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Why Pay Too Much?

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WHY PAY TOO MUCH?

by Maria Ricci, General Manager

PSC’s service offering is singularly that of a Professional Employer Organization. This is our key differentiator in comparison to a Paying to much?staffing company. We do not participate in any recruiting activities.  We provide 3rd party independent contractor engagement and billing services to those corporations who are manning their Independent Contractor population on their own, bringing known independent contractors back from previous projects or pay rolling independent contractors through staffing companies for long periods of time. 

A staffing firm’s primary objective is to supply quality contractors to corporations when needed. Speed and quality is of the essence. In order for a staffing firm to enable this operation and maintain a high level of satisfaction within their customer base they need to continuously invest. The majority of their spend goes toward the marketing and maintenance of these contractors. The corporation pays for that of course. At the outset, that is reasonable, considering that the corporation does not necessarily have the time or the savoir faire to do their own contingent workforce recruiting.  It begins to get costly for the corporation when the contractor is needed for a longer time period but cannot hire them on permanent status:  head count restrictions, permanent hiring freeze, project delays, additional workload etc...

Temporary to Permanent, without any additional fee clauses, are popular and beneficial to the corporation when the corporation can hire the contractor on a permanent basis. When the corporation cannot, often the corporation nor the contractor is allowed to continue their relationship unless the corporation buys the contractor. 

Why choose a PEO:

  • Reduced costs
  • Standard Rate across the board – rate management through established rate cards
  • There isn’t Temporary to Permanent placement clauses. This means that you can end and rehire the contractor as you wish if he has already been identified by the corporation through previous projects or placements with staffing firms.
  • Turnover. Although this practice lacks in professionalism and good business etiquette, it is happening in the marketplace today. Because a PEO is not in the recruiting business the risk of offering your contractor a better opportunity is nonexistent.  
  • Proper classification of contractors reduces risks of co employment
  • Proper processing of contractors ensures the right agreements and paperwork are signed and provided by the contractors to ensure the protection of the corporation, the contractor and the PEO.

The transition to a Professional Employer Organization can represent substantial cost savings for the corporation and therefore, why pay too much?

To learn more about PSC please do not hesitate to contact us at: info@paymentservicescorp.com or take our free Risk/Reward Questionaire.  click below

Risk/Reward


FedEx pays more than $3MM for misclassified workers

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FedEx Ground has agreed to pay the state more than $3describe the image million to settle claims that the company misclassified its drivers as independent contractors, Attorney General Martha Coakley’s office announced Thursday.

Coakley’s office had alleged that Pittsburgh-based FedEx Ground had made insufficient payments to the state for payroll taxes, worker’s compensation and unemployment assistance as a result of the misclassification.

In the announcement of the settlement, Coakley called it a “step to level the playing field for businesses.”

The settlement followed a joint investigation by Coakley’s office, the Executive Office of Labor and Workforce Development and the Department of Revenue. The investigation revealed that FedEx Ground’s misclassification of employees had resulted in “significant underpayments” to the Department of Revenue, Division of Industrial Accidents and Department of Unemployment Assistance, according to Coakley’s office.

The settlement also provides for a payment for the 13 drivers named in the attorney general’s citation, according to Coakley’s office.

FedEx Ground drivers in the state have also brought their own lawsuit against FedEx Ground - which is pending and not affected by the settlement with Coakley’s office - and FedEx Ground denies liability in the settlement, according to Coakley’s office.


Congress Investigates Employee Misclassification

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By Lindsay Beyerstein, In These Times

OUS  Congressver 10 million American workers are classified as independent contractors. But how many of them are really self-employed and how many are falsely labeled as such by unscrupulous employers?

That's one of the questions the Senate Committee on Health, Education, Labor and Pensions (HELP) set out to answer in a hearing on employee misclassification last week.

