Some groups are calling it systematic and deliberate wage theft, others (slightly more diplomatic) are calling it a labour friendly campaign, but there is a tidal wave of turmoil brewing in the trucking Industry of the Ports of Los Angeles.

A report entitled “The Big Rig Overhaul: Restoring Middle-Class Jobs at America’s Ports Through Labor Enforcement” is a collaboration between three organizations alleging years of what they call the “enormous scale and shocking costs of an illegal business practice used by employers..” to bring attention and demand restitution and change to the industry. The National Employment Law Project, The Los Angeles Alliance for a new Economy and the Change to Win Strategic Organizing Center allege that worker misclassification in classifying port truckers as Independent Contractors instead of Employees became the port industries business model and was in fact a “scam”.

The numbers in the report allege a 1.4 billion dollar (includes wages and lost state tax revenue) misclassification scam that involves 60% of port truck drivers. Amounting to lost wages and benefits translating to 5,072$ per driver, per month.The report was published in the hopes to leverage Congress to pass legislation including The Payroll Fraud Prevention Act, The Clean Ports Act of 2013, and the Fair Playing Field Act of 2012.

From a Contingent Workforce Management perspective, the main point of emphasis and what it may come down to in the courts to deem who (if anyone) is in fact responsible for this misclassification will rely on the Nature of the Working Relationship between the alleged Independent Contractors and the trucking companies themselves.  The CRA (Canada Revenue Agency) and IRS (Internal Revenue Service) do have a different set of standards in how they define the classification of workers, but where they agree in terms of how they view this report will be that:

A) They do not differentiate between errors of omission and errors of commission. If misclassification occurred, the company will be liable, regardless of intent.

B) Determining of the amount of control a company can have in regards to the daily tasks of an independent contractor. Two instances of note in this example would fall under Exclusive Service, and Supervision. (Both are further defined below)

Supervision and Service

 

While the outcomes of this report remain unclear at the present time, there was fair warning that 2014 would be a year of heightened scrutiny at all levels regarding worker misclassification. If nothing else, the groups involved in the allegations of this report shows that those warnings are true.

 

Are you properly managing your risk? Get a free risk assessment from CWS here

 

Restaurants have always been a deliciously perfect mix of temptation and entrapment. Take a bunch of hungry people,  stack them by the dozens in a room surrounded by drool educing aromas, and then drop an entire menu full of options and choices in front of them. More often than not the hungry masses will leave satisfied, but they’ll probably have to put on their glasses to believe at how much the meal actually cost. The lesson: Hunger trumps budget, almost exclusively.

The same could be said for the proverbial buffet of Contingent Labour flooding the market. With businesses staffing their ranks from this talent pool at record highs, it’s truly a feast fit for a king for companies looking to tackle their project based labour needs. According to a recent report published by IQ Navigator-who provides technology that manages staffing vendors and temporary workers-even with the rapid growth in the use of Contingent Labour in 2013, costs stayed relatively flat. As with any great meal out however, cotemp-labor-bill-ratesmes the bill.

Contingent Labour hit record highs in 2013 with a total of 17 million workers in the market. Which works out to be almost an 8% jump from the previous year with no signs of slowing down. That number is expected to grow to 23 million by 2017 (MBO Partners). With analysts predicting what Gary Pollard (VP of Information Products at IQ Navigator) calls “upward pressure” in 2014, companies that got into the market to save on labour costs could be looking at a giant bill, not a giant profit. The reasons for this steady rise in the cost of using temporary workers will be associated with “A continued increase in demand, coupled with an expected tightening supply of workers-thanks in part to a declining workforce participation rate, and an increase in college enrollment for people over 25 years old.” Pollard also goes on to say that the aging Baby Boomer population will also contribute. 

Considering staffing agency markups are generally 20-25%, the math does look daunting. A worker in IT currently making 30 dollars an hour (a position poised for a steep raise, but more on that later) may go to 45-50 dollars an hour. That’s an increased profit to the staffing agency of 5 dollars per hour. Over the course of the year that translates to approximately 19,200$ extra paid to the staffing agency-and that’s just for one employee. In Restaurant terms, that’s one heck of a corking fee. 

Employers are still looking to cut labour costs wherever they can, but the need for labour isn’t going to dry up. Projects will still need to be completed and expert skills will be in demand. So, if you can’t save on the labour, perhaps you can save on the mark-up. By tweaking their current model, employers could find themselves embracing direct source hiring, coupled with IC (Independent Contractor) Compliance and Payroll providers that can offer drastically smaller mark-ups and allow the company to still attract and afford top talent. This would be especially attractive to companies that already have established relationships with Contingent Workers at their locations.

