Part II of my summary of the keynote address from this year's Contingent Workforce Risk Forum. Interesting stuff about future trends in the world of work:
While Mathiason made a compelling case for the continued growth of the contingent workforce, he listed Top Ten Legal Challenges to continued growth of the segment:
Health Care Reform and the Contingent Workforce: It appears as if the current law will begin breaking down the employer based health care system, and that is good news for workers who want the freedom to move from assignment to assignment. The challenge for employers will be in defining whether or not contingent workers should be included in their headcount for the purpose of calculating potential penalties for not providing coverage for those workers. Someone will have to pay as health care becomes more portable, but the question remains who that will be.
Legal Attacks on Independent Contractor Status: There is a perfect storm in place. Tax revenue is down because of the recession. More benefits are being paid to the unemployed, further reducing state coffers. More workers want their independence. More companies want workforce flexibility. The government needs the money that regular full-time workers provide, in way of payroll taxes. For these reasons, 24 states have already increased their level of enforcement on misclassification of workers, and passed laws to require greater penalties for those who misclassify workers. This will have a significant impact on the growth of this segment. Contingent workers already represent 8% of the total US workforce and the numbers are growing.
Wage and Hour Misclassification Challenges: Between 2008 and 2009, there was a 40% growth in wage and hour claims. Some of this is to be expected, given the downturn in the economy and a more labor friendly administration in power. Of concern for those involved with contingent staffing, however, is the fact that independent contractor misclassifications were the fastest growing segment. Many employers will tell you that workers prefer the perceived status and security that comes with being classified as exempt (salaried). That is true, unless of course, the job goes away, and the need for income becomes more important than “status”.
The position of Recruiter deserves special mention here, since it is a job ideally suited in many ways for the contingent worker world. It can be done remotely, requires little face-to-face interaction, sometimes odd working hours, and tends to have high peaks and low valleys of activity. The courts have delivered conflicting decisions regarding the exemption status of Recruiters as a classification, and Mathiason believes that this will be an area of focus for auditors in the coming years.
Managing Co-Employment Risks: The law continues to evolve in this tricky area. The very nature of the contingent workforce requires some duel control. Many suppliers of contingent workers do not see the client face-to-face, and many never see the contingent worker either! To manage this risk, and to provide security to the buyer of these services, compliance certification reports will become mandatory. At this time, Mathiason says that the laws are changing to recognize what it calls primary and secondary employers. The hope is that these designations will provide some clarity to these fluid situations.
Allocating Legal Risks between Providers and Users of Continent Workforce Resources: After the legal risks are defined, businesses, suppliers and independent contractors need to determine the best sharing arrangement for those risks. Simply put, who will be responsible for what in the eyes of the law?
Part III next...
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