Studies suggest hiring independent contractors can save as much 35% on payroll costs. Additionally, employers no longer need to provide workers compensation insurance for the independent contractor. Depending on the type of work, this can add a great deal to the cost of hiring employees. Retaining independent contractors avoids all these problems.
The government likes to classify everyone as an employee forcing the employers pay the payroll taxes. For the same exact reasons, employers like to hire independent contractors and avoid paying the payroll taxes.
The issue also appears when an independent contractor is insured on the job and seeks compensation and medical care after being injured.
The legal definition turns on the control an employer exerts over the employee or independent contractor. The more control the more likely the individual be an employee. IRS uses a 20 prong criteria:
1. Is the worker required to comply with instructions about when, where and how the work is done?
2. Is the worker provided training that would enable him/her to perform a job in a particular method or manner?
3. Are the services provided by the worker an integral part of the business' operations?
4. Must the services be rendered personally?
5. Does the business hire, supervise, or pay assistants to help the worker on the job?
6. Is there a continuing relationship between the worker and the person for whom the services are performed?
7. Does the recipient of the services set the work schedule?
8. Is the worker required to devote his/her full time to the person he/she performs services for?
9. Is the work performed at the place of business of the company or at specific places set by the company?
10. Does the recipient of the services direct the sequence in which the work must be done?
11. Are regular oral or written reports required to be submitted by the worker?
12. Is the method of payment hourly, weekly, monthly (as opposed to commission or by the job?)
13. Are business and/or traveling expenses reimbursed?
14. Does the company furnish tools and materials used by the worker?
15. Has the worker failed to invest in equipment or facilities used to provide the services?
16. Does the arrangement put the person in a position or realizing either a profit or loss on the work?
17. Does the worker perform services exclusively for the company rather than working for a number of companies at the same time?
18. Does the worker in fact make his/her services regularly available to the general public?
19. Is the worker subject to dismissal for reasons other than non-performance of the contract specifications?
20. Can the worker terminate his/her relationship without incurring a liability for failure to complete the job?
At the end though, there is no particular factor that may sway it one way or the other.
Wednesday, November 11, 2009
Wednesday, October 14, 2009
Reduction in Force: Downsizing and PEOs
Although Professional Employer Organizations do not deal with Reduction In Force (RIF) issues as much as others, due to it generally being a governmental issue and not a small business issue -- nevertheless, it is an important thing for business owners to acquaint themselves with (in a general "downsizing" sense), and PEOs can and do consult business owners on this matter.
Before a Reduction In Force begins, the federal agency defines the competitive area, i.e. the geographical and organizational boundaries within which employees compete for retention. A competitive area may consist of all or part of an agency. The minimum competitive area is a bureau, major command, directorate, or other equivalent major subdivision of an agency within a local commuting area. If an agency wants to change a competitive area within 90 days of a RIF, the agency must obtain approval from Office of Personnel Management.
Check out our directory's list of PEOs for one that can help your company set up an employee incentive program, aid with downsizing, and many other things.
Before a Reduction In Force begins, the federal agency defines the competitive area, i.e. the geographical and organizational boundaries within which employees compete for retention. A competitive area may consist of all or part of an agency. The minimum competitive area is a bureau, major command, directorate, or other equivalent major subdivision of an agency within a local commuting area. If an agency wants to change a competitive area within 90 days of a RIF, the agency must obtain approval from Office of Personnel Management.
Check out our directory's list of PEOs for one that can help your company set up an employee incentive program, aid with downsizing, and many other things.
Understanding Employee Health Insurance Benefits
Part of the administrative schematic of a PEO is the doling out of employee health insurance benefits. This is one of the most crucial and needful of all the aspects of PEO handiwork. There are a fair amount of federal and state laws and regulations a PEO must adhere to (or make sure the company in their care adheres to, rather). The Americans with Disabilities Act (ADA) was passed, for instance, due to the bureaucratic protocols faced with employee disability, health, employment status and fair compensation issues.
Although the ADA does not require an employer to provide additional insurance benefits to an individual with a disability, an employer may not deny health insurance coverage completely to an individual based upon that person's diagnosis or disability absent an actuarial justification. For example, a blind person may not be denied coverage based on blindness independent of actuarial risk classification. Also, an employee who is addicted to drugs, but not a current user, may not be excluded from receiving health care benefits simply because of the person's addiction. Similarly, an employer may not deny a qualified applicant a job because the employer's current insurance plan does not cover the person's disability or because of the increased cost of insurance. An employer also may not terminate an employee so as to avoid paying the increased costs of the employee's medical benefits or those of a family member with a disability.
A PEO can also help set up an employee incentive program for your company. Select one from our directory of effective PEOs today, and see what a difference it can make.