 Nobody likes to be told to think long-term and look at the big picture (especially when they find themselves starving and staring at a bevy of choices and opportunity) but making the right choice in regards to how enterprises source their contingent workforce and who (through Admin and Payrolling or MSP) offers the best opportunity to cut costs, and stay compliant and competitive may allow them to have their cake, and pay the bill too.

Last Tuesday, President Obama delivered his administrations’ most recent message to the people of the United States– and for those who’ve grown accustomed to these things, it was the usual banter and pageantry of goals and aspirations to improve the nation. However, among the policy discussions and rounds of applause was one nugget in particular that is relevant to those of us who follow such things. The impending rise of the minimum wage (at least for federal contracts) and its impact to the issues surrounding worker classification(s) and employee/employer relations. President Obama didn’t directly address the situation, but in an online piece for Forbes, columnist Robert Wood, put the issue on the table. “Did President Obama just make independent contractor v employee issues even bigger? Arguably, yes.”  obama_sotu_dann.photoblog600

Wood does play down the notion that every employer in the country is suddenly looking for loopholes or to reduce labor costs in the face of new legislation such as the minimum wage debate or healthcare, but he cautions both employers and employees to take a hard look at their relationship with one another.

In 2010, Department of Labor Secretary Seth Harris quoted a study that suggested up to 30% of employers misclassify workers, whether by simple oversight, or willful negligence, and the Government Accountability office is also quoted in Harris’ address as stating the IRS is losing billions of dollars in revenue.  Harris goes on to suggest that this type of negligence and oversight is hazardous to the economy, and causes the long term effects of a loss in tax revenue, and public funded programs such as Social Security. Even as recently as two weeks ago, online publication Benefitspro suggested that 2014 would be the year lawmakers and regulators firmly crackdown on misclassification. However, what may be the most glaring statements from both the DOL study, Seth Harris, Benefitspro, and Mr. Wood, is that there will be no compromise in terms of how misclassification is treated by organizations like the IRS or the CRA. In other words, it doesn’t matter how it happened. All that matters is that it happened at all.

So, left with this potential crackdown the natural follow up is what’s next? Since every study and report indicates that contingent workforces are not going anywhere anytime soon,  and in fact, will only continue to grow, 6a00d8345675df69e20167686b88a0970b-400wiIndependent Contractors, Employees, and Employers need to have crucial conversations regarding the nature of their relationship. Contracts alone won’t cut it anymore.  For employers looking to navigate the complex worker compliance labyrinth, there are plenty or resources at their disposal, but what is proving to be true as more and more non-compliance issues are raised on both sides is the need for specialists in this field.  With the intricacies of legalese and the monotony of ever changing legislation, oversights can become easier and more common–but beyond all that it really goes back to a simple concept of clear communication and discussion of needs. What does the employer specifically require? What does the potential employee/contractor require? How will this relationship be supervised? Where can we educate ourselves to make sure our relationship will be compliant with the law? In most cases, the proper classification can be quickly deciphered with just a few simple conversations, and for employers looking to navigate the  complex worker compliance labyrinth, there are plenty or resources at their disposal.

While the reasons and needs of a contingent workforce may differ by the industry, there’s seemingly one thing that everyone with stake in the state of the workforce can all agree on.  The no-nonsense and zero tolerance approach of both lawmakers and regulators looms large on all parties involved in 2014, and taking the proper precautions is paramount in the face of liability enforcement policies, changing legislation, and the increased ability of government agencies to share information.

 

*Contingent Share of Workforce courtesy of the SIA

 


Article_Arrest
A staffing company operator in Ontario Canada was fined almost C$1.3 million (US$1.2 million) and sentenced to four years in jail, the Canada Revenue Agency announced Tuesday. The owner of the  staffing companies did not remit proper payroll and income tax deductions to the government, according to the agency. According to court records  The Staffing Agency failed to remit approximately C$5.8 million owing to Canada Revenue Agency. The Director of the Staffing Agency will have one year to pay the fine upon release from jail, or she will serve an additional five years in jail.

A related party who owned a business that used the services of the staffing companies was also sentenced to two years in jail and fined C$397,758 (US$373,499).  As per the Canada Revenue Agency report the owner of TPM Machining Group knowingly used the services of the staffing companies to avoid remittance of payroll and income tax deductions, the agency reported.

This case highlights how client organizations need to perform a higher level of due diligence on the staffing firms they have within their supply chain to gain better visibility into the staffing firm’s ongoing compliance with payroll, employment and tax laws.  Even with a complex structure of contract and agreements in place, the CRA was able to establish that the client of the staffing companies knowingly used the services of a staffing agency to avoid remittances of payroll and income tax deductions and was therefore able to assess fines and jail time to the client’s management.

