PSC Blog - Contractor Misclassification Risks and Labor Law Compliance

PEO’s as Part of a Human Resources Management Plan

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A Professional Employer Organization (PEO) can definitely be a part of your Human Resources strategy when establishing a management plan, particularly in today’s economic environment. As we continue to emerge from the economic downturn of 2008, all companies are looking for ways that they can be more efficient at managing their workforce and making certain that they are compliant with regulations in order to avoid the risks and penalties associated with worker misclassification which can be very expensive. In order to avoid such risks more and more companies are turning to PEO’s who can be the solution to the following questions:

1. Do I want to outsource my payroll? This PEO service eliminates the time it takes to open new supplier files, service contractors by answering their multiple questions that come with invoicing, tax filing etc...
2. Do I want to have a better control of the number of independent contractors (1099) and T4 (W2) employees I have? Are they properly classified? Are we compliant with the law?
3. Do I want to have a better idea of my average pay rate to better manage my costs and the duration of contracts? A thorough understanding of these metrics significantly reduces or eliminates co employment risks and the associated issues;
4. Do I want to reduce the overall administrative workload associated with a short term non permanent workforce? The outsourcing of this work means that a company can focus on the retention and efficiency of the permanent workforce;
5. Do I want to invest time and money to purchase a centralized management system to manage my temporary workforce? While this may be a solution for some companies, for many others it means the addition or expansion of the HR department.

At Payment Services Corporation we know that these kinds of questions have been asked during a Human Resources Management planning session, if not they should be as part of a prudent planning process. A Professional Employer Organization will work with your HR, Legal and Procurement departments to establish a customized service solution depending on your needs so your focus can remain on your core employees and business objectives.

Want some help with these issues? We’re here for you!