Does This New Worker Misclassification Development Offer Your Company Opportunity?
The Internal Revenue Service is offering a break to employers who come clean about wrongly classifying workers as independent contractors to avoid paying federal payroll taxes, the agency announced this week.
What happens when workers are considered independent contractors? Read the full article here...
Comment:
This is a great initiative and provides an opportunity that can definitely save your corporation money. A PEO can assist you by performing a risk analysis and give you a clear understanding of your level of risk. Based on those findings they can provide you with a customized package of services to assist your corporation and stop the non compliance moving forward. A wide range of services allowing for substantial cost saving and risk mitigation opportunities are available to you.
How Can Your Company Take Advantage of This Opportunity?
Risk Analysis
- How many contractors do you have?
- How long have they been under contract?
- What type of agreement is there?
- What has been signed?
Evaluation of Different Levels of Risk
- Does contractor workforce meet criteria of independent?
- Are they incorporated entities?
- Do they carry their own insurance?
- Do they have multiple customers?
- Are they working on a specific project on or off site?
Potential Elements of a PEO Custom Package
- Thorough and strict onboarding process;
- Comprehensive revisit of all existing contractors for status;
- Process all contractors as employees who don’t qualify as contractors;
- Add insurance to contractors as applicable at minimal cost;
- Add easy to use web based system for time and expense entry;
- Expand reporting capabilities for enhanced visibility of saving opportunities;
- Other elements based on corporate need.
Expected Outcomes Based on Case Studies
- Cost savings, potentially significant depending on current situation;
- Risk mitigation that avoids costly fines and penalties of workforce misclassification;
- Satisfied and happy workforce resulting in improved work environment and productivity.
What to do? We know that most companies are going to miss out on this opporunity and the decreased risk of misclassification fines and penalties as well as cost savings that go along with it...unfortunately! Take action now, contact a PSC today and let us help you determine what might be your best next step.
Interested in what our contractor audience thinks of our services? Check out our 2011 Contractor Survey Report FREE!
OTTAWA,ON – Payment Services Corporation, (PSC) a leading Canadian Professional Employment Organization and provider of independent contractor payment solutions announced today the signing of a three year contract with CauseForce, a leading event production and cause marketing firm, to provide professional employment payroll services for their Canadian operations through 2014.
“This is an exciting opportunity for us to continue to demonstrate our reach of services across the Canadian Market.” Commented Ted Weyn, Managing Partner for Payment Services Corporation. “Clients continue to rely on PSC for their independent contractor and casual employee payment processing for three primary reasons: First is our excellence in service as confirmed by our 2011 Contractor Satisfaction Survey results; second is our flexibility in processing capabilities and third is our ability to educate our community on the ever-changing legal and tax landscape as it relates to co-employment and tax liabilities.”
“We chose PSC because of their ability to meet our service and budgetary needs in a short period of time. Their attention to detail and market knowledge just solidified that we made the right choice in selecting them.” Commented Trina McCloud, VP of Finance for CauseForce.
“We have a great team of dedicated service and processing individuals who consistently deliver excellence within an operationally efficient setting.” “We consistently strive to improve our services but are keenly aware that it all begins with a satisfied contractor or employee.” Running our services well above industry standards is what sets us apart from the competition.” Commented Maria Ricci, General Manager of Payment Services Corporation.
About Payment Services Corporation
Payment Services Corporation (PSC) is headquartered in Ottawa, ONand is one of the fastest growing Professional Employment and Payment Processing Organizations in Canada, in addition servicing U.S.markets. With unparalleled experience and service, PSC continues to lead the market in best practices for the better management of independent contractor workforces. For more information, please visit www.paymentservicescorp.com or call 866-972-0616.
About CauseForce, Inc.
CauseForce works with non-profit organizations to help them raise money for their mission. It's just that simple. Since its inception in 2002, CauseForce has produced blockbuster fundraising events around the world that have shattered fundraising records, one after another. For more information, please visit www.causeforce.com or call 323.654.9255.
Aon Corp. Settles Employee Misclassification Lawsuit for $10.5M
Corporations will be the First Target in Workforce Misclassification Enforcement
As the government continues to clamp down on misclassified employees, the corporations will be the first called upon. Sheer efficiencies pushes the government agencies to go after the corporations versus the employees themselves first. Why not pursue one company instead of hundreds of employees? Plus the government looks better chasing the greedy companies versus the workers.
