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Contingent Workforce Processes and Issues

Contingent Workforce Processes and Issues. For Legal Department Presentation by Zent Law Group. Why You Need to Know about the Contingent Workforce. Legal Risk to the Company if defined processes are not followed. Legal Risk to the Company if workers are mischaracterized.

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Contingent Workforce Processes and Issues

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  1. Contingent Workforce Processes and Issues For Legal Department Presentation by Zent Law Group

  2. Why You Need to Know about the Contingent Workforce • Legal Risk to the Company if defined processes are not followed. • Legal Risk to the Company if workers are mischaracterized. • Loss of Intellectual Property if certain contingent workers are not approved by legal (such as Academics and Professional Experts). • Economic impact to the company and departmental staffing budgets if worker claims result from failure to follow company staffing process.

  3. Consequences of Misclassification • Federal Government • Internal Revenue Service • Bureau of Immigration and Customs Enforcement • Department of Labor • State Government • Income Tax • Unemployment Premiums • Legal Claims by Workers • Stock Purchase Plan • Stock Option Plan • 401k Plan • Wrongful termination, discrimination • Workers’ compensation • Overtime, accrued benefits

  4. Understanding the Workforce

  5. Understanding the Workforce Outsourced Service Providers (OSPs) Employee Typically Long Term or Seasonal Staffing Needs Typically Long Term Staffing Needs Agency Temporary Worker Consultant/Contractor Short-Term Temporary Staffing Needs Often used for unique, one-time projects

  6. Fills open requisitions and short term (internship) roles Eligible for company benefits Paid by company Uses company tools & equipment Works under direction and control from company Employees

  7. Agency Temporary Worker • Fill “short-term”, “flexible,” “project based” positions • Legal employees of a temp agency • Receive W-2 from agency employer at year end • Uses company tools & equipment • Works at company offices • Taxes paid by temp agency • Given specific instructions by company

  8. Outsourced Service Providers (OSPs) • Service provider with multiple employees providing service to company (Deloitte, etc.) • Generally paid by invoice for services • Uses own tools & equipment • Works under their own direction • Carry all required insurances • Generally project staffing at their own discretion

  9. Consultant/Contractor • Performs a unique service • Self Employed • Works for multiple clients at same time • Paid upon milestones or project completion • Receive Form 1099 from company at year end • Uses own tools & equipment • Pays their own taxes quarterly • Works under their own direction • Carries required insurances • Sometimes consist of Academics/Professional Experts

  10. Procedures for Hiring

  11. Procedures for HiringContingent Workers • Employees are Processed by Company’s Human Resources Department • OSP’s are processed by the Purchasing Department • Contractors/Consultants/Academics/Experts are evaluated and processed by Company’s designated Staffing Agency • Agency Temps are processed by Company’s designated Staffing Agency

  12. OSP Engagement Process • OSPs are engaged through the Purchasing Department • OSPs must execute the Company’s form of Purchase Agreement • Under the Purchase Agreement, OSPs: • Are required to be entirely responsible for their employees and subcontractors • Pay all wages, taxes and withholding of their employees and subcontractors • Carry insurance, including workers compensation for their employees • Carry all insurance that the Company requires of OSPs, and • Require their subs to carry all such insurance.

  13. Staffing Agency Evaluation Process • Applies to Consultant or Agency Temp • Collect information and evaluate contractor for compliance with IRS, EDD, and DOL • Recommendation made within 24 hours of receipt of all required documents • If an Agency Temp, then Staffing Agency hires and payrolls worker to eliminate company’s risk • In event of an audit, Staffing Agency maintains a compliance file

  14. Documents Reviewed for Consultant Evaluation • Articles of Incorporation (only required if incorporated) • Professional Liability Insurance (Errors & Omissions) • Commercial General Liability Insurance • Automobile Liability • Business License (only if required in city working in) • Evidence of most recent clients other than Company (Invoices) • Evidence of recognition in contractor’s field • Evidence of Taxes paid • Federal Employer Tax ID Number (not Social Security) • Fictitious Business Name Statement (DBA) • Proof of advertising/marketing materials • Proof of Published Works

  15. Documents Reviewed for Academics/Professional Expert • Automobile Liability (if driving) • Evidence of recognition in your field • Evidence of an understanding for the release of all IP from the Expert’s employer to Client • Certification of Taxes Paid • Curriculum Vitae (C.V.) (Resume) or • Evidence of current employment or • Proof of Published Works • Statement of Work

  16. Thank You Contact Information:Monica Zent Zent Law Group, PC 1298 Kifer Road, Suite 509 Sunnyvale, CA 94086 Tel. 408-736-3600 (Ext. 3601) mzent@zentlaw.com

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