Jul 05

OFCCP Violations have Real Consequences

By Rebecca Callahan OFCCP No Comments »
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During a compliance review, the OFCCP uncovered that pharmaceutical giant AstraZeneca had paid – on average – $1,700 less to its female sales specialists than their male counterparts. As a result of the findings, the company must pay $250,000 plus interest in back pay and monetary damages to the impacted group. 

AstraZeneca holds a $2 Billion contract with the Department of Veterans Affairs and, as such, is required to comply with OFCCP regulations or risk cancellation of its contract and face debarment. Maintaining all supporting documentation to demonstrate compliance for as long as it remains a federal contractor is paramount.

Does your organization have federal contracts? What are you doing to ensure alignment with OFCCP requirements?

  • Make sure there are no statistically significant disparities by reviewing similarly situated employee groupings
  • Managers and recruiters need to offer fair compensation, regardless of gender.
  • Organizations must be able to substantiate the compensation status of employees in the SSEG.

Rather than to take risks, rely on a trusted provider such as SourceRight Solutions to educate your team on OFCCP.

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Jun 28

California SB 459 Employment: Independent Contractors

By Beth Mesechoff Contingent Workforce Management No Comments »
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On June 23, 2011 bill SB 459 cleared another hurdle towards becoming law by passing the California Assembly Labor Committee by a vote of 4 to 2 to make its way to the Judiciary Committee. 

Bill SB 459:

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

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

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

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Jun 15

Fair Criminal Record Screening Standards Act

By Rebecca Callahan Recruitment No Comments »

The City of Philadelphia recently announced a new initiative aimed at setting limits on employers requesting criminal records of applicants. Set to go into effect July 1, 2011, the new Fair Criminal Record Screening Standards Act (FCRSSA) is designed to aid former criminals trying to secure employment at companies with 10 or more employees operating within city limits. While similar legislation exists in Hawaii, Massachusetts and Minnesota, this law is the first of its kind in Philadelphia.

The FCRSSA stipulates the employers may only inquire about criminal arrests during the standard pre-screening process and cannot bring up prior convictions on the application or during interviews. This law requires that employers determine whether or not an applicant’s prior convictions have bearing on the job opening. Similarly, at no time can employers ask or take action against candidates for past arrests without conviction.

Before going into effect, employers have until June 17, 2011 to update applications and the hiring process and train hiring staff on the FCRSSA. After July 1, companies found in violation may be fined up to $2,000 per incident.

This new law presents detailed restrictions for companies looking to fill openings without discriminating. Careful preparation and ample training are crucial for fair practice and spotting qualifications instead of convictions.

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May 19

New Measures in Veteran Hiring

By Rebecca Callahan Recruitment No Comments »
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The U.S. Department of Labor’s Office of Federal Contract Compliance Programs announced a proposed rule to strengthen affirmative action requirements for veterans protected under the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA) on April 26, 2011. Those protected include veterans: disabled, Vietnam-era, active duty and those recently discharged as well as anyone who served during a war, campaign or expedition.

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

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

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Apr 27

More on Misclassification

By Beth Mesechoff Contingent Workforce Management No Comments »
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The Payroll Fraud Prevention Act (S.770) [PFPA], introduced April 8th, would amend the Fair Labor Standards Act of 1938 intended to eradicate employer misclassification of employees.  The PFPA is focused specifically on independent contractors for payroll and unemployment purposes.

If enacted, the PFPA will:

  • expand the FLSA to include independent contractors, placing their employment under DOL supervision making employers subject to audits
  • require the DOL to report any misclassifications directly to the IRS
  • institute a penalty from $1,110 to $5,000 per employee for employers caught violating payroll classifications
  • set a provision of triple damages if an employer is caught violating the minimum wage or overtime laws for misclassified employees
  • require companies to provide all employees with written notice on current policy detailing their individual status with the company
  • pierce the so-called “corporate veil” to include independent contractors with business entity types of corporation or LLC
  • establish under federal law a provision that makes it a “special prohibited act” to “wrongfully classify an employee as a non-employee” 

Consistent with the labor policy of the current administration, the PFPA is a revision of the 2010 Employee Misclassification Prevention Act bill that ended up buried in subcommittees. Senators Tom Harkin (D-IA) and Sherrod Brown (D-OH) are the driving force of the Act, having sponsored both the EMPA and PFPA. For the 112th Congress, the Senators polished up last year’s language adding a section that calls for the Department of Labor to establish web page explaining how the PFPA impacts the FLSA should S.770 pass.

So far, the PFPA is still under consideration, assigned to the Senate Committee on Heath, Education, Labor and Pensions. It has yet to be introduced to this session of the House and as of now, has far less sponsors than its predecessor. Stay tuned. 

For the latest info on the PFPA, check the bill’s Thomas page at the Library of Congress website.

