Staffing Industry Analysts - Concurrent Session: Risk Building the … · 2012-01-13 · Ignoring...

© 2015 Cra in Communications Inc. All rights reserved. October 21-22, 2015 n Omni Dallas Hotel

Concurrent Session: Risk

Building the Next Generation of Contingent Workforce, One Independent Contractor at a Time

Moderator: Dawn McCartney, Director, Contingent WorkforceStrategies & Research, Staffing Industry Analysts

Speakers:

Dana Shaw, President and COO, Icon Professional Services

William Hays Weissman, Shareholder, Littler Mendelson, P.C.

WEDNESDAY 11:00 AM – 12:00 PM DALLAS E


Context Setting/Goals for this workshop

Key Takeaways:

Compliance simplified-how to get into a “compliance-ready” mindset while accessing and retaining today’s most valued STEAM talent

The system is broken and needs change, but until it does, government will continue to push on employment issues at employers’ expense; there are ways to protect yourself while getting work done


Agenda

Self-Check

Foundational Compliance

20th Century Law Does Not Fit 21st Century Talent Economy

Fact-Patterns, Try Your Hand At Solving

Solutions Set

Commitments and Close


Employees vs. Non-Employees


Implications of Using Employees vs. Non-Employees


Industry Watch 2015

40%

60%

Fulltime

Contingent

Contingent Labor as a whole is growing: Independent Contractors

Are satisfied:• 85% of ICs are satisfied by type• 57% of ICs are satisfied by engagement• 9.4% would prefer to work full-time

Under Scrutiny• In 2013, U.S. companies spent an estimated $268M in wage-

and-hour settlements • Average settlement amount: $4.2M.

Probably 10% or so of those are ICs


By Value

Total value globally = $2.74 trillion

Agency

Temps Other Temps

Independent

Contractors SOW

$300bn$577bn

$905bn $921bn


Wide Variety of Non-Employees

Based on what you know, which of the following types of ‘workers’ did

work on behalf of your company/organization during 2014?

Source: Staffing Industry Analysts, Global Total Talent Management Survey, April 2015

62%

62%

54%

45%

27%

14%

10%

6%

5%

5%

0% 10% 20% 30% 40% 50% 60% 70%

Independent contractors or…

Temporary workers

Professional services

Outsourced services

Partners

Formal volunteers

Franchisees/affiliates/associates

On-line workers

Informal volunteers

Robots/drones/cognitive computing


Stop the madness

Tenure Limits as a Means to Avoid

Co-employment

Different color badges and not

allowing temps to attend company

parties


Einstein’s definition of insanity…

Ignoring Imbedded IC’s Sourcing 1099’s through a temp

agency


Educate or suffer unintended consequences

Thinking a well written contract

cures all

Relying on hiring and engagement

managers to make the right decision


That’s what I said! Not what I meant…”

You Usually Say You Should Say

1. Hire 1. Engage / Contract With

2. Assignment 2. Project / Engagement

3. Fire 3. Cancel / Terminate

4. Duties, Tasks, Responsibilities 4. Services

5. Manage, Supervise, Direct 5. Administer / Oversee

6. Pay Rate 6. Payment / Fee Schedule

7. Tenure Policy / Length of Stay 7. None

8. Travel & Expense Policy 8. None

9. Pass / Fail (relating to IC compliance) 9. Qualified Independent Contractor or W-2 Employee

10. Right and Wrong (regarding information provided about a project) 10. Accurate and Inaccurate


Agenda

Self-Check




Solutions Set


13


How 20th Century Employment Law Is

Failing Our 21st Century Economy


Recognizing the Problem?

"We live in a 21st century economy, but we’ve still got a

government organized for the 20th century. Our

economy has fundamentally changed -- as has the world

-- but our government, our agencies, have not. The

needs of our citizens have fundamentally changed but

their government has not. Instead, it’s often grown

more complicated and sometimes more confusing."

- President Barack Obama, “Remarks by the President on

Government Reform,” January 13, 2012.


The Early Influences On 20th Century

Employment Law

Rise of industrial age

– 1860s to 1930s

– First large scale “employers”

Push by unions to establish workplace

rules

– 1880s to 1930s

– Minimum wage, overtime, worker’s

compensation

Great Depression


The Creation of 20th Century Employment

Law

Laws reaction to large industrial firms

– NLRA, FLSA, SSA, Workers Compensation acts

– Framework borrowed from older master servant law used to assess liability for

injuries

- Only two choices: employee or independent contractor

Regulatory structure built upon “employees” working for large employers,

pushed by unions

– Exclusions for small businesses and independent contractors

– Distinction between “labor” and “management” clear


Our 21st Century Economy

Markets highly efficient

Automation technology

Labor shift from goods to services allows labor to

decouple from firms

Communication and mobility across the globe

Labor and management distinction no longer clear

Growing gulf between high and low paid jobs


Markets, not Employers, Are What Matter

Firms organize resources internally when the cost is

less than purchasing those resources in the

marketplace

– Transactional theory of the firm (Ronald Coase,

1937)

What happens when resources are when cheaper to

purchase in the market?

– ADP, Ceridian, Paychex etc.

- Why do we use them to process payroll?

– Independent contractors – why do we use them?

- No “budget”


The Framework is Broken

Two choices forced by the 20th Century framework creates

unstable and unpredictable framework for “work” in modern

economy

– “The application of the traditional test of employment – a

test which evolved under an economic model very different

from the new “sharing economy” – to Uber’s business

model creates significant challenges. Arguably, many of the

factors in that test appear outmoded in this context.”

