Issue link: http://www.e-digitaleditions.com/i/136276
CEO's Letter Money-saving Classification It's a bird. It's a plane. No, it's a worker. The modern workplace in some companies is a lot like the opening of the old Superman TV show. In the show, a problem was always arising that was so big that the regular police force could not handle it so Superman (or later the politically correct, Superwoman) would arrive and offer much needed support, skills, or X-ray vision. I do not want to suggest that the procurement of temporary labour approximates the need for well-meaning, caped extra-terrestrials. But the confusion about worker classification is an epidemic in this country, and a great frontier for class action litigation, and we all know it. What are you doing about it? Is it a temp? Is it a contractor? Is it a consultant? In the myriad of regulations, you can get caught with misclassifying your fulltime and contingent employees. The most common historical examples occur, as we all know, under the overtime provisions of the Fair Labour Standards Act (FLSA). That is, however, primarily related to the separation of professional workers into exempt and non-exempt categories. In spite of decades of FLSA class actions suits, they continue to arise as companies struggle with the regulation. Even one of the HR providers was sued under this, because their titling did not clearly distinguish the recruiting staff that, actually, recruited from the staff that did recruiting support, such as interview scheduling and data entry and reporting. But what about the growing component of the workforce that is "contingent" labour? This issue was tackled at our HRO Today Forum in Dublin, and highlights of that discussion can be found in "Making Talent Sustainable" on page 22. The 1997 Vizcaino v. Microsoft case, handed down by the Ninth Circuit Court of Appeals, raised the issue of "co-employment" of long-term contractors. "Co-employment" means payrolled by someone else but really working for Microsoft in that case. A whole set of recommended legal processes for avoiding coemployment suits has arisen. But co-employment can be deemed to be many different things. What is the difference between a contingent worker who is in your building through a contingent labour provider and a consultant assigned to your company for a series of years? This is a potential for conflict, issues, and litigation. Now some companies might take the attitude that getting sued is a cost of doing business and that it happens to everyone. The difference we learned after the Vizcaino ruling or in some of the FLSA cases is that even good companies, with good HR departments, and good policies can get sued. We also learned that companies with the attitude that they were going to get sued anyway and did not have good policies got sued . . . and sued and sued. Litigation is costly and time consuming even if you win. Looking at worker classification can reduce your litigation risk. What are the prevalent worker classifications that are to be considered? Contingent worker through a temporary service provider, consultants on a statement of work (especially independents on 1099 basis), contractors on long-term assignment—all are among the workers who need to be carefully classified. Managed services programme (MSP) providers are potentially great risk mitigation partners. They can advise and help organise the programmes and work with you on the identification and classification issues. They also might be willing to allow the risk to be shifted with respect to workers covered under the MSP programme if you agree to their policies. The least "enlightened" of the HR and procurement communities look at MSP as a way to organise billing, get financial leverage on contingent labour spend, and shave some points off the cost of contingent labour using better management processes. MSP can be a partner in the talent management strategy of a significant part of your workforce. If you have not reviewed your worker classifications recently, you should. If you do review them, make sure you review every few years to insure that they are reflecting your current workforce. We will be talking about these and other issues such as generational issues, HR career planning, and unveiling the top technology at the HRO Today Forum APAC in Singapore 22-23, May and HRO Today Forum Europe in London, 12-14, November (www.hrosummits.com). We hope to see you there. Elliot H. Clark, CEO [4] HRO TODAY GLOBAL | SPRING 2013 CEO: Elliot H. 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