Although the ADA does not require an employer to provide additional insurance benefits to an individual with a disability, an employer may not deny health insurance coverage completely to an individual based upon that person's diagnosis or disability absent an actuarial justification. For example, a blind person may not be denied coverage based on blindness independent of actuarial risk classification. Also, an employee who is addicted to drugs, but not a current user, may not be excluded from receiving health care benefits simply because of the person's addiction. Similarly, an employer may not deny a qualified applicant a job because the employer's current insurance plan does not cover the person's disability or because of the increased cost of insurance. An employer also may not terminate an employee so as to avoid paying the increased costs of the employee's medical benefits or those of a family member with a disability.
A PEO can also help set up an employee incentive program for your company. Select one from our directory of effective PEOs today, and see what a difference it can make.
Tuesday, October 13, 2009
Oprah Winfrey Wrongful Termination Lawsuit Underscores PEO Importance
The issue of wrongful termination of an employee where concerns a no-term, at will employment arrangement can be a tricky one at times. And it appears to be tricky times indeed for Oprah Winfrey and a former employee of hers.
A wrongful termination lawsuit has been brought against the media mogul and her Harpo Inc. by her former stewardess Corinne Gehrls.
Gehrls is vehemently denying allegations that she and married pilot Terry Pansing had intimate relations during a flight with Winfrey on board her posh private jet -- claims which resulted in their July 7 termination.
Also named in the Chicago defamation suit are fellow flight attendants Myron Gooch and Kirby Bumpus—who happens to be the daughter of Oprah BFF Gayle King. The fired stewardess says the two "falsely told Winfrey and Harpo" that she and Pansing "had been observed having inappropriate intimate contact outside the cockpit of the plane."
Gehrls has vehemently denied the allegations, going so far as to take--and pass--a polygraph test on the advice of her lawyer. Pansing reportedly did the same. Winfrey's former employee is seeking $75,000 plus costs, attorney's fees and other damages.
To wit: an employment, having no specified term, may be terminated at the will of either party on notice to the other. This presumption may be superseded by a contract, express or implied, limiting the employer's right to discharge the employee. Absent any contract, however, the employment is 'at will,' and the employee can be fired with or without good cause. But the employer's right to discharge an 'at will' employee is still subject to limits imposed by public policy, since otherwise the threat of discharge could be used to coerce employees into committing crimes, concealing wrongdoing, or taking other action harmful to the public. Accordingly, while an at-will employee may be terminated for no reason, or for an arbitrary or irrational reason, there can be no right to terminate for an unlawful reason or a purpose that contravenes fundamental public policy.
Are you in need of a PEO, which can help settle and arbitrate disputes such as these? Wouldn't you rather delegate this kind of situation to a Professional Employer Organization? Choose from our directory of accomplished PEOs today.
A wrongful termination lawsuit has been brought against the media mogul and her Harpo Inc. by her former stewardess Corinne Gehrls.
Gehrls is vehemently denying allegations that she and married pilot Terry Pansing had intimate relations during a flight with Winfrey on board her posh private jet -- claims which resulted in their July 7 termination.
Also named in the Chicago defamation suit are fellow flight attendants Myron Gooch and Kirby Bumpus—who happens to be the daughter of Oprah BFF Gayle King. The fired stewardess says the two "falsely told Winfrey and Harpo" that she and Pansing "had been observed having inappropriate intimate contact outside the cockpit of the plane."
Gehrls has vehemently denied the allegations, going so far as to take--and pass--a polygraph test on the advice of her lawyer. Pansing reportedly did the same. Winfrey's former employee is seeking $75,000 plus costs, attorney's fees and other damages.
To wit: an employment, having no specified term, may be terminated at the will of either party on notice to the other. This presumption may be superseded by a contract, express or implied, limiting the employer's right to discharge the employee. Absent any contract, however, the employment is 'at will,' and the employee can be fired with or without good cause. But the employer's right to discharge an 'at will' employee is still subject to limits imposed by public policy, since otherwise the threat of discharge could be used to coerce employees into committing crimes, concealing wrongdoing, or taking other action harmful to the public. Accordingly, while an at-will employee may be terminated for no reason, or for an arbitrary or irrational reason, there can be no right to terminate for an unlawful reason or a purpose that contravenes fundamental public policy.
Are you in need of a PEO, which can help settle and arbitrate disputes such as these? Wouldn't you rather delegate this kind of situation to a Professional Employer Organization? Choose from our directory of accomplished PEOs today.
Thursday, October 8, 2009
PEOs ensure employee safety in the workplace
PEOs, a.k.a. Professional Employer Organizations, help ensure employee safety in the workplace by upholding federal safety standards, as well as by doing thorough background checks. The former method involves safety rules and regulations involving operation of machines and making sure safety guidelines are followed; the latter involves keeping workers safe from colleagues who may potentially be a threat to workplace safety, determined by a history of violence or a record of having trouble with the law, etc.
