Change can be a scary thing. In our modern world we have the ability to effect and control things that would have seemed like science fiction not that long ago, but two things we have yet to figure out how to control are time and change. They happen whether we want them to or not. Whether it be the seasons, our age, technology, or tradition. Look out the closest window from where you’re reading this; it’s happening right now. Most of us fail to notice daily change and even less find the time to think about the big picture. Tasked daily with the duty to fulfill the needs and requirements of our jobs and busy lives outside of work it’s easy to forget to stop and think about change in the context of the big picture. There’s mortgages, kids, education, retirement, and (hopefully) a little vacation and social activity to worry about as well. However, it’s long term and big picture thinking that keeps us motivated, helps us shape and sharpen the daily decisions of our lives, and give us the ability to remain focused even through short term pain or discomfort (See: that fitness plan). Change, both large and small is a healthy and natural part of our human existence. So, as we’ve continually heard that a business is only as good as the people it employs, and corporations are in fact people under the law, then perhaps it’s time to start applying the rules that work for people, to enterprise.

In an interesting piece on Strategic Sourcing, that is, a specific plan of action regarding the procurement and hiring of top talent, Argentus Talent Acquisition poses the question: Who is better to Effect the Toughest Changes in Strategic Sourcing? Your Permanent Team or Third Party Contractors? (Go here for the full article) They deduce that the contractor/consultation model allows for greater opportunity for change within your organization by allowing for a fresh perspective and minimizing the personal and political hurdles that can stop an organization from moving away from the status quo.

If we apply this same line of thinking to the larger context of Contingent Workforce Management, it may be time to ask: When is the last time your enterprise truly thought about the long term goals regarding your Contingent Workers? And are small steps being taken daily to effectively embrace that strategy? As we’ve already discussed, change is happening, the only variable is how we respond to it.

 

Ardent partners are set to release new research later this month that indicates that Contingent Labour is set to rise 30% over the next three years, a figure that they state “Accurately represents the growing reliance on the non-traditional workforce.” If you follow Contingent Labour, deal with mitigating risk on independent contractor compliance, or Talent Management and Procurement, you know the stats already.  It’s very easy to get lost in them. While effective, they can also over complicate the matter at hand. Enterprise at its core needs to innovate, it needs to be adaptable, and it needs skills present to make those first two things achievable. If the big picture is growth and competitiveness in the marketplace, then it’s a major priority to always make sure the base needs of innovation, adaptability, and skills are constantly being met.  Even if the path to get there requires some short term pain or discomfort.  (See: that fitness plan again) More and more, it is Contingent Labour that is being utilized to meet these needs—and while cost savings is usually the most immediate and alluring statistic in moving an Enterprise into this type of model, it can’t be the only thing. Sure, in the short term, it’s easy to be won over by the idea of utilizing IC’s (independent Contractors) to have flexibility in staffing, or save money on taxes and entitlement & benefit programs, but cost savings needs to be looked upon as daily actions of a larger goal, not the entire plan. Or, as we’ve looked at it previously, the small change that sets up the big change.

Long term change, requires long term strategy. If Contingent Labour, is at the core of your business than it’s time to start putting the plans in place to manage it. Whether it be through an Administration or Payrolling Service for your Contingent Workforce, Managed Services, or through Consulting. Not thinking long term about the inevitable change, management, and caliber of your Contingent Workforce may get you through today, but perhaps it’s time to turn that age old interview question on your own Contingent Workforce Management plan. Where do you see it in 5 years? How about 10?

 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

 

After a rather flat bill rate for Contingent Workers in 2013, analysts are predicting a sharp rise in the latter half of 2014. According to Robert Half Technology and The Creative Group, here are the positions that will see the sharpest rise in salary in 2014

money 1. Mobile applications developer: Experienced mobile applications developers can expect to see the largest increase, 7.8 percent, in starting compensation of any tech position listed in this year’s Salary Guide, with salaries ranging from $100,000 to $144,000.
2. Business intelligence analyst: Skilled business intelligence analysts can anticipate a 7.4 percent boost in starting compensation in 2014, with salaries ranging from $101,250 to $142,250.
3. Information systems security manager: Information systems security managers who can assess and re-mediate vulnerabilities, threats and intrusions are in demand, and are projected to see a 6.8 percent bump in base compensation this year, with average starting salaries between $115,250 and $160,000.
4. User experience designer: User experience designers can expect to see average starting salaries between $78,000 and $120,000, up 7.5 percent from 2013.
5. Mobile designer: Skilled mobile designers can anticipate average starting salaries to increase 6.3 percent in 2014, to the range of $66,000 to $103,000.
6. User experience specialist: User experience specialists can expect to receive base compensation in the range of $79,000 to $118,000, a gain of 5.9 percent over last year.

 

*Source-SIA (Staffing Industry Analysts)

Short answer: Buyer Beware!

