Monthly Archives: May 2016

What Your Business Needs to Know

images-23Many U.S. workers are forgoing the traditional office job to work on a contractual or freelance basis. For employers, having contingent workers could mean a savings of time and money, as they don’t have to take the time to train the worker, pay health benefits or contribute to a 401(k).

However, if your business does choose to use contractors or freelancers, you need to make sure your workers are properly classified. Depending on the specific terms of your arrangement with an independent contractor — hours worked, reporting structure, payment schedule, etc. — you might find yourself in the middle of a misclassification lawsuit.

Joy Child, vice president at law firm Alexander, Aronson, Finning & Co., noted that a company wrongly treating its workforce as independent could be liable for payroll taxes, interest and penalties. Regular employees are entitled to certain legal protections and benefits that independent contractors aren’t, and the IRS and state governments are actively looking for clues that a company might be shirking its responsibilities to its workers.

How are independent workers classified?

In the 1990s, Microsoft misclassified thousands of programmers and computer engineers as independent contractors. These long-term temp workers brought a benefits case against the company and were deemed by the courts as “employees.” As a result, the company was required to pay $97 million in penalties and legal fees, and the case yielded a set of guidelines to help employers determine whether a worker is an employee or an independent contractor.

Based on a report on the Microsoft case, these are the five most important factors to consider for worker classification:

  1. Control over how work is done: Workers who work when and where they want, using their own methodologies and guidelines, are rightly considered to be independent contractors. If, however, you require a worker to be in the office for a fixed period of time and work according to company policies, that person should likely be classified as an employee.
  2. Equipment and software: Does the worker use his or her own computer, or does he or she use a machine on-site? Does that machine have software on it that the worker does not have? Does he or she use company office supplies? An independent contractor should supply most or all of his or her own materials to complete a job.
  3. Compensation: Freelancers are generally paid by the job. If a company pays a worker a monthly or yearly amount, the IRS will likely categorize that person as an employee. Remember, businesses need to send all independent contractors a 1099 form to report how much the company paid the person over the course of a year.
  4. Training: Businesses shouldn’t have to train independent contractors, according to the IRS and many state labor boards. Independent contractors should be able to begin immediately, producing work that they’ve been hired for. If a worker requires significant training, he or she may be considered an employee.
  5. Exclusivity: True freelancers are self-employed business owners. They often have their own website and business cards, and advertise their services to other companies. Asking the person to exclusively work for your company puts him or her closer to employee status.

Some lawyers routinely advise businesses to cease using independent contractors, or to reclassify them as employees, to avoid the potential for misclassification liability. An updated version of the report details steps companies can take to minimize or avoid future misclassification issues.

If a compliance analysis reveals potential misclassification issues, workers can be reclassified as either employees or independent contractors. This can be done either by a government reclassification program or voluntarily. This does not require that independent workers who are now employees become part of your benefits program, though; voluntary participation is likely to be more cost-effective and less painful for businesses.

Once everything is restructured, the accompanying documents must ensure that the contractor agreement is followed, according to the report.

There are workforce management and staffing organizations that hire or retain some or all of a company’s independent contractors, and they issue those workers a 1099 (independent worker) or a W-2 (employee) based on their proper classification. Miranda Nash, co-founder and CEO of talent marketplace Qeople, advised employers to work with one of these firms to reduce the administrative burden.

Although using these firms doesn’t free employers from liability, staffing agencies can help because they are familiar with the rules and how to manage contract and freelance workers, Nash said.

In a recent webinar by Work Market, co-founder and president Jeff Wald said “a lot of people still have a lot of guesswork” when it comes to determining the compliance of their contingent workforce, and that “60 percent of all contingent labor is unaccounted for in financial planning and forecasting.” The above outline could help take the guesswork out of how to use contingent workers, and help avoid any potential misclassification liability.

You should know about the company culture

Think your employees get your company’s culture? They might not see it the same way you do: New research has revealed disconnects between managers and their employees regarding their companies’ values and culture.

