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The Pitfalls of Payrolling Temporary Workers                             The Pitfalls of Payrolling                  (and ...
The Pitfalls of Payrolling Temporary WorkersINTRODUCTION            Emergent employs the contingent workforce.   The Emerg...
The Pitfalls of Payrolling Temporary WorkersPRESENTATION OVERVIEWTemporary and project-based contingent workerusage is inc...
The Pitfalls of Payrolling Temporary Workers DISCLAIMER  Nothing on this presentation is intended to create any contractua...
The Pitfalls of Payrolling Temporary WorkersCONTINGENT WORKFORCE HISTORY                                    Prior to this ...
The Pitfalls of Payrolling Temporary WorkersU.S. CONTINGENT WORKFORCE SIZETOTAL ANNUAL SPEND & AVERAGE DAILY # OF WORKERS ...
The Pitfalls of Payrolling Temporary WorkersSOURCING CONTINGENT WORKERS                            Outsourcing      Staffi...
The Pitfalls of Payrolling Temporary WorkersCONTINGENT WORKFORCE SEGMENTS      Hourly                              „Temps‟...
The Pitfalls of Payrolling Temporary Workers  TEMPORARY WORKER CO-EMPLOYMENT    When the company that utilizes the conting...
The Pitfalls of Payrolling Temporary Workers    RECENT CONTINGENT WORKFORCE LAWSUITS                                  Stat...
The Pitfalls of Payrolling Temporary Workers   SOME CONTINGENT WORKFORCE   EMPLOYER RESPONSIBILITIES     • Properly issuin...
The Pitfalls of Payrolling Temporary Workers    WORKER CLASSIFICATION    •    46% of Independent         Contractors are f...
The Pitfalls of Payrolling Temporary Workers    PAYROLLING & REGULATIONS        • Wage & Hour                             ...
The Pitfalls of Payrolling Temporary Workers    WORKER MANAGEMENT       •   Accident and Incident                   • Perf...
The Pitfalls of Payrolling Temporary WorkersAVOIDING THE PITFALLSIn order to ensure that your contingent workforce is comp...
The Pitfalls of Payrolling Temporary WorkersWORKFORCE SUPPLIER QUALIFICATION•    Ensure financial stability of the    supp...
The Pitfalls of Payrolling Temporary WorkersSUPPLIER EMPLOYEE HANDBOOKSOLUTIONS                                           ...
The Pitfalls of Payrolling Temporary WorkersSUPPLIER AGREEMENT• Consider moving away from timecard  only agreements.• Clea...
The Pitfalls of Payrolling Temporary WorkersINTERNAL POLICIES• Mention exemption of contingent workers  from regular emplo...
The Pitfalls of Payrolling Temporary WorkersSOURCING AND SELECTING• Clearly define and document the assignment  descriptio...
The Pitfalls of Payrolling Temporary WorkersINCREASING WORKFORCE VISIBILITYYou can gain more contingent workforce visibili...
The Pitfalls of Payrolling Temporary WorkersSUMMARY• Contingent workforce usage is increasing.• Companies must be strategi...
The Pitfalls of Payrolling Temporary WorkersTHANK YOU / Q&A                                                  Contact Emerg...
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The Pitfalls of Payrolling Temporary Workers

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The Pitfalls of Payrolling Temporary Workers