Falling on a banana skin

Many Employers are under the assumption that they can easily outsource IC misclassification or other employment and tax law liabilities by payrolling their independent contractors through a staffing firm or managed service provider (MSP).  Although “bundling” IC misclassification, and employment and tax law compliance in with your existing contingent workforce staffing and/or MSP providers may seem like a smart idea, the reality is that in many cases, employers are paying millions of dollars to these providers in fees and receiving very little protection if any at all.

The problem with taking this “bundling” approach is that most of these providers lack the focus and knowledge to implement a fully compliant IC verification process. Many providers over-trust the power of their contracts. Although a contract is an important part of defining the relationship the rules governing the classification and the tests applied by auditors look at the true working relationship vs. what is written on a contract.  Therefore putting faith in the phrase “we have a contract” vs. having your provider perform proper worker education and deep due diligence and offer full visibility into the classification of the workers is a very risky proposition.

Focused compliance experts perform all of the detailed verification and worker education required to properly vet the situation and obtain the necessary detail to defend a tax authority or legal claim.  In the absence of proper due diligence and verification in advance of an engagement it is often entirely up to the worker to determine the “nature” of the working relationship.  When looking at the details of the majority of reclassification cases lack of proper due diligence and worker education upfront have resulted in workers whistle blowing on their employers or  inadvertently triggering an audit after filing for government based benefits such as unemployment insurance or in the case of an injury, workers compensation insurance.

Moreover, precedents have been set where the IRS, and other state and federal agencies, have deemed transparent all of the layers between the provider of services [contractor] and the receiver of services [employing firm] for the purpose of assessing the relationship. So, in practical terms it doesn’t matter how many layers are between firms and the IC/1099s – the IRS will treat the relationship between the “worker” and “firm” as direct. The result is any misclassification assessments, penalties and fines are the liability of the firm as much as they are the liability of the staffing firm.

New legislation tabled in Congress last year called the “Payroll Fraud Prevention Act” is looking to require Employers to perform mandatory worker classification and inform the workers of the classification prior to the engagement to ensure that the workers that have been classified as Independent Contractor/1099 are actually independent and understand the pros and cons of their classification.

In building a business case to make this a priority within an organization it is also important to note that since worker misclassification can be deemed payroll fraud these liabilities “pierce the corporate veil” – meaning that corporate officers and directors are personally responsible for source deductions and reclassified wages.

 

The Solution:

The first step Contingent Workforce Solutions recommends is to perform a Risk Assessment that will give you a diagnosis of the firms’ contract workforce Risk.

The first phase of the Risk Assessment is to take an inventory of your non-employee headcount.  This activity should help in identifying who within the organization is working as an Independent Contractor, a temp employee or an employee of another consulting organization. In many cases contract workers are spread throughout organizations with very little visibility – having been brought in by various departments in any number of ways. Once the identification of all of your contract workers occurs an estimate of the potential liability that could accompany an audit can be calculated.

The second phase of a Risk Assessment is a detailed assessment of each individual worker to determine their worker classification and or their eligibility to work legally.   With this information you can identify who should be treated as a W2 and who should be IC/1099.  More importantly during this assessment you can identify potential worker misclassification risks where workers who you believe are independent contractors / 1099’s are not thinking or acting like independent contractors.

 

 

Download Whitepaper - January

By: Andrew Edwards

For as long as anyone can remember, the standard work week has been set at 40 hours. Under president Obama’s Affordable Care Act, this standard is being reduced to 30 hours.

Under the ACA, a full time employee is any person who works, on average, 30 hours or more in a work week. If they are employed by an organization with over 50 full time (or equivalent) staff, the organization will need to provide adequate health insurance for its full time workforce, or face stiff financial penalties.

The impact to the economy and the workers who support it is larger than the administration has envisioned. Some employers are placing a cap on the number of hours their staff works at 29 in order to avoid the expense of qualification as a large employer under the ACA. The Wall Street Journal reported that this decision could impact over 2.3 million workers across the United States. This is a counter productive measure aimed at generating a more socialized medical system at the expense of the American economy as a whole.

Many argue that in order to protect the incomes of workers (who are already not working what was previously deemed to be full time hours), the ACA hourly regulation should be left at 40 hours. The federal government should not be regulating the operations of businesses by setting the weekly average of hours worked at 30 via the Affordable Care Act.

Source:

The Wall Street Journal, Thursday July 18, 2013

http://online.wsj.com/article/SB10001424127887323309404578611490682767344.html

By: Christina Fabugais

The Situation

A large oil and gas equipment manufacturer based in Houston was found recently investigated by the U.S. Department of Labor’s Wage and Hour Division, and was found in violation of the Fair Labor Standards Act’s overtime provision. The investigation was conducted by the division’s Houston District Office, which deemed that the manufacturer misclassified their roughnecks and crane operators as independent contractors. The company denied the workers their time and one-half overtime rate for hours worked in excess of 40 in a week. Some of these misclassified workers worked as many as 80 hours a week, without overtime pay as per the requirements of the FLSA.