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Apr 19

2011: The Year of Growth

By Rebecca Callahan Recruitment No Comments »
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At SourceRight Solutions, 2011 is off to a great start. We’re definitely seeing growth in certain market sectors, especially IT and financial services. More professionals have opted to become part of the contingent workforce as “free agents,” which has created a highly qualified talent pool to fulfill the uptick in exempt hiring requirements. In fact, we’re seeing an increasing trend in recruitment process outsourcing towards exempt-level hiring – a sharp contrast since historically RPO was more transactional – and now we’re being called into situations where our full range of skills and tools are being leveraged to source hard-to-find, passive candidates.

To oversee this growth, companies need to commit resources – whether internal, external or both. All of us witnessed organizations letting their recruiters go during the recent downturn. Many of our clients are now turning to us not only to help recruit but to also be part of broader strategic discussions with their hiring managers. Leveraging your MSP/RPO partner to counsel on how talent is developed and where the next wave of talent is coming from is becoming more commonplace.

Also becoming more frequent is the use of interim executives. An interim executive can fill the gaps created by winnowed-down management teams or newly created initiatives.  The interim executive can also lay the groundwork for someone within the company to assume the responsibilities. This free agent-driven “knowledge transfer” approach has enormous benefits as companies gain the benefits of senior talent – including C-level – with considerably more experience than could be brought on staff. While images of grey haired sages might come to mind, the reality is that many of these interim executives are far from retirement age and possess unique entrepreneurial skills.

There’s also a new position being created within many forward-thinking organizations: the Global Talent Acquisition Leader. These individuals are responsible for overseeing organizational talent acquisition strategy, effectiveness and spend.

In closing, we anticipate growth in improving the management of “blended” workforces across all categories of talent—full-time, part-time contingent, contract, and alumni—by using integrated infrastructure, tools, and analytics to strategically optimize the resourcing and management of talent globally.

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Apr 05

The State of Independent Contractor Relationships

By Beth Mesechoff Contingent Workforce Management No Comments »
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The use of independent contractors has come under increasing scrutiny in recent years at both the state and federal level. Many  states have chosen to adopt their own labor and employment statutes that differ from the federal standards, establishing classification criteria that must be satisfied in order for individuals who work or reside in those states to be treated as an independent contractor (IC). Many states have formed interagency task forces with each other and the Federal agencies to share information and have begun to aggressively audit businesses that use independent contractors in an attempt to replenish depleted state funds without increasing taxes on the small remaining population of working middle class W2 employees.  In contrast, recognizing the impact additional regulations have on businesses, other states have sought to minimize the regulatory burden, largely adhering to federal standards, and, if regulating in areas where federal law is silent, seeking a more business friendly, less  restrictive approach.

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

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

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

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Mar 21

Anticipating Tomorrow, but Preparing Today

By Rebecca Callahan Global Talent Acquisition No Comments »
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Regardless of industry, the pace of business is fast. In the past, innovation seemingly happened as fast as the speed of sound. Today, thanks to globalization and technological advances, it’s happening at the speed of light. Not only should organizations anticipate change, but they need to prepare for it.

U.S. Army War College coined a new term – VUCA – to describe the dynamic nature of today’s world rife with volatility, uncertainty, complexity and ambiguity. With change being the only constant a business can count on, how can organizations prepare for the unexpected?

The difference between high performing organizations and those that underperform is having agile leaders, who are focused, fast and flexible.

Focused leaders have a sharp vision and strategic plan for success. In many cases that requires forming and reforming teams to meet changing business demands. With workers geographically dispersed, managers need to oversee work groups in different time zones, cities or countries. Today’s leaders need to be nimble and able to effectively bring these diverse groups together to champion a common cause.

Fast response is also essential when responding to change. That means sourcing talent with the right skills to support business objectives and having the tools and process that support sharing information and knowledge rapidly across the organization. This skilled talent is not only found in the traditional workforce, but in consultants, contract workers, free agents and freelance talent. Managing a blend of contingent and permanent workers requires systems and processes that enable organizations to incorporate multiple sources of talent and rapidly make decisions.

A flexible and creative approach to how work gets done is also a requirement for agile leadership. That means fostering collaboration among partners, departments and teams within physical and virtual spaces. Leaders who can effectively infuse collaborative work processes are able to drive results and demonstrate to their organization that together, not only are they prepared for change, but actually doing something about it.

As competition intensifies and the mode in which work gets done continues to evolve, SourceRight Solutions helps to optimize the acquisition of critical talent – strategically deploying full-time, contingent and free agents – enabling today’s agile leaders to meet business demands by accessing the right talent to quickly respond to change.

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Mar 14

Employee or Contractor? Misclassification Continues to be of Issue

By Beth Mesechoff Contingent Workforce Management No Comments »
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During January we  noted the government’s continued focus on proper worker classification, Although the two bills referenced – the Fair Playing Field Act of 2010 and the Employee Misclassification Prevention Act – were not enacted during the 2010 session, this is still a hot topic, and they will likely resurface in some form with the 2011 session. During President Obama’s recent State of the Union address the President made mention of his continued focus on efforts to eliminate tax loop holes and reduce the tax gap resulting from misclassified workers, and how this activity will also aid in balancing the budget.

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

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

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

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

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Mar 14

How are you Handling the Insurance/Health Care Issue?

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

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

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

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

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

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

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

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