Posted on Fri, Aug 26, 2011
By Debbie Fledderjohann, Top Echelon Contracting President
Contracting offers employers the flexibility they need in this economy to easily adjust their workforce to their business needs. But some employers are gun-shy about utilizing contractors out of fear of co-employment issues. In this series, we will examine the co-employment risk and how your client companies can reduce that risk when utilizing contractors.
Contractor benefits, or more specifically, the lack thereof, was the driving force behind one of the most famous co-employment lawsuits. In Vizcaino v. Microsoft, it was determined that workers originally hired as independent contractors and later converted to temporary/contract workers employed by a third party were eligible for the company's 401(k) and Employee Stock Purchase Plan, despite the fact that the workers signed agreements acknowledging that they were not eligible for the company's benefits. Microsoft settled the case for $97 million!
How can your clients avoid a similar fate when utilizing contractors? Well, if the recruiter or contracting back-office that is employing the contractors offers a full menu of benefits, contractors will have little reason to go after the client company for those benefits. For example, Top Echelon Contracting offers the following benefits to its contractors:
- Health insurance through Anthem Blue Cross and Blude Shield
- Dental insurance
- Vision Insurance
- Life Insurance
- Accidental Death and Dismemberment Insurance
- 401(k)
- Paid time off (if the recruiter negotiates this for their placements)
The Vizcaino v. Microsoft has made a lot of companies wary of contracting arrangements. But ensuring that contractors can access the benefits they want through their Employer of Record can go a long way to helping them avoid Microsoft's fate.
This article is for informational purposes only and should not be considered legal advice.
Posted on Wed, Aug 24, 2011
By Debbie Fledderjohann, Top Echelon Contracting President
Contracting offers employers the flexibility they need in this economy to easily adjust their workforce to their business needs. But some employers are gun-shy about utilizing contractors out of fear of co-employment issues. In this series, we will examine the co-employment risk and how your client companies can reduce that risk when utilizing contractors.
Perhaps one of the most important aspects of the employer/employee relationship is how the worker is paid for his/her services. So it stands to reason that one of the biggest ways a company can avoid co-employment when utilizing contractors is to have zero involvement in the payment of those contractors.
The Employer of Record (i.e., the recruiter or the contracting back-office the recruiter is utilizing) should pay the contractors on a regular basis. They should withhold the employee share of taxes from that pay and pay the employer share of payroll taxes. The Employer of Record is also responsible for compliance with any laws and regulations regarding the payment of employees.
Top Echelon Contracting, for example, pays contractors on a weekly basis in accordance with federal and state wage and hour laws. We are responsible for withholding all applicable payroll taxes from the employee's paycheck and pay the employer share of taxes, too.
The only involvement the client company should have is confirming the number of hours the contractor worked and paying the invoice that is sent to them by the recruiter or back-office service. Further, the client company should not discuss pay rates or increases, bonuses, or incentives with contractors. These issues should be negotiated through the recruiter who placed the contractor.
This article is for informational purposes only and should not be considered legal advice.
Posted on Mon, Aug 22, 2011
By Debbie Fledderjohann, Top Echelon Contracting President
Contracting offers employers the flexibility they need in this economy to easily adjust their workforce to their business needs. But some employers are gun-shy about utilizing contractors out of fear of co-employment issues. In this series, we will examine the co-employment risk and how your client companies can minimize that risk when utilizing contractors.
Co-employment exists when two or more legally separated employers share potential or actual employer responsibilities with common employees. Sometimes this is intentional, such as in PEOs (Professional Employer Organizations) where a company outsources the majority of the employment tasks to an outside agency but retains the right to direct and control its workers.
When a company wants to utilize contractors, they do not want to enter into a co-employment arrangement. They want someone else to take on all of the employment responsibilities and liability. But when done improperly, contracting can actually create a co-employment relationship in which the client company could end up retaining some of the liability for their contractors.
Case in point: Several years ago, Microsoft settled a case for $97 million in which a group classified by Microsoft as temporary workers claimed they were actually common-law employees entitled to benefits. This well-known case has become a cautionary tale for companies who utilize contractors. It has made some companies reluctant to utilize contractors for long periods of time because many of the workers involved in the Microsoft case had been with the company for years.
But contracting does not have to create co-employment issues if companies are careful about the way the contract assignments are structured. We will discuss which factors really do create co-employment risks and how your clients can avoid those risks.
This article is for informational purposes only and should not be considered legal advice.
Posted on Mon, Mar 28, 2011
By Debbie Fledderjohann, Top Echelon Contracting President
We asked recruiters who are successfully doing contracting to share some of their best marketing tips. The main thing to keep in mind when trying to get contracting job orders is that, while you may be used to dealing with human resources when filling direct-hire job orders, contracting job orders are more often coordinated through the hiring manager.
Here are just a few things recruiters can do to sweep hiring managers off their feet:
- Fill job orders quickly - One of the main reasons companies turn to contractors is because they need someone right away to fill a need. If you can find them great candidates fast, they will likely call you the next time they need someone in a hurry.
- Do your homework - If you know nothing about the company or its industry, how can you provide them with a good fit? Hiring managers want recruiters who understand what they do and who they are.
- Communicate . . their way - It's important for recruiters to find the method of communication that works best for the hiring manager. Maybe the hiring manager hates email, so be sure to pick up the phone when you need to talk. Or maybe text messaging works for some hiring managers. Whatever is easiest for them and makes them the most comfortable.
- Build a relationship - People want to work with vendors who are personable and who care. Don't forget about them when the job order is filled. Touch base occasionally to see if there are other staffing needs you can help fill.
- Ease their co-employment concerns - Utilizing contractors can create a tricky co-employment situation where it may be unclear which parties will handle the liability associated with those workers. Hiring managers want to outsource as much of this liability as possible. If you can assure them that you (or your contracting back-office) will handle the employment issues, such as benefits administration, Workers' Compensation, and Unemployment, and compliance with laws like the Fair Labor Standards Act (FLSA), that will go a long way to making you their recruiter of choice.
None of these things are hard to do, and many apply to your direct-hire business as well. It all comes down to providing quality candidates and doing quality, timely work. If you can do that, you are well on your way to raking in the contracting job orders!