Many non-PEO businesses suffer because of a lack of thorough background checks, or adherence to federal safety laws and regulations. Any company is better served by the services of a PEO, which also routinely handle such administrative aspects of running a business, such as: payroll, health insurance, and other legalities.
A PEO can also set up an employee incentive program, which reinforces positivity and good work ethics in the workplace. Choose a professional employer organization from our directory, and find out what a PEO can do for you and your company.
Many non-PEO businesses suffer because of a lack of thorough background checks, or adherence to federal safety laws and regulations. Any company is better served by the services of a PEO, which also routinely handle such administrative aspects of running a business, such as: payroll, health insurance, and other legalities.
A PEO can also set up an employee incentive program, which reinforces positivity and good work ethics in the workplace. Choose a professional employer organization from our directory, and find out what a PEO can do for you and your company.
Tuesday, October 6, 2009
PEOs keep businesses compliant with fair employment laws
One of the many duties of a PEO is keeping companies federally compliant with laws regarding equal employment opportunity. They answer to the Equal Employment Opportunity Commission (EEOC), and state and local Fair Employment Practices Agencies (FEPAs). This is hugely important in reducing companies' liabilities when it comes to fair employment practices.
The EEOC coordinates all federal equal employment opportunity regulations, practices, and policies. The Commission interprets employment discrimination laws, monitors the federal sector employment discrimination program, provides funding and support to FEPAs, and sponsors outreach and technical assistance programs. Any individual who believes he or she has been discriminated against in employment may file an administrative charge with the EEOC. After investigating, the EEOC determines if there is "reasonable cause" to believe discrimination has occurred. If "reasonable cause" is found, the EEOC attempts to conciliate the charge by reaching a voluntary resolution between the charging party and the respondent. If conciliation is not successful, the Commission may bring suit in federal court. Also, the EEOC may also issue a Right-to-Sue-Notice to the charging party, allowing the charging party to file an individual action in court without the Agency's involvement.
In addition to reducing company liability with fair employment issues, a PEO can also set up an employee incentive program, which reinforces positivity and good work ethics in the workplace. Choose a professional employer organization from our directory, and find out what a PEO can do for you and your company.
The EEOC coordinates all federal equal employment opportunity regulations, practices, and policies. The Commission interprets employment discrimination laws, monitors the federal sector employment discrimination program, provides funding and support to FEPAs, and sponsors outreach and technical assistance programs. Any individual who believes he or she has been discriminated against in employment may file an administrative charge with the EEOC. After investigating, the EEOC determines if there is "reasonable cause" to believe discrimination has occurred. If "reasonable cause" is found, the EEOC attempts to conciliate the charge by reaching a voluntary resolution between the charging party and the respondent. If conciliation is not successful, the Commission may bring suit in federal court. Also, the EEOC may also issue a Right-to-Sue-Notice to the charging party, allowing the charging party to file an individual action in court without the Agency's involvement.
In addition to reducing company liability with fair employment issues, a PEO can also set up an employee incentive program, which reinforces positivity and good work ethics in the workplace. Choose a professional employer organization from our directory, and find out what a PEO can do for you and your company.
Monday, October 5, 2009
Pre-employment screening handled by PEOs reduces liability
Employers use employment background checks to verify the accuracy of information provided by job seekers. Background reports may also uncover information left out of the application or interview. Today, more employers are being sued for "negligent hiring" -- for not checking carefully enough into the background of a potential employee. If an employee's action hurts someone, the employer may be liable. This is one reason more background checks are being conducted. A PEO can assist your business in this process by doing a more thorough job, and thus reducing liability.
Some questions PEO agents routinely ask when doing a pre-employment screening involving, for example, an employee disability, include: What were the essential functions and requirements of the previous job? - What was the relationship between those requirements and the applicant's impairment? - What aspects of the applicant's previous performance and conduct were not affected or influenced by the disability? - What aspects of the applicant's performance and conduct may have been influenced by the disability? - What specific changes in job duties or assignments were made in order to accommodate the applicant's disabilities? - Did these changes allow the applicant to successfully perform the job?
These and many other questions are tackled by PEOs, so you as a business owner can focus on the things that made you want to get into business in the first place!
Choose a PEO from our directory, and experience the difference a professional employer organization can make.
Some questions PEO agents routinely ask when doing a pre-employment screening involving, for example, an employee disability, include: What were the essential functions and requirements of the previous job? - What was the relationship between those requirements and the applicant's impairment? - What aspects of the applicant's previous performance and conduct were not affected or influenced by the disability? - What aspects of the applicant's performance and conduct may have been influenced by the disability? - What specific changes in job duties or assignments were made in order to accommodate the applicant's disabilities? - Did these changes allow the applicant to successfully perform the job?
These and many other questions are tackled by PEOs, so you as a business owner can focus on the things that made you want to get into business in the first place!
Choose a PEO from our directory, and experience the difference a professional employer organization can make.
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