The Pitfalls of Payrolling Temporary Workers

Workforce

The Pitfalls of Payrolling(and Employing) Temporary Workers

The Pitfalls of Payrolling Temporary Workers

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#Emergent employs the contingent workforce. Introduction

Emergent Corporate Headquarters, Burbank, CAThe Emergent family of companies, founded in 1976, is one of the largest U.S. employers of contingent labor. www.emergent.comTwitter: @emergentdotcom

About


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Presentation OverviewMany companies have a limited understanding of the risks that accompany utilizing these types of workers.

This presentation explores:Temporary/Contingent Workforce Overview (History, Growth, and Segments)Avoidable Contingent Workforce Pitfalls and Risks.

Payrolling &RegulationsWorkerManagementWorker Classification

OverviewTemporary and project-based contingent worker usage is increasing for all types of companies.


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#Nothing on this presentation is intended to create any contractual or other legal relationship between the presentation viewer and Emergent or any of Emergent's staff, and should not be construed as legal advice or professional opinion for handling a specific factual situation.

Emergent cannot guarantee or warrant the accuracy or completeness of posted information in any way.

Readers should not act upon any information from this presentation without consulting with the appropriate legal, financial, or other business professional for guidance and advice.DisclaimerLegalese


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#Contingent Workforce HistoryOverview


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U.S. Contingent Workforce SizeTotal Annual Spend & Average Daily # of Workers

Source: Staffing Industry Analysts and Bureau of Labor StatisticsIncreased Usage = Increased Risk

Overview


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Sourcing Contingent WorkersOverview


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Contingent Workforce SegmentsHourlyFixed BidOverview


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Temporary Worker Co-Employment

When the company that utilizes the contingent workers services (client company) manages the workers on a day-to-day basis they often become a co-employer or joint employer along with the supplier of the contingent worker.

Co-employment could mean that the client company may be held liable for the decisions and mistakes of the staffing supplier and vice versaPitfalls & Risks


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#consequences9

Recent Contingent Workforce Lawsuits

State Compensation Fund vs. Large Staffing CompanyWorkers Compensation Piggybacking by One of the Largest U.S. Staffing CompanyCA Self-Insurers Security Fund vs. Staffing Industry PEOClient companies named in lawsuit to pay workers comp claims of insolvent companyPitfalls & Risks


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Properly issuing paychecks Withholding federal and state tax Providing required insurance Sourcing the worker Selecting the worker Assigning work Negotiating pay rate Negotiating duration of assignment Complying with FLSA, FMLA, Immigration and other regulations Supervising the worker

Some Contingent Workforce Employer Responsibilities HR (discipline & discontinuation) Managing/Evaluating performance Training and development Workers compensation insurance Documenting right to work in U.S.It takes knowledge and resources to compliantly employ contingent workers. Pitfalls & Risks


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46% of Independent Contractors are found to be Misclassified

Penalties can be severe

In 2011 the Department of Labor dedicated $25 million to uncovering misclassification

The IRS uses a 20 factor test to determine proper classificationWorker Classification

Pitfalls & Risks


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#Payrolling & RegulationsWage & HourMeal & Rest PeriodsPaying TaxesRecord KeepingRight to WorkOSHAFMLAFLSAState Specific RequirementsBackground Screening

Pitfalls & Risks


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#Properly paying OTPayment of Minimum Wage

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Worker Management Accident and Incident ProceduresSafety TrainingRecording injuries and OSHA regulations

Performance and disciplinary action Ending assignmentsDocumented standard operating procedures

Pitfalls & Risks


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# The staffing supplier should have established procedures for accidents. Clients should provide worksite specific safety training for all newly on-boarded workers. Injuries should be recorded in accordance with OSHA regulations. Performance and disciplinary communications to the worker should be made by the supplier. The supplier should discontinue the assignment not the client. Ideally the manager will refer to a contingent workforce best practices manual.

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In order to ensure that your contingent workforce is compliant we recommend:

Workforce Supplier/Employer QualificationProper AgreementsWorker Management Best PracticesGain Workforce Visibility

Avoiding the Pitfalls

Solutions


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# Ensure financial stability of the supplier. If not using a client agreement then make sure the supplier has well articulated agreements that outline responsibilities for the laws and regulations discussed in this presentation. Make sure the supplier has proper insurance. Make sure the supplier has documented human resources and safety policies (ideally outlined in a employee handbook).

Workforce Supplier Qualification

Solutions


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Supplier Employee Handbook

Solutions


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Consider moving away from timecard only agreements. Clearly outline responsibilities of each party.Identify proper insurance limits in the agreement.Ensure proper indemnification is in place.Complete a Statement of Work for each new assignment. Consider consolidating contingent workforce employment under one company. Supplier Agreement

Solutions


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Mention exemption of contingent workers from regular employee benefits in the employee handbook.Develop an internal contingent worker best practices manual. Educate the managers who use temporary contingent labor on procedures. Understanding what to do when discontinuing an assignment.How to communicate performance issues and recognition with the supplier.NOT disciplining the worker.

Internal PoliciesSolutions


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Clearly define and document the assignment description for the supplier and contingent worker.The supplier should screen and select the worker (including performing background checks when appropriate). Engage a worker with sufficient skills to perform the tasks and who does not require general training. Clarify that the workers compensation code that the worker will be classified under is appropriate for the role.It is the responsibility of the supplier to select the worker.

Sourcing and Selecting Solutions


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#And if you dont do that. Imagine if this situation happens. 20

You can gain more contingent workforce visibility at your organization by:

Centralizing contingent workforce management at your organization.Using a workforce management system or a vendor management system to track your contingent workforce and their suppliers.Standardize agreements and processes with staffing suppliers and individual consultants. Increasing Workforce VisibilitySolutions


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Summary Contingent workforce usage is increasing.

Companies must be strategic about temporary contingent worker compliance because of the co-employment responsibilities that come with managing this workforce on a day to day basis.

By wisely and consistently qualifying and monitoring your contingent workforce, your companys risk can be mitigated. Summary


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. Thank You / Q&ATwitter: @emergentdotcomEMERGENT.COM/[email protected]

Contact Emergent for a no cost contingent workforce evaluationThank You


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The Pitfalls of Payrolling Temporary Workers

Business

Transcript of The Pitfalls of Payrolling Temporary Workers