The composition of the American workforce has been changing and will continue to evolve. Whereas regular employment used to be almost the only classification of worker, now more and more in the \u201cgig economy\u201d people are hired as temporary employees or independent contractors.<\/p>\n
According to the latest job report from the Bureau of Labor Statistics, almost 157 million employees were participating in the workforce. This includes 27 million part-time employees (those who work less than 35 hours per week), 4.7 million who are \u201cinvoluntary part-time\u201d as they would like to but cannot find full-time employment. Unemployment rose slightly to 3.9% with about 6 million people actively looking for employment while there were 6.9 million job openings.<\/p>\n
Shifting job trends, employment costs, and employee availability have required companies to look for alternative ways to fill open positions and meet work demands. Two of the more popular options are hiring temporary employees or independent contractors. Both have pros and cons to consider.<\/p>\n
Temporary employees (\u201cTemps\u201d):<\/p>\n
Temporary employees fill a need in the workforce that regular employees cannot. Companies use temporary employees for several reasons including:<\/p>\n
\u00b7 to fill a short-term need (i.e., sudden or occasional increased client demands),<\/p>\n
\u00b7 to assist regular employees who are under work stress,<\/p>\n
\u00b7 to complete a specific project (i.e., to scan hard-copy records into electronic storage),<\/p>\n
\u00b7 to \u201ctry out\u201d a person before hiring full-time,<\/p>\n
\u00b7 to meet seasonal demands (i.e., sales people just for Christmas shopping season),<\/p>\n
\u00b7 to cover a regular employee out on extended leave,<\/p>\n
\u00b7 to reduce employment commitments in an uncertain economy, or<\/p>\n
\u00b7 to avoid the costs associated with regular employees (i.e., benefits, insurance).<\/p>\n
According to a report by the American Staffing Association, 3 million temporary \/ contract employees are placed by staffing companies each week and over 15 million temporary \/ contract employees are hired by staffing companies each year. Workers may choose to be placed as temps to give them flexibility, may believe it is a good way to find a regular job (which it can be), or may sign up as temps out of necessity.<\/p>\n
Cautions:<\/p>\n
\u00b7 Do not keep a temp for too long \u2013 Retaining a temp for a long time with no intention to terminate their services or bring them on as a regular employee may be seen as avoiding mandated employment obligations. While extending a temp beyond the initial project deadline is fine, do not infinitely employ a temp without converting to regular employment at some point. If they are good, hire them so they won\u2019t leave to temp for someone else who can provide them stability.<\/p>\n
\u00b7 Do not blindly trust the staffing agency you use \u2013 Implement practices such as doing reference checks on a new staffing agency and viewing all paystubs the agency issues to your temps to make sure everything is handled correctly. If the agency is not processing payroll correctly, you could be found liable for back wages and taxes.<\/p>\n
Independent Contractors:<\/p>\n
Companies may choose to hire independent contractors for several of the same reasons they would a temp: staffing flexibility, reduced employment costs, or to meet a temporary need. Independent contractors can also fill a specific, more regular role that the company may not need full-time, such as marketing, IT support, HR, or bookkeeping.<\/p>\n
The CPA Practice Advisor explains that small businesses hire independent contractors more than regular employees. Since small companies must be more streamlined in their operations and are more impacted by client demand and budget fluctuations, independent contractors give them a way to fill part-time or occasional workforce needs without the expense of hiring a regular employee.<\/p>\n
Many people are choosing to leave the regular workforce and work for themselves as an independent contractor. The trend of self-employment is increasing with expectations of 42 million people working as self-employed independent contractors by 2020 as compared to 126 million regularly-employed workers. That means 1\/3 of the workforce will be classified as independent contractors in the next year or two.<\/p>\n
Cautions:<\/p>\n
\u00b7 Do not misclassify true \u201cemployees\u201d as \u201cindependent contractors\u201d \u2013 Various federal and state agencies (including the IRS and DOL) have different standards and \u201ctests\u201d for independent contractors. A few areas of consideration to demonstrate the true \u201cindependence\u201d of a contractor include (list not all-inclusive):<\/p>\n
o Does the person control his \/her work hours, methods, tools, etc.?<\/p>\n
o Can the person work independently without oversight or supervision from company management?<\/p>\n
o Can the person work for other companies \/ clients doing similar work?<\/p>\n
o Is the person given expectations and can meet them however they wish or does the company dictate every procedure?<\/p>\n
o Is the person expected to follow company policies such as attendance and progressive discipline?<\/p>\n
o Can the person gain a profit or suffer a loss from the work arrangement?<\/p>\n
\u00b7 Do not be surprised by an audit of the relationship \u2013 Utilizing independent contractors can create increased exposure to federal and state government audits. These agencies focus on companies with independent contractors to make sure they are not misclassifying workers in order to avoid paying taxes, minimum wage, and overtime, as well as not providing required benefits such as health and workers\u2019 comp insurance.<\/p>\n
Regardless of the makeup of your workforce, it is important to remember there are regulations to follow for all types of workers, and the penalties for employee misclassification or failing to follow those regulations can be very costly. Of course, if you have any questions, don\u2019t hesitate to contact us at Affinity HR Group \u2013 your HR partner and resource.<\/p>\n
By Paige McAllister, SPHR, HR Compliance \u2013 Affinity HR Group, Inc.<\/p>\n","protected":false},"excerpt":{"rendered":"
The composition of the American workforce has been changing and will continue to evolve. Whereas regular employment used to be almost the only classification of worker, now more and more in the \u201cgig economy\u201d people are hired as temporary employees or independent contractors. According to the latest job report from the Bureau of Labor Statistics, […]<\/p>\n","protected":false},"author":3,"featured_media":10118,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-6259","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"aioseo_notices":[],"yoast_head":"\n