  1. 1. The Pitfalls of Payrolling Temporary Workers The Pitfalls of Payrolling (and Employing) Temporary Workers 1
  2. 2. The Pitfalls of Payrolling Temporary WorkersINTRODUCTION Emergent employs the contingent workforce. The Emergent family of companies, founded in 1976, is one of the largest U.S. employers of contingent labor. EMERGENT CORPORATE HEADQUARTERS, BURBANK, CA ABOUT WWW.EMERGENT.COM TWITTER: @EMERGENTDOTCOM 2
  3. 3. The Pitfalls of Payrolling Temporary WorkersPRESENTATION OVERVIEWTemporary and project-based contingent workerusage is increasing for all types of companies.Many companies have a limitedunderstanding of the risks thataccompany utilizing these typesof workers.This presentation explores:• Temporary/Contingent Workforce Overview (History, Growth, and Segments)• Avoidable Contingent Workforce “Pitfalls” and Worker Payrolling & Worker Risks. Classification Regulations ManagementOVERVIEW 3
  4. 4. The Pitfalls of Payrolling Temporary Workers DISCLAIMER Nothing on this presentation is intended to create any contractual or other legal relationship between the presentation viewer and Emergent or any of Emergents 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.LEGALESE 4
  5. 5. The Pitfalls of Payrolling Temporary WorkersCONTINGENT WORKFORCE HISTORY Prior to this point temps a "stop gap“. After a Corporate "Restructuring" standard staffing strategy Wave. 3.1M Full-Time Demand Increases William Russell Kelly Jobs EliminatedProvides Office Temps Temps = 1 of 13 at Client Site CA Grants Temp Firms Employer Status New Jobs. Manpower Temp Labor passes GE. US Contingent Workforce Professionalized Recession Employment Estimated to be $164B Recovery, Led by 2X 2009 Figures Contingent Labor 1940 1950 1960 1970 1980 1990 2000 2010 2020 Post WWII Employment Great Recession = Model, Open- Massive Layoffs. US Ended, Single Companies to Attack Employer, EE Protected Vizcaino v. Microsoft Labor Costs Contingent Against Arbitrary Permatemp Suit Labor Expected To Be Up Dismissal Global Competition & 3rd Party Contingent To 50% of Workers Hired Stagnating Profits Labor (MSP/VMS) Back US Companies to Attack Services Increase Labor Costs Contingent Workforce IncreasedOVERVIEW 5
  6. 6. The Pitfalls of Payrolling Temporary WorkersU.S. CONTINGENT WORKFORCE SIZETOTAL ANNUAL SPEND & AVERAGE DAILY # OF WORKERS 2018 (Projected) $164 billion 2011 6M Workers $87 billion 2.58M Workers 1999 $17 billion 990K Workers Increased Usage = Increased Risk Source: Staffing Industry Analysts and Bureau of Labor StatisticsOVERVIEW 6
  7. 7. The Pitfalls of Payrolling Temporary WorkersSOURCING CONTINGENT WORKERS Outsourcing Staffing Internal Service Suppliers ‘Self-Sourcing’ Providers Project- Previously Temp ICs SOW Based Alumni Used Referrals Workers Workers WorkersOVERVIEW 7
  8. 8. The Pitfalls of Payrolling Temporary WorkersCONTINGENT WORKFORCE SEGMENTS Hourly „Temps‟ Contractors Fixed Bid Freelancers SOWOVERVIEW 8
  9. 9. The Pitfalls of Payrolling Temporary Workers TEMPORARY WORKER CO-EMPLOYMENT When the company that utilizes the contingent worker‟s 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 versa…“PITFALLS” & RISKS 9
  10. 10. The Pitfalls of Payrolling Temporary Workers RECENT CONTINGENT WORKFORCE LAWSUITS State Compensation Fund vs. Large Staffing Company Workers’ Compensation ‘Piggybacking’ by One of the Largest U.S. Staffing Company CA Self-Insurers’ Security Fund vs. Staffing Industry PEO Client companies named in lawsuit to pay workers’ comp claims of insolvent company“PITFALLS” & RISKS 1 10
  11. 11. The Pitfalls of Payrolling Temporary Workers SOME CONTINGENT WORKFORCE EMPLOYER RESPONSIBILITIES • Properly issuing paychecks • HR (discipline & discontinuation) • Withholding federal and state tax • Managing/Evaluating performance • Providing required insurance • Training and development • Sourcing the worker • Workers‟ compensation insurance • Selecting the worker • Documenting right to work in U.S. • Assigning work It takes knowledge and resources • Negotiating pay rate to compliantly employ contingent workers. • Negotiating duration of assignment • Complying with FLSA, FMLA, Immigration and other regulations • Supervising“PITFALLS” & RISKS the worker 11
  12. 12. The Pitfalls of Payrolling Temporary Workers WORKER CLASSIFICATION • 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 classification“PITFALLS” & RISKS 1 12
  13. 13. The Pitfalls of Payrolling Temporary Workers PAYROLLING & REGULATIONS • Wage & Hour • OSHA • Meal & Rest Periods • FMLA • Paying Taxes • FLSA • Record Keeping • State Specific Requirements • Right to Work • Background Screening“PITFALLS” & RISKS 1 13
  14. 14. The Pitfalls of Payrolling Temporary Workers WORKER MANAGEMENT • Accident and Incident • Performance and Procedures disciplinary action • Safety Training • Ending assignments • Recording injuries and • Documented standard OSHA regulations operating procedures“PITFALLS” & RISKS 1 14
  15. 15. The Pitfalls of Payrolling Temporary WorkersAVOIDING THE PITFALLSIn order to ensure that your contingent workforce is compliant werecommend: • Workforce Supplier/Employer Qualification • Proper Agreements • Worker Management Best Practices • Gain Workforce VisibilitySOLUTIONS 1 15
  16. 16. The Pitfalls of Payrolling Temporary WorkersWORKFORCE SUPPLIER QUALIFICATION• 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).SOLUTIONS 1 16
  17. 17. The Pitfalls of Payrolling Temporary WorkersSUPPLIER EMPLOYEE HANDBOOKSOLUTIONS 1 17
  18. 18. The Pitfalls of Payrolling Temporary WorkersSUPPLIER AGREEMENT• 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.SOLUTIONS 1 18
  19. 19. The Pitfalls of Payrolling Temporary WorkersINTERNAL POLICIES• 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.SOLUTIONS 1 19
  20. 20. The Pitfalls of Payrolling Temporary WorkersSOURCING AND SELECTING• 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.SOLUTIONS 2 20
  21. 21. The Pitfalls of Payrolling Temporary WorkersINCREASING WORKFORCE VISIBILITYYou can gain more contingent workforce visibilityat 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.SOLUTIONS 2 21
  22. 22. The Pitfalls of Payrolling Temporary WorkersSUMMARY• Contingent workforce usage is increasing.• Companies must be strategic about temporarycontingent worker compliance because of the co-employment responsibilities that come withmanaging this workforce on a day to day basis.• By wisely and consistently qualifying andmonitoring your contingent workforce, yourcompany‟s risk can be mitigated.SUMMARY 2 22
  23. 23. The Pitfalls of Payrolling Temporary WorkersTHANK YOU / Q&A Contact Emergent for a no cost contingent workforce evaluation . TWITTER: @EMERGENTDOTCOM EMERGENT.COM/NEWS INFO@EMERGENT.COMTHANK YOU 2 23

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