According to the study, which was conducted by corporate training company VitalSmarts, workers’ values vary by seniority. VitalSmarts found that leaders want innovation, initiative, candor and teamwork. In contrast, nonmanaging employees think their managers really want obedience, predictability, deference to authority and competition with peers.

These miscommunications negatively affect workers’ performance, as well as decrease their motivation, commitment and confidence in their company, the researchers said. In fact, of the people surveyed, only 9 percent of nonmanaging employees and 15 percent of managers and executives have positive views of their corporate culture.

To bridge these gaps in perception, Joseph Grenny and David Maxfield, the lead researchers on the study and co-founders of VitalSmarts, recommended the following leadership strategies:

Understand why you want to change your culture. If you feel like a cultural change will help bring employees and bosses together, consider the specific business motivations for changing it. Launching solutions as a “feel-good hobby” without concrete, measurable reasons can damage your culture in the long run.

Focus on vital behaviors. If you decide your culture does need a face-lift, you will need to make some behavioral changes to go along with it. It isn’t realistic to tackle numerous behaviors at once, though, so focus on the core two or three that will make the most difference in performance.

Listen deeply. Employees should have the chance to speak, and as an employer, you should listen and be open-minded. Directly engaging with employees and answering their questions are critical steps in understanding where you stand as a manager and what you can change to improve your company.

“Leaders tend to think employees won’t open up — but we’ve seen the opposite,” Grenny said in a statement. “When an executive sits down and truly listens, employees will be surprisingly honest.”

Take action. Don’t just say something — actually do it. After listening to your employees’ concerns, be sure to make the appropriate changes to benefit you and your company as a whole, building their trust in you as their leader.

In addition to employing these strategies, leaders should “participate in interpersonal skills training” in order to create a healthy culture, Maxfield said.

“Leaders can … better manage their teams [through training], but they are also in a position to cascade these skills to their employees — ultimately creating a new, healthy cultural norm,” Maxfield said.

Tips To Motivate Your Employees

unduhan-12A new study from Robert Half Management Resources revealed that 53 percent of all professionals wish they had more insight into the effects of their contributions on their companies’ bottom lines.

This is especially true of younger workers. Nearly 65 percent of those surveyed who were between the ages 18 and 34 said they wanted more information on how their work helps their company make money.

“Employees who see the direct correlation between their contributions and company performance are more engaged, make better spending decisions and can identify new ways to increase productivity and growth,” Tim Hird, executive director of Robert Half Management Resources, said in a statement.

Currently, 47 percent of the workers surveyed said they are always able to make the connection between their day-to-day duties and how they contribute to the company’s bottom line. Meanwhile,14 percent said they are rarely or never able to connect those dots. [See Related Story: Communication Is Key to Genuine Employee Engagement]

When examined by age group, those typically in leadership roles have the hardest time making those connections. Just 38 percent of those between the ages of 35 and 54 are always able to understand how their work affects the bottom line, while 19 percent said they aren’t able to make those connections on a regular basis.

“It is concerning that so many workers who are 35 to 54 — a group that often serves as managers and top executives — lack a complete understanding of how their responsibilities help their organization’s bottom line,” Hird said.

Since younger workers put more of a priority on knowing how their work is serving a larger purpose, it is critical that employers make sure they are helping them connect those dots, Hird siad.

“Managers who do not have regular conversations with staff about how their work affects the company are missing a major opportunity to develop ideas for improving the business,” he said.

To help employers, Robert Half Management Resources offered several tips for keeping workers more informed about how they are contributing to the company’s financial standing:

  1. Give updates to everyone. Often, employers provide financial updates only to high-ranking managers and executives. Conversations about company performance and how workers are meeting, or not meeting, goals should be held with everyone in the organization, regardless of their level. Giving workers a better understanding of how their contributions make an impact is a good way to help employees improve their performance.
  2. Have regular discussions. Instead of detailing how the company is performing only once or twice a year, employers should have their managers give more specific feedback to individual employees on a regular basis.
  3. Get an outside perspective. It never hurts to hear what those outside the organization think of how the company is performing. Every so often, check in with those in your network, or industry consultants, to not only get their insight into how the company is performing, but also to learn best practices from other organizations.