If names like Raytheon, Enterprise Rent-A-Car and Ecolab are being tapped, is stands to reason your firm could be next. Are you protected?
High-Profile California Cases Draw Attention to Employee Misclassification
Recent lawsuits filed in California courts are highlighting the oft-ignored issue of employee misclassification.
April 24, 2011 /24-7PressRelease/ -- High-Profile California Cases Draw Attention to Employee Misclassification
Recent lawsuits filed in California courts against Franklin American Mortgage Company, Raytheon, Enterprise Rent-A-Car and Ecolab are highlighting the often ignored issue of employee misclassification. Read the full article here...
Workforce Misclassification: Steps in the right direction...signs of hope.
Congratulations to Pennsylvania for attempting to make it simpler for the employer to know how to conduct their business and remain within the state guidelines for the engagement of independent contractors. Now, let’s hope that the Federal Government and other states follow suit in this legislative simplification. Additionally, Pennsylvania should apply the rules to non-construction worker positions.
Our recent article that stated that the Federal Senate is taking a 3rd attempt at creating punitive legislation for misclassifying workers by calling the misclassifications, “payroll fraud”.
We need more states like Pennsylvania to simplify the rules on the businesses so they can be compliant versus attacking them punitively as the Federal Government has been attempting to do.
Pennsylvania Legislature Implements New Measures to Curb Independent Contractor Misclassification by Construction Firms
A new Pennsylvania law targets construction employers who misclassify workers, and it could mean a range of expanded benefits for many of the state's carpenters, plumbers, and electricians.
April 20, 2011 /Advertising Marketing PR News/ -- Independent contractors are widely utilized in the construction business to help reduce costs and bring in valuable outside expertise. For employers, using independent contractors means employment tax savings and the avoidance of certain labor laws. But, problems arise when employers start calling regular employees "independent contractors." Read the full article here...
Senate Re-Loads With New Bill on Independent Contractor Misclassification
As we reported last year, the misclassification issue of independent contractors will not be going away and that overtime, the issue will intensify in its pursuit. The prize is too big in the government’s eyes to let this one go. This is demonstrated by this article showing that after two failed attempts, the Senate is taking another attempt by now calling this issue “payroll fraud”. What’s next in this pursuit? Tar and feathering?
We are in favor of the government and legislators putting in place new rules that clarify what constitutes and independent contractor that is reasonable and prudent. Then giving businesses clearer guidelines as to what and when best to engage contractors. Doesn’t that seem more reasonable?
From www.bradenton.com
New Bill Characterizes Misclassification as “Payroll Fraud”, says Pepper Hamilton
Highlights:
The penalties for misclassification, up to $5,000 per employee, could be staggering for companies that pay a significant amount of workers on a 1099 basis instead of using W-2s.
This law would be the first federal law where businesses must give newly hired workers a federally prescribed notice.
Read the full article here...
Think That You're Immune to Workforce Misclassification in Canada? Think Again!
"Taxman cracks down on IT consultants
Government ignoring committee’s call to recognize realities of ‘modern labour market’
Thousands of local IT consultants are facing hefty tax reassessments as the Canada Revenue Agency reexamines their relationship with staffing agencies that help connect them to the federal government, experts say.
In recent months, the CRA has started “aggressively” auditing these incorporated businesses and ruling their role is more like an employee of a staffing firm than an independent contractor.
The financial stakes for these consultants are said to be high, with some facing reassessed tax bills of up to $50,000, say those involved in the fight with CRA." Read more...
Comment
The "test" has been in place for some time but CRA hasn't aggressively pursued it in a category that is so key to most users of independent contractors, and that is Information Technology.
It is easy to determine if someone is a full time equivalent, in part based on the number of hours that they work for any one company, and the number of weeks per year they are expected to work. It now appears that IT will no longer be exempt from the same rigor applied to all other skill categories. The message to staffing firms and other's that engage these resources, if they work 37.5 hours a week and 50+ weeks a year for the same company, and don't have multiple customers, they are probably full time equivalents in the eyes of CRA. If you don't classify these contractors accordingly and they can't meet the tax obligations the obligation could be met by the client's of those resources and or the staffing companies that misclassified them in the first place. Workforce misclassification is costly!