To view the original article CLICK HERE

awardwinnerMississauga, Ontario – November 7, 2013– Contingent Workforce Solutions (CWS) is pleased to announce they have been awarded the 2013 Health & Safety Award by the Association of Canadian Search, Employment and Staffing Services (ACSESS).  As Canada’s National Staffing Association, ACSESS oversees the monitoring and governance of industry best practices.

The award is presented to a company in the staffing and human capital services industry that has demonstrated outstanding performance in workplace health and safety (H&S). The judging criteria was based on the following considerations: leadership in demonstrating a commitment to H&S; innovation in the communication and awareness of H&S information; visionary leadership in the planning, development & implementation of best of breed H&S practices and participation in the community and industry health and safety programs.

Contingent Workforce Solutions’ innovative Health & Safety program called, WorkSafe, has been custom developed to help independent contract and temporary workers work safer and prevent workplace injuries and hazards.  CWS’ program was designed to build outstanding awareness that escalates the importance of Health & Safety for contract and temporary workers. Through its very efficient online orientation system and dedicated approach, CWS ensures the timely enforcement of worker education, workplace inspections, and proper incident responses to ensure a safe and healthy environment for all. CWS’ WorkSafe program is compliant with Provincial legislation in Canada, and State/OSHA legislation in the US.

Jeff Nugent, Managing Director of CWS says, “I’m very proud that Contingent Workforce Solutions has been recognized as a leader in the area of Health & Safety. Our team has worked very hard to develop a leading edge program that promotes the health and safety of all workers, especially contingent workers who are often overlooked when it comes to worksite and job specific health and safety training.  It is very important for us to meet the needs of employers that are looking to ensure compliance, and to mitigate their overall risk when dealing with contract and temporary workers.” Nugent goes on to add, “We believe that ensuring our workers safety is just the right thing to do and we look forward to continuing to develop innovative Health & Safety and other value added programs for our clients in the years to come.”

 

About Contingent Workforce Solutions

Contingent Workforce Solutions provides Contract Workforce Management services and technology that enables corporate and staffing agency clients to centralize the process of engaging, administering and paying contract, temporary and project based workers in an efficient and risk free manner. Through its highly developed processes and technology, CWS allow clients to streamline their processes, reduce risk and save money. As experts in the field, CWS provides independent contractor & worker classification that ensures its client’s workers are administered in compliance with employment and tax regulations.  For more information please visit www.contingentworkforcesolutions.com

About ACSESS

The Association of Canadian Search, Employment and Staffing Services (ACSESS) is the single voice for promoting best practices and ethical standards for the recruitment, employment and staffing services industry in Canada. With more than 1,200 member offices offering staffing solutions in the areas of professional search, and temporary and contract staffing, ACSESS members provide a key service to businesses and offer a broad range of career planning and employment opportunities. For more information please visit http://www.acsess.org/

jeffstaffing100

Contingent Workforce Solutions (CWS) is pleased to announce that its Founder and Managing Director, Jeff Nugent, has been named to Staffing Industry Analyst’s 2013 Staffing 100’s list.  The list, now in its third consecutive year, recognizes the 100 most influential people in staffing globally.

These professionals are shaping the way people work and think about jobs. We salute this year’s honorees who have helped millions of peoples find jobs and more importantly are the visionaries that are taking the industry to the next level –  Subadhra Sriram Editorial Director for Staffing Industry Review Magazine

As the founder and managing director of Contingent Workforce Solutions, Jeff Nugent is a pioneer in contingent workforce management. His firm provides contract talent management and compliance services to employers, staffing firms and independent contractors. Jeff boasts 55,000 Twitter followers and is the founder and managing editor of the Contingent Workforce Strategies group on LinkedIn, where HR, procurement and CWM professionals can network, share ideas, trends and best practices. Nugent serves as an expert contract talent advisor for HR.com and has taken on various speaking engagements and advisory roles. Founded just four years ago, Contingent Workforce Solutions expanded quickly through Canada, the U.S. and Europe.

To view the full list of professionals named to The Staffing 100 click here.

 

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The CWS Team is in Chicago this week to kick off the CW Solutions Forum! As an Optimum Sponsor of the event we are participating in innovative and thought leadership driven sessions focused on  Worker Classification, Compliance, and Risk Mitigation

As an added bonus we invite all attendees to drop by our booth to enter into our draw for an iPad Mini.

BE SURE TO STOP BY CWS BOOTH #15 TO ENTER THE DRAW!