Employers mislabel their employees as contractors in order to avoid paying Medicare, UI and Social Security taxes. Amazingly there are no legal consequences for misclassifying workers, even if the employer does it on purpose. Committee Chair Tom Harkin (D-Iowa) pointed out this kind of tax evasion is costing cash-strapped state unemployment insurance funds billions of dollars a year.

A 2000 study commissioned by the Department of Labor found that up to 30% of employers misclassify at least some of their employees. The practice is rampant in the construction industry and in low-wage and gray market sectors of the economy.

By breaking the law, employers can cut their labor costs by up to a third. Frank Battaglino, who owns a sheet metal company in Maryland, testified about how hard it is for law abiding employers to compete with companies who cut corners.

"Increasingly we were being beat out of competitive bids by unusually low bids," Battaglino said. "We know this is a direct result of companies deliberately misclassifying their workers as independent contractors."

Who counts as an employee? The law takes a pretty commonsense view of the question. Basically, if you work for wages with the employer's tools at the employer's workplace under the employer's supervision, you're an employee. True independent contractors are literally in business for themselves. They invest capital in their own ventures and share in the profits or losses of their enterprises.

Deputy Secretary of Labor Seth Harris told the committee about one Wisconsin family restaurant that tried to evade minimum wage laws by classifying the dishwashers in their kitchen as "independent contractors."

Most workers don't realize that most of the rights they take for granted in the workplace derive from their legal status as employees. For example, most anti-discrimination laws are written in terms of what employers can do to their employees. Contractors may not be protected.

Help may be on the way for misclassified workers. In January of 2010, the DOL hired more inspectors to combat misclassification. The President's 2011 budget calls for an additional $25 million to help the DOL, IRS and other agencies address the problem.

Finally, Harkin and Sen. Sherrod Brown (D-OH) have introduced the Employee Misclassification Prevention Act, which would impose penalties for misclassifying employees as contractors and require employers to keep records on non-employees who work for them.


Unions Begin to Weigh in on Misclassified Workers

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Last week the American Teamster's union announced that they are in favor of the Obama administrations crack down on misclassified workers.  You can read more Unions by Sectorabout the announcement in our news section. Teamsters Support Senate Efforts to Protect Misclassified Workers.

No real surprise here as the unions continue to try and remain stable in light of the trouble economy. They are going to be behind any efforts to corral jobs from both misclassified union and non-union work locations to help bolster their declining ranks. According to the Bureau of Labor Statistics, "The number of wage and salary workers belonging to unions declined by 771,000 to 15.3 million in 2009, largely reflecting the overall drop in employment due to the recession."  In 1983, the first year for which comparable union data are available, there were 17.7 million union workers.

Certainly many union shops have been impacted by the down economy that has hit hard in the manufacturing areas like Autoworkers, etc.  As the unions can enlist the government to help them identify what would or should be union positions will continue to bolster their ranks and dues.

Let us know how your company has been effected by unions and contract workers.  Share information that might help another company challenged with this area of employment processing.

 


Illinois - Fed Ex Drivers are Employees NOT Independent Contractors

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Federal Express DriversFIRST SUMMARY JUDGMENT RULING FROM THE FEDERAL MDL COURT HOLDS THAT ILLINOIS FEDEX DRIVERS ARE EMPLOYEES, NOT INDEPENDENT CONTRACTORS

In PSC's ongoing coverage of the Federal Express Cases on Employee Misclassification, we bring you the latest update from Illinois District Court.