“The misclassification of employees as independent contractors is a serious threat to both workers, who are entitled to good and safe jobs, and to employers who obey the law and are undercut when others use illegal practices” said Cynthia Watson, the Wage and Hour Division’s regional administrator for Southwest. “The department is committed to remedying employee misclassification, which is a problem we commonly come across in the oil and gas industry. It often results in employees being denied their proper wages.”

The Result

The company has been required to pay $687,469 in overtime back wages for 133 misclassified workers.

To view the original article click here


Mississauga ON, 31 Oct 2012- This Halloween at CWS a break was taken from our busy schedule to get into the holiday spirit.

The staff turned their hand to the art of pumpkin carving; we can let you judge how we got on from the results of our hard work in the picture! A few glasses of champagne helped in the process- as well as a ton of candy and some delicious dirt n’ worms’ cake.

As you can see from the photo we also relaxed the dress code to allow someone in their pyjamas, a ladybird and a nerd join in. Our Chief Financial Officer also enjoyed the day, donning a tailor made wig designed specially to replicate his old hair style we found in a High School year book.

Whatever way you or your office celebrated the holiday we hope you enjoyed it as much as we did, and wish everyone a happy Halloween from CWS!

PROFIT H50_2011_LORESToronto, September 4, 2012—Contingent Workforce Solutions (CWS), with over 1,029% growth in the past two years, today was ranked #8 on the 13th annual PROFIT HOT 50 Ranking. The PROFIT HOT 50 is the definitive ranking of Canada’s Top New Growth Companies. Published in the October issue of PROFIT Magazine and online at PROFITguide.com, the PROFIT HOT 50 ranks young firms by two-year revenue growth.

In 2011, Contingent Workforce Solutions was ranked #1 on the PROFIT HOT 50 and is recognized among the top 10 companies this year. “We are ecstatic to have been recognized for a second straight year by PROFIT Magazine. It has been a whirlwind of a year since winning the top spot last year,” says Jeff Nugent, President and Managing Director of Contingent Workforce Solutions. “With all the great new opportunities that have come from winning the top spot last year, and being ranked 8th this year, we are excited to continue our exponential growth.”

Contingent Workforce Solutions has achieved this growth while riding the trend toward employers engaging with more and more contract and temporary talent. By providing companies with the technology and process management services that properly account for, manage and administer their contract workers, Contingent Workforce Solutions helps its clients manage their contract worker head count and line item expense.

“We were very fortunate to be able to recognize this trend in the marketplace, and we truly believe we are providing a unique service offering that many organizations need,” says Jeff Nugent. “The risks associated with dealing with contract and temporary labour span across industries and organizational sizes, this is what really makes us successful, our ability to provide our services to a wide variety of clients and partners.”

CWS partners with its clients to streamline the management of their contingent workers and ensure their contractors have the work status and health and safety certifications required to be compliant with employment and tax law. Contingent Workforce Solutions’ SimplicityVMS software enables organizations to keep track of and properly administer their contract labour expenditures throughout the organization. In addition to its corporate clients, such as Bank of Montreal, Sobeys, Walmart and Enbridge, CWS’ Simplicity software is also used by recruiting firms that provide it as a value-add to their clients.

CWS is especially honoured to receive this award from the PROFIT HOT 50 amid competition from Canada’s top new growth companies. “A talented and diverse group of entrepreneurs have built this year’s HOT 50 companies,” says Ian Portsmouth, Publisher and Editor-in-Chief of PROFIT. “Their creativity and ambition spell a bright future for their businesses, and point the way to success in Canada’s ever-challenging economy.”

About CWS:
Contingent Workforce Solutions is a business process management and advisory firm specializing in developing and implementing industry leading contract workforce management people, processes & technology that help its clients gain control of their contract workforce. Since CWS is not a Staffing Vendor we partner with clients to provide: Advisory and Program Consulting Expertise; Managed Program Outsourcing Services, and Third Party Contractor Compliance, Engagement, Payrolling and Administration Services. CWS’ client base includes: Bank of Montreal, Wal-Mart, Enbridge and Worley Parsons. For more information visit www.contingentworkforcesolutions.com.

About PROFIT Magazine and PROFITguide.com:
PROFIT: Your Guide to Business Success is Canada’s preeminent publication dedicated to the management issues and opportunities facing small and mid-sized businesses. For 30 years, Canadian entrepreneurs and senior managers across a vast array of economic sectors have remained loyal to PROFIT because it’s a timely and reliable source of actionable information that helps them achieve business success and get the recognition they deserve for generating positive economic and social change. Visit PROFIT online at www.PROFITguide.com.

For more information, please contact:

Christina Fabugais
Contingent Workforce Solutions Inc.
Direct Phone: 416-642-9077
Toll free: 1-866-837-8630, ext. 9077
Email: christina.fabugais@cwsolutions.ca
Linkedin: http://www.linkedin.com/in/christinafabugais


Jeff Nugent speaks at the Human Capital Risk Management Conference April 2012 on the risks, pros and cons of using contingent work.