Do the diligence on the front end. If it looks like a T4 with 37.5 hours a week and one customer for 2+ years it probably is. Eventually this skill classification will have to do what every other skill classication does and that is be subject to source deductions. Professional support in workforce classification and payroll deductions could save your company from significant fines or tax penalties.
"Employers in three states get FUTA tax hit"
Talx, a human resources, payroll and tax services firm, reported in its blog that employers in Indiana, South Carolina and Michigan will pay more in federal unemployment taxes (FUTA) because those states had outstanding loans from the federal government as of Nov. 10 to pay unemployment insurance obligations.
Employers pay both federal and state unemployment taxes. The federal rate is 6.2% on the first $7,000 in wages per employee. Employers usually receive a 5.4-percentage point credit that reduces their federal unemployment tax rate to 0.8% from 6.2%. But that credit falls by 0.3 percentage points each year a state has a balance on its federal unemployment insurance loan after two years." Read more...
This is definitely not something to be writing home about!
Unfortunately, these costs will have a direct impact on these employer’s bottom lines. Both employer and employee will feel the pain in the long run becuase with these payouts there are usually cutbacks on other services or benefits, job losses, production loss etc… How many of these employees are permanent and how many are contractors? Are the contractors being processed internally?
Many companies will use a PEO services company to manage these issues. A Professional Employer Organization's internal payroll experts understand local, state or provincial and federal regulations and ensure that all the necessary remittances are made at the outset. They are responsible as they become the Employer of Record reducing risk and streamlining operations for the companies they work with. Is it time for your company to source a PEO?
Is your company looking for professional employee management services in the USA or Canada? We're here to help!
"PS skirting its own hiring rules by using temp workers, watchdog warns"
By Kathryn May, The Ottawa Citizen September 21, 2010
OTTAWA — Federal departments appear to be using thousands of workers hired through temporary help agencies to circumvent their own rules and laws, says Canada's staffing watchdog.
In a letter to a parliamentary committee, Public Service Commission president Maria Barrados flagged some of the worrisome trends that have emerged in the initial phase of the commission's year-long probe of the government's $300-million a year dependence on temporary-help agencies.
Read more:
http://www.ottawacitizen.com/temp+tactics+skirt/3553968/story.html#ixzz131RvCCTl
A Professional Employer Organization’s (PEO) key benefits will directly contribute and bring the necessary solutions to the complexities the Public Service is experiencing at this time. A true PEO service is not focused on recruiting the talent but rather managing the pools of temporary workers and independent contractors that the Corporation or the Public Service can identify so well at a substantially different and lower rate than the standard staffing firm. The PEO is responsible for the management and payment of the contractor population and will release them, at no additional cost, to the Corporation or Public Service whenever requested. Tenure is managed by the PEO to assist the Corporation or Public Service in keeping the contractor population on a very temporary basis avoiding the consequences of a temporary workforce becoming a camouflage for a permanent employee. The PEO can also assist with rate management and spend control with the right technology in place and reporting capabilities.
Whether or not the watchdog's warnings go further or not, the Canadian and U.S. governments have made it clear that they are cracking down on private sector companies, looking for cases of misclassified workers, or co-employment conflicts. If you're found to be non-compliant the penalties can be very steep, legal costs alone can be extraordinary. The PEO services industry in the U.S. is somewhat more mature, but Canadian companies are also realizing that these services offer far more than risk protection, there are substantial potential cost and time savings allowing the company to function with greater efficiency. Hmmm...what's up with the government?
"FedEx to pay $2.3 million over ICs-
FedEx Corp. will pay Montana a $2.3 million settlement over misclassification of FedEx Ground drivers as independent contractors, Montana Attorney General Steve Bullock announced Wednesday." Read more...
We've pointed out some of the challenges that FedEx has been experiencing with respect to their classification processes and how costly it has been for them in our blog on occasion. Here is another ruling and example of how PEO services could save significant noncompliance penalties. How is your company addressing these issues? Are you ready for an audit?