June, 2010. Source: http://www.fedexdriverslawsuit.com/

FedEx Ground and Home Delivery drivers have been found to be employees under the Illinois Wage Act. The decision was issued by U.S. District Court Judge Robert Miller in the multi-district litigation that Judge Miller has been presiding over for the past five years. (In re: FedEx Ground Package System, Inc. Employment Practices Litigation, Cause No. 3:05-MD-527 RM) This holding came in a May 28, 2010 Opinion and Order granting summary judgment to the Illinois drivers under the Wage Act. The Court did not rule on other claims made by the Illinois drivers, but indicated it will address those claims separately. The decision is important in that it is one of a growing number of decisions in the past few years holding that the FedEx Ground drivers are employees and not, as FedEx claims, independent contractors. The essence of the cases consolidated before Judge Miller is that FedEx Ground has intentionally and consistently misclassified drivers as independent contractors, when they are in reality employees. Judge Miller specifically found that the Illinois drivers were employees under the Wage Act because their work was an essential and a necessary part of FedEx's business. As former CEO Dan Sullivan testified, the drivers are the "centerpiece" of FedEx's "workforce" and they are an "essential component" of the company's business. The Court noted the fact that drivers must wear FedEx uniforms and maintain a personal appearance satisfactory to FedEx. Contractors supply their own vehicles, but they must bear FedEx's logos and advertising. Further, FedEx structures the routes so that the trucks are in use 9 to 11 hours a day. Contractors can hire replacement drivers, but only with FedEx's approval. Finally, the Court noted that FedEx managers were obligated to have business discussions and customer service rides each year in order to maintain FedEx's image and reputation. Drivers' motions for Summary Judgment in 40 other states are pending. Currently, there are 63 lawsuits consolidated in the multi-district litigation. Motions for Summary Judgment have been filed, briefed and are awaiting decisions in almost all of these cases.


IRS 401(K) Compliance - Questionaires are coming...but why?

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As our readers know by now, that the IRS is continuing to look at alternative means of revenue generation.  Attacking the area of misclassified workIRS  Moneyers was one that we have focused on and now this is possibly the next.

IRS may not only use this to to generate revenue, but find a way to solve for the growing Social Security shortages.  Many of us hear varying numbers describing the shortfall in Social Security funds for retiring baby-boomers.  Several plans have been submitted to the Obama administration that would put more government control over 401(K) plans as a means to help support those shortfalls.

IRS Employee Plans Compliance Unit has launched its 401(k) Compliance
Check Questionnaire Project.  The will be sending instruction letters to 1,200 random sponsors of 401(k) plans that filed an Annual Report for the 2007 plan year.

IRS intends to use the information to identify key compliance issues for future guidance on, and enforcement of, these issues. The questionnaire is not an IRS audit or investigation, however,failure to respond will result in IRS enforcement action, which may include an examination of the 401(k) plan.

The Questionnaire seeks detailed information on a wide range of topics. Topics include: demographics,participation, employer and employee contributions, top-heavy and nondiscrimination testing, distributions (including plan loans), automatic contribution arrangements, designated Roth features, plan operations
and administration, and IRS voluntary compliance programs.

The Questionnaire can be seen on the IRS website at 401(K) Questionnaire  (Click on "View/Print the Guide to Completion of the 401(k) Questionnaire").

If you receive the instruction letter, the Questionnaire must be completed and submitted to the IRS within 90 days of the date on the letter. While the Questionnaire is publicly available on the IRS website, plan sponsors completing the Questionnaire must do so through a secure on line system on the IRS website.


Canadian Businesses prepare for Bill 168, Employment Harassment

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By James Heeney, special to CBC News

It's a matter of days before Bill 168 comes into force in Ontario, providing new Bill 168protections to employees regarding workplace violence and harassment. Is your business ready?

The legislation takes effect on June 15, 2010. It's important to understand that all employers are required to meet these legal requirements, no matter how large or small the company is.

While large corporations with significant budgets and human resources departments have extensive resources to put these legal requirements into place, navigating through the legal responsibilities may be significantly more difficult for smaller businesses.

Employers who leave these tasks to the last minute may find themselves in non-compliance with the law once the amendments come into force. The Occupational Health and Safety Act indicates that corporations that are in non-compliance will face penalties, including significant fines. Programs are already in place to audit workplaces in Ontario to determine compliance.