- Judge Chen’s March 11, 2015, Order denying summary

judgment


20th Century Government’s Reaction

To Our 21st Century Economy

Localizing employment law

Increasing pay, benefits, flexibility and hiring by

employers

Reducing employer control over the workplace


21st Century Economy’s Reaction to Our 20th

Century Government

ACA “30 hour” week triggers employed paid

health insurance

– Response: 29.5 hour work weeks, no

insurance

Higher minimum wage

– Response: Increase automation of low paid

jobs

- E.g., Automated checkout at the grocery

store


Localization of Employment Law

High minimum wages

– SF ($10.74), San Jose ($10.15), Seattle ($11,

up to $15 by 2017)

Predictable scheduling

– SF (Retail Workers Bill of Rights)

– AB 357: Two weeks’ notice of work schedules

in food and general retail industries

Paid sick leave

– SF (since 2007), Oakland, San Diego, Seattle,

Portland, Philadelphia, NYC, DC, others


Increases In Pay, Benefits and Hiring

Federal Legislation

– H.R. 932 (“Healthy Families Act”): Employees get

up to 7 paid sick days per year

– H.R. 1439 (“FAMILY Act”): Establish national,

gender neutral paid family and medical leave

insurance program

– H.R. 1450 (“Flexibility for Working Families Act”):

Give workers the right to request temporary or

permanent change to the number of hours they

are required to work; when and where they are

required to work or be on call; and notice of

scheduled assignments

Federal Litigation

– EEOC v. Ford Motor Co. (March 2015): ADA did not

require employer to keep employee with IBS who

rejected reasonable accommodations and otherwise

could not perform her job

– EEOC v. Freeman (February 2015): Court rejecting

EEOC’s arguments that use of background checks

disproportionately impacted African-Americans


Decreasing Employer Control in the Workplace

• Attacking Employer Policies on: • Restricting Profanity• Confidentiality• Social Media• Other Policies Pertaining to Communications• At-Will Employment• Complaint Procedures• Confidentiality• Non-Disparagement/False Statements/Conflict of

Interest• Non-Solicitation• Usage of Company Resources• Uniform/Dress Code/Logos• Discipline/Dispute Resolution• Email Organizing (Purple Communications)• Leaving Work Areas

• Irony is that greater employee freedom starts to make them look like ICs


Purple Communications Inc. and Communications Workers of America, AFL-CIO, 21-CA–095151 (December 11, 2014):

Employers are not required to open their corporate email system to unions or other non-employees for Section

7 activities.

Employers are not required to give employees who do not use corporate email to do their jobs access to the

corporate email system for union organizing or other Section 7 activities.

Employers may want to rethink providing email access to all employees and whether access is required to

perform employee job duties.

Employers can maintain broad rights to monitor corporate e-mail but cannot change their monitoring practices

in response to Section 7 activity.

Employers should consider conducting an overall review of their policies governing corporate e-mail for

compliance with Section 7.


Fixing the Problem

Decouple from “employers”

– COBRA was a small step

Revisit employee/contractor dichotomy

– Fails the “sharing” economy

– Fails to account for impact of technology and

mobility

Revise legal framework to one that is more balanced

– Law so complicated compliance impossible, but

employers hammered for mistakes


Agenda

Self-Check




Solutions Set



Do:

– Rigorously evaluate your IC’s and Freelancer usage on an ongoing basis

– Make sure you clearly identify who is working in the building and in what

capacity

– Educate hiring managers and build “idiot proof” worker tracking

mechanisms

– Engage third party support to keep abreast of legislative and regulatory

issues


Have A Plan…

U.S employers with at least 10 employees have a 12.5% chance of having an

employment liability charge filed against it.

The IRS has a voluntary process in which workers and employers can solicit its

opinion as to whether workers are properly classified. Only 3% of the time did the

IRS agree that the worker was an independent contractor.

In 2013, U.S. companies spent an estimated $268M in wage-and-hour settlements.

– Average settlement amount: $4.2M

– 2013 median settlement value: $2.8M (highest since 2008)

– 2013 Average Cost to Companies to Resolve Case: $4.5M

– 2013 average settlement value per plaintiff: $7,000 (far above the average of

$5,800 for the entire January 2007 - December 2012 period)


Work That Plan…

Best Practices: • Vetting, Validation and Security• Don’t just stay current, stay ahead• Audit Defense.

Company Profile: • Respected in its industry• Proven track record• Innovative in its client solutions and responsive

to ever-changing needs.


What do Best-In-Class Companies do?

74% of Best-in-Class organizations have an internal review process for

ensuring compliance with federal policies and tax policies compared

to 43% of All Others

66% of Best-in-Class organizations have a proper onboarding strategy

in place, compared to 54% of Industry Average

More than 50% of Best-in-Class organizations have visibility into spend

of contingent workforce management compared to 35% of All Others


Benefits of Being the Best

Best in Class companies (as compared to all others):

– 16% savings in labor costs as the result of the utilization of freelance or independent workers

– 32% very high or high visibility into the performance of their non-employee workers

– 93% compliance with internal, federal, and state policies concerning ICs

– 5 days average time to full productivity, compared to 15 days for All Others


Agenda

Self-Check




Solutions Set



Starting Tomorrow…A Few Brave Folks

I will _________________________________

by partnering with my _____________________________________ department/key stakeholders in order to

_____________________________________


Thank you

Reach out to us for any questions:Dana Shaw: [email protected] Weisman: [email protected]

Please take your Compliance Key, your access to competitive advantage information

mailto:[email protected]

mailto:[email protected]


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Building the Next Generation of Contingent Workforce,One Independent Contractor at a Time

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Staffing Industry Analysts - Concurrent Session: Risk Building the … · 2012-01-13 · Ignoring...

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