer may delay the starting date, requiring you to decide if the candidate is “worth the wait.” A highly skilled candidate whose pay requirements are considerably more than what you had budgeted may or may not be the right hire—but you need to be prepared to decide. Our point? Be prepared to deal with real life candidate situations as they come up, knowing that hiring in today’s marketplace often requires flexibility and creativity. Don’t be afraid to use your staffing partner as your marketplace expert. If you don’t hire the candidate that needs to relocate, what are your chances of finding a similar candidate locally? Is the job you have going to be meaty enough for the higher skilled candidate? Let your staffing partner guide you through your search for answers to these questions. 7. COMMUNICATE CANDIDLY AND OFTEN.  When things change for you, make sure you let your staffing partner know. The work it takes to source, screen, and prepare a candidate for specific work requirements takes time. Your staffing partner doesn’t like wasting time any more than you do and that’s what happens when they don't have the information they need to do their job efficiently. Reciprocally, expect your staffing partner to keep you posted on their candidate sourcing successes as well as information they gather as they track their candidates throughout the placement process. Many times they will be privy to candidate information that will let you know if your preferred candidate is actually going to accept your job offer if extended. We recommend daily touch-points between our recruiting team and our clients to make sure we stay current on what each of us is experiencing as we interact with potential. Feedback processes should be honest, candid and ongoing. This is particularly true with regard to submittal reviews and/or follow-ups after interviews. Your staffing partner needs your feedback ASAP, as they use that feedback to make adjustments in their sourcing and evaluation activities. Don’t be embaNancyrrassed if you don’t think the candidate your staffing partner thought “should be perfect” was not the right fit for you. Selecting the right candidate isn’t about being “right or wrong” in your assessment, but is about gathering as much information as you can on each candidate so your hiring decision can be based on a broad base of information and perspectives. For more information on “how to get the best from your staffing partner” contact me, Nancy Swanson, at nancys@pacestaffing.com or (425) 454-1075 ext. 3010. I’m PACE’s Vice President of Partnership Development – I am focused on helping our customers develop the type of recruiting partnerships that we know will optimize their staffing results.  

Is Your Company Fully Optimizing it’s Flexible Staffing Strategies? Ten Questions you can ask yourself!

by Jeanne Knutzen | October 1, 2013

0 Blog, Human Resource Roles Contract Employees, Downsizing, Flexible Staffing Models, PACE Staffing Network, Seattle Staffing, Seattle Staffing Agency, Shamrock Organization, Staffing Solutions, Temporary Staffing, WorkForce Optimization

1. What percentage of your total workforce currently falls into one of the flexible worker (temp, contract, part-time) categories?  While there is no magic ratio of flex-to-core employees, if your percentage of core to non-core staff is 10% or below, look hard at the things your company is doing to embrace the “flexible work” model. The “shamrock organization” that has been widely touted as the model for the future, suggests that as much as 33% of your workforce can be contingent workers, while another 33% are the workers provided by “outsourced” service providers. Only 33% of this shamrock workforce are core employees, with the responsibility to manage and coordinate the work of the contingent others. Does this staffing model make business sense for your company? Your team? How much money could you shave off your operating budget if you became more “shamrock” like? 2. Is the demand for your goods or services increasing or decreasing? How have you adjusted your headcounts to deal with these trends? Reducing or adding to your temporary/flexible workforce is fast becoming the preferred staffing model to cushion the highs and lows of economic volatility. The notion of “right sizing” isn’t just about reducing staff; it’s also about not making permanent commitments to core employees until you know for sure that a business trend is stable. Using a flexible staffing strategy to always stay “right sized” has become a strategic method used by employers to transition wage costs from a fixed cost to a variable cost. Investing in or holding onto fixed costs that your competitors treat as variable will eventually impact profitability and your ability to compete. 3. Do you have a good handle on the rhythms of supply and demand for your department’s particular goods and services? The reoccurring low and high points of your team’s work cycles? With the growth in popularity of temporary and contract staffing options, an employer’s ability to move employees in and out of work environments quickly has significantly improved. Many employers have made a science out of staffing their teams at levels to support the lowest points in the demand cycle and using flexible workers to cycle-up or cycle-down in response to business need. “Workforce optimization” software’s have been developed to help companies track productivity requirements prior to impact. 4. How much overtime is currently being required of your workforce – core and flex? Overtime is very costly and is often a reactive strategy rather than the result of a well thought out plan. Staffing with the right number of core employees and augmenting up or down with flexible employees should eliminate most overtime requirements. 5. When special projects or reworks come up, do you typically have enough employees currently on staff to handle the extra work load? If you have core staff that consistently have the time to volunteer for additional work, chances are your company has too many fixed wage costs embedded into your workforce strategies. Most work that is non-reoccurring or not part of your regular routine should be done by your flexible workforce, not your core. 6. How long is it taking you to hire a core employee? What is the impact to your business of an inability to hire? If you need to move quickly and it takes too long to hire a core employee, you can miss important opportunities. Temporary or contract employees with the skill sets you need, can be brought in and put to work quickly. Temp-to-hire staffing models have dramatically increased over the last two years. Workers who have found themselves suddenly out of job are oftentimes willing to work in non-core ways. Many of these employees will bring new ideas and new ways of working to your company, promoting an atmosphere of change. 7. Are there jobs under your direction with high turnover, requiring you to be constantly in “hire” mode? Reoccurring turnover can be a sign that the job you are trying to fill just might not lend itself to a core staffing model. Many work groups composed of workers with low to moderate skill levels have been fully converted to a temporary staffing model. Another way of dealing with a high turnover job is to use a rotating group of auditioning contingent workers who you can use to keep work flowing, while giving workers a chance to demonstrate their special interest in or talent for the work to be performed. This auditioning process allows you to “always be hiring” while outsourcing much of the staffing costs to a third party employer. 8. Are there jobs under your direction where the morale of the work group seems to be an issue? Or where a large number of employees are no longer on their A-game? In large teams performing repetitive tasks, there are oftentimes cycles in employee performance that can be managed just like any other business cycle. If your productivity goals are such that all employees need to be on their A-game always, you might consider a more flexible staffing model that capitalizes on the opportunity to bring fresh new employees into your work group at just the right time—recycling employees who might have “burned out” into other work or jobs. 9. Is your team undergoing significant process changes? Bringing on new ways of working? New technologies? Periods of rapid or longer term change are often times when you need to slow down your commitments to core hiring and convert to a more flexible and short term work model. It is not unusual for work groups dealing with extended periods of uncertainty or change to be composed of more temporary than core workers. 10. How much of your operating budget can you devote to temporary or contingent staff? Many companies that monitor hiring levels carefully will at the same time provide considerable budget dollars for temporary/interim staff. One of the ways to add to your workforce without breaking full time employee (FTE) rules is to identify an employee you want to hire and instead of hiring them directly, you use an “employer of record” service through a third-party employer service. This staffing strategy avoids most of the hidden costs associated with core employees, retains the flexible component of an hourly employee who can go in and out of your workforce “at will”, plus protects your current core employees from the stress of trying to do more than they have core FTE to do. For more information about ways to drive down fixed costs by using flexible workforce strategies, contact the PACE Staffing Network at infodesk@pacestaffing.com.

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.

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.