To help smaller businesses make the transition, here are five things all businesses need to do before June 15:

1. Conduct a risk assessment

The purpose of this assessment is to determine if any parts of the employer's operation are vulnerable to acts of violence. This assessment is later used to update or develop policies to control the identified risks.

Employers must ensure that they do a complete evaluation of their operations to ensure that the vulnerabilities to violence are identified and addressed. Unfortunately, the bill does not explain how such an assessment is to be done.

An assessment doesn't have to be a complex undertaking, though. It can generally be accomplished by creating a questionnaire and meeting with employees to help identify areas of concern in the workplace.

2. Make necessary changes to the workplace

Using the information gathered during the risk assessment, employers then need to make the necessary changes to reduce the vulnerability to violence in the workplace.

For example, in the retail, bar and restaurant industries an employee may be susceptible to client outbursts. If an employer identifies this as a risk for violence in the workplace, measures should be taken to reduce this risk by installing easily accessible emergency security buttons.

The installation of these security buttons will allow employees to call security and/or the police when they see suspicious, escalating or illegal behaviour. It is easy to see how the ability to contact emergency services can significantly reduce the risk of employees being subject to violence.

However, just because your workplace does not have high risk for this type of behaviour doesn't mean you can avoid making changes. Even offices have risks and the task for employers is to identify them and to make changes where applicable.

3. Develop and review policies with respect to workplace violence and harassment

Employers must ensure that policies are in place with respect to workplace violence and harassment. For employers with five employees or more, the bill says this policy must be in writing and posted in the workplace.

Using the example given above, if there is a susceptibility to client outbursts, it may be necessary for employers to have a policy in place to address this issue. The policies can give employees a guide of the proper protocol to follow when faced with unruly, aggressive or violent customers.

Employers also must ensure that a policy is in place to address the procedure for the reporting and investigating of workplace harassment complaints.

After the initial development, these policies must be reviewed as often as "necessary" (i.e., when there are significant changes in the workplace which may affect violence and/or harassment), but a review must also be done at least annually. These policies are critical documents. Employers can face penalties from the Ministry of Labour for not developing policies in accordance with the new act, and/or not complying with the policies when faced with a workplace violence or harassment issue.

4. Develop and maintain programs to implement the policies

Employers must include in the programs these specific measures and procedures:

  • To control the risks identified in the risk assessment.
  • For summoning immediate assistance when workplace violence occurs or is likely to occur.
  • For workers to report incidents of workplace violence or harassment.
  • To state how the employer will investigate and deal with incidents or complaints of workplace violence or harassment.

5. Train employees

Employers must provide information and instruction to their employees regarding the contents of the policies and programs. This training is critical, as it implements all of the previously mentioned steps. Employees have the opportunity to learn what they can and what they must do to minimize risks in the workplace, what their obligations are in regards to the policies in place, and what the consequences are for non-compliance with the policies.

After reviewing the policies and programs with employees, an effective form of training is to present employees with realistic fact patterns (a legal term for a summary of events or presentation of the facts surrounding an event) and to demonstrate how to apply the policies and programs to the fact patterns.

Preparing for the changes in the Occupational Health and Safety Act will be a lengthy and detailed process for employers, particularly smaller businesses with limited resources. However, the changes to the legislation are an essential step in ensuring that employers are doing their part in reducing the risk of violence and harassment in their workplaces and to avoiding possible fines and liability.

Read more: http://www.cbc.ca/money/story/2010/05/28/f-james-heeney-workplace-harassment.html#ixzz0pbbIov9n

 

James Heeney, a partner at Rubin Thomlinson LLP in Toronto who provides counsel to employers and employees on all areas of employment law.

Payment Services Corp. Releases 2010 Contractor Satisfaction Survey

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In an ongoing effort to continue to provide superior customer satisfaction, Payment Services is proud to announce the release of their 2010 Contractor Satisfaction Survey.