 

Tuesday September 10, 2013
9:00 AM – 10:30 AM  ROUNDTABLE DISCUSSION #12
Open Table – Risk Discussion
 
Details: Join Contingent Workforce Strategies LinkedIn Group Editor and Managing Director of Contingent Workforce Solutions Jeff Nugent, as he facilitates an open table discussion on the topic of risk and risk management. This will be an interactive session where participants will be able to share and discuss their experiences, best practices and future risk mitigation plans.  Risk topics will range from Worker Misclassification and IC Compliance, to Health & Safety, to Operational and IP protection. 

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11:00 AM – 12:00 PM  Concurrent Session: Risk Track 
When Safety Matters. Workplace Safety and the Contingent Workforce.

Details: Workplace accidents happen to be an unfortunate reality for many companies to deal with in today’s economy. When these accidents happen to involve the contingent workforce, who bears  the assignment of liability and brunt of the cost can often be unclear, resulting in tremendous penalties, fines or judgements. What can you do to protect your company? How should your relationships be structured? Kersten Buck, Director, Strategic Solutions, Staffing Industry Analysts moderates this interactive Panel Activity with Experts Jeff Nugent, Managing Director of Contingent Workforce Solutions & Eric Rambaugh Partner, Michael Best & Friedrich LLP. From workers compensation exclusivity to OSHA compliance and enforcement, this workshop will explore the myriad ways program managers can manage their companies liability while creating a safe workplace environment for everyone.

 

For more information and to schedule a meeting with one of our representatives contact:

Christina Fabugais

P: 1-866-837-8630 Ext. 9077

E: info@contingentworkforcesolutions.com

 

10 Jul 2013

Today, Contingent Workforce Solutions (CWS) announces that it will be participating as an Optimum Sponsor in Staffing Industry Analysts’ CW Solutions Forum. The event takes place on September 9-10, 2013 in Chicago, IL and focuses on cutting-edge solutions for corporate managers of contingent labor programs including: contingent workforce risk, recruiting, RPO, technology and much more.

Jeff Nugent, President & Managing Director of CWS, will be facilitating a roundtable discussion on the topic of Risk Mitigation Strategies, and will be participating on a panel of experts on the topic of When safety matters. Workplace safety and the contingent workforce.

As an expert in contract worker classification and risk mitigation strategies, Jeff has helped clients implement programs that reduce liability from worker misclassification, personal injury and commercial claims. With over 17 years of experience Jeff has worked with countless top employers in developing and implementing contract workforce management best practices and technology tools that enable clients to take a holistic approach to strategically managing their contract workforce.

“We are very excited to be sponsoring this year’s CW Solutions Forum. It is a great honor to be asked to participate in an event that brings together the top global minds in the contingent workforce management industry,” says Nugent. He goes on to say, “The risks associated with engaging contingent labor are a growing concern for many organizations. With the massive increase in usage of contract workers and unprecedented crackdown on misclassification and tax audits, the insights and knowledge being shared at the CW Solutions Forum is absolutely invaluable in today’s working world.”

About Contingent Workforce Solutions

Contingent Workforce Solutions (CWS) is North America’s leading Contract Worker Classification and Payrolling Specialist. Our proprietary independent contractor (IC) and 1099 compliance technology and innovative process management platform enables employers to hire, administer, and pay their contract workforce in an efficient and risk free manner. (www.contingentworkforcesolutions.com)

For more information and to register visit: CW Solutions Forum

By: Christina Fabugais

Last Tuesday, the Obama administration announced that they were listening to businesses, and have decided to extend the requirement for business with over 50 full time employees to provide health care to their workers. The Affordable Care Act was slated to be enforceable January 2014, but has been delayed till 2015 in order to accommodate businesses who have been struggling to set up their programs in time.

Valerie Jarrett, the Senior Advisor and Assistant to the President for Intergovernmental Affairs and Public Engagement, wrote on the White House Blog:

“As we make these changes, we believe we need to give employers more time to comply with the new rules. Since employer responsibility payments can only be assessed based on this new reporting, payments won’t be collected for 2014. This allows employers the time to test the new reporting systems and make any necessary adaptations to their health benefits while staying the course toward making health coverage more affordable and accessible for their workers.”

The government is still urging employers to voluntarily set up their programs in order to be ready for the new 2015 date.

For more information on how the Affordable Care Act will affect your contingent workforce read our previous blog post Thinking of Using Independent Contractors to Avoid Paying Into the Affordable Care Act? Read This First.

13 Jun 2013

By: Christina Fabugais

Last February a federal judge ordered kgb USA Inc. to pay $1.3 Million in back wages for more than 14,500 workers. The workers were hired to respond to text messages from customers, and worked remotely from their homes.

The company falsely misclassified their workers as independent contractors, and paid them at a piece rate based on the number of text messages sent regardless of the number of hours worked. The piece rate earnings yielded less than the minimum wage of $7.25 per hour, which is a requirement under the FLSA.

To read the original news release click here