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Contingent Workforce Processes and Issues

For Legal Department

Presentation by Zent Law Group

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Why You Need to Know about the Contingent Workforce

Legal Risk to the Company if defined processes are not followed.

Legal Risk to the Company if workers are mischaracterized.

Loss of Intellectual Property if certain contingent workers are not approved by legal (such as Academics and Professional Experts).

Economic impact to the company and departmental staffing budgets if worker claims result from failure to follow company staffing process.

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Consequences of Misclassification

Federal Government

– Internal Revenue Service

– Bureau of Immigration and Customs Enforcement

– Department of Labor State Government

– Income Tax

– Unemployment Premiums Legal Claims by Workers

– Stock Purchase Plan

– Stock Option Plan

– 401k Plan

– Wrongful termination, discrimination

– Workers’ compensation

– Overtime, accrued benefits

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Understanding the Workforce

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Understanding the Workforce

Typically Long Term or Seasonal

Staffing Needs

Short-Term Temporary Staffing Needs

Typically Long Term Staffing Needs

Often used for unique, one-time projects

EmployeeOutsourced Service

Providers (OSPs)

Agency Temporary Worker

Consultant/Contractor

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Employees

Fills open requisitions and short term (internship) roles

Eligible for company benefits

Paid by company

Uses company tools & equipment

Works under direction and control from company

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Agency Temporary Worker

Fill “short-term”, “flexible,” “project based” positions

Legal employees of a temp agency

Receive W-2 from agency employer at year end

Uses company tools & equipment

Works at company offices

Taxes paid by temp agency

Given specific instructions by company

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Outsourced Service Providers (OSPs)

Service provider with multiple employees providing service to company (Deloitte, etc.)

Generally paid by invoice for services

Uses own tools & equipment

Works under their own direction

Carry all required insurances

Generally project staffing at their own discretion

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Consultant/Contractor

Performs a unique service Self Employed Works for multiple clients at same time Paid upon milestones or project completion Receive Form 1099 from company at year end Uses own tools & equipment Pays their own taxes quarterly Works under their own direction Carries required insurances Sometimes consist of Academics/

Professional Experts

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Procedures for Hiring

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Procedures for HiringContingent Workers

Employees are Processed by Company’s Human Resources Department

OSP’s are processed by the Purchasing Department

Contractors/Consultants/Academics/Experts are evaluated and processed by Company’s designated Staffing Agency

Agency Temps are processed by Company’s designated Staffing Agency

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OSP Engagement Process

OSPs are engaged through the Purchasing Department OSPs must execute the Company’s form of Purchase

Agreement Under the Purchase Agreement, OSPs:

– Are required to be entirely responsible for their employees and subcontractors

– Pay all wages, taxes and withholding of their employees and subcontractors

– Carry insurance, including workers compensation for their employees

– Carry all insurance that the Company requires of OSPs, and

– Require their subs to carry all such insurance.

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Staffing Agency Evaluation Process

1. Applies to Consultant or Agency Temp

2. Collect information and evaluate contractor for compliance with IRS, EDD, and DOL

3. Recommendation made within 24 hours of receipt of all required documents

4. If an Agency Temp, then Staffing Agency hires and payrolls worker to eliminate company’s risk

5. In event of an audit, Staffing Agency maintains a compliance file

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Documents Reviewed for Consultant Evaluation

Articles of Incorporation (only required if incorporated) Professional Liability Insurance (Errors & Omissions) Commercial General Liability Insurance Automobile Liability Business License (only if required in city working in) Evidence of most recent clients other than Company

(Invoices) Evidence of recognition in contractor’s field Evidence of Taxes paid Federal Employer Tax ID Number (not Social Security) Fictitious Business Name Statement (DBA) Proof of advertising/marketing materials Proof of Published Works

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Documents Reviewed for Academics/Professional Expert

Automobile Liability (if driving)

Evidence of recognition in your field

Evidence of an understanding for the release of all IP from the Expert’s employer to Client

Certification of Taxes Paid

Curriculum Vitae (C.V.) (Resume) or

Evidence of current employment or

Proof of Published Works

Statement of Work

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Thank YouContact Information: Monica Zent

Zent Law Group, PC1298 Kifer Road, Suite 509Sunnyvale, CA 94086Tel. 408-736-3600 (Ext. 3601)mzent@zentlaw.com