PSC recognizes that within the PEO industry, competitive differentiation is ultimately limited to the provision of superior services.  Therefore, we take the process of the survey and looking at the results very seriously.  The data provided enables our team to refine our programs and processes and ensure that we continue to strive to be the company within the PEO industry by which all other like companies are measured.

To gain access to the survey results, readers can click the 2010 Contractor Satisfaction Survey Cover to gain access to the report.

PSC Contractor Survey ReportClick Here 

The survey will reveal to the reader...

  • Employment Classification Demographics of the contractor community
  • Graphically represent what areas of service have been exemplary and those that can be improved upon.
  • See first-hand what the contractor community thinks of PSC's services

We trust that the data provided will demonstrate to our readers why PSC is rapidly becoming the leading Professional Employment Organization in North America.  We are very pleased with the results revealed in the report and applaud our team's commitment to excellence.  However, as the report will teach readers, PSC operates in the Japanese spirit of Kaizen.  Continuous Improvement.

Please jump on the PSC Train Blog, and let us know what you think about contractor satisfaction.

To learn more about a PEO, click here to learn more and read our popular Blog WHAT IS A PEO, HOW IS IT DIFFERENT FROM AN ASO?


 


When is a Workday over for a Contractor?

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PSC 2010 Contractor Survey ResultsAs other labor laws begin to blur in the dust of the D.O.L. and I.R.S's proposed changes, employers are finding it increasingly difficult to stay compliant.  Remaining abreast of what rules and regulations are being impacted by proposed changes isWorking in the Airport just half the battle.  New areas are being looked at with scrutiny to determine what is "fair".

According to Employment Law specialists, Jackson Lewis, LLP, the time a worker actually works is now being looked at for fairness.  "Another compliance challenge involves the changing scope of the workday and workplace.  Some employees use cell phones, PDA's and home computers to access company networks, check e-mail, and listen o voice mail during "nonworking" hours.  Other spend time in security clearance lines at airports, putting on and taking off protective gear before and after their jobs duties.  These increasingly common practices push the boundaries of the workday and workplace and challenge the wage and hour compliance."

How many hours a day do you commute to work?  Are you working or commuting.  We know we all do it but it certainly will be hard for company's to figure out what's fair and enforcible.

Please let us know how you see this issue...what's fair?

 

who are facing


D.O.L., seeks prevention to avoid Misclassified Worker Penalties

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The Department of Labor (DOL) will find employers in violation of the law anPrevention of Misclassified Workersd will take legal action against them if they do not have an effective plan in place to protect workers from violations of their workplace rights. Companies without such a plan are breaking the law.

The DOL Spring 2010 publication, issued this week, specifically says, “Employers and others must ‘find and fix’ violations — that is, assure compliance — before a Labor Department investigator arrives at the workplace. Employers and others in the Department’s regulated communities must understand that the burden is on them to obey the law, not on the Labor Department to catch them violating the law. This is the heart of the Labor Department’s new strategy. We are going to replace ‘catch me if you can’ with ‘Plan/Prevent/Protect.’”

This means that companies must have a plan to prevent the misclassification of workers as independent contractors. The DOL investigates violations of the Fair Labor Standards Act (FLSA), which includes misclassifying workers as independent contractors. The DOL applies its own test (the Economic Realities Test, which has a different emphasis than the IRS’ 3 Areas of Control Test) for determining whether a company has misclassified an employee as an independent contractor. If the DOL determines that the worker was misclassified, and otherwise would have been entitled to minimum wage and overtime pay under the FLSA, the company may be required to pay the employee back wages and prospectively re-classify the worker as an employee entitled to minimum wage and overtime. These expenses can be cost-prohibitive.

This aggressive new policy exposes employers to investigations by the DOL – investigations in which employers will need to prove their innocence by showing that they have an effective plan in place to protect workers from violations – including violations of the FLSA.

Does your company have a plan?

PSC can help create and prevent.  Contact us or take our Free Risk/Reward Assessment.

Risk/Reward Assessement



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