Employers all across America took a collective sigh of relief last week when the Obama administration announced that the employer mandate portion of the Affordable Care Act (ACA) would be postponed until 2015.  But the decision could leave some recruiters wondering how this will affect their firms, many of which stood to benefit from the mandate.

The employer mandate was to require employers with 50 or more employees to provide healthcare insurance to those employees by January 1, 2014, and it also came with a number of reporting requirements.  This mandate was a mixed blessing for recruiters.

For larger recruiting firms, it presented a challenge, as they were at risk of rising above the 50-employee threshold and having to provide insurance to their contractors.  But for most recruiters, it provided an opportunity to get more contract staffing business, as more companies turned to contractors to stay below the 50-employee threshold.

But now, according to a blog on the U.S. Department of Treasury website by Assistant Secretary for Tax Policy Mark Mazur, the reporting requirements under the employer mandate have been postponed until 2015.  That means the government will not be able to determine which employers are not providing the required coverage and cannot assess penalties, so the requirement to provide insurance is effectively also postponed until 2015.

So where does this leave recruiters?  Well, if you are a large firm that would fall under the employer mandate, you technically don’t have to provide insurance until 2015.  However, Mazur urged employers to voluntarily implement the reporting requirements in 2014 to prepare themselves for 2015.  Also, the delay does not relieve you of the obligation to notify employees about the existence of healthcare exchanges, or “The Marketplace.”  You must still provide the required notice by October 1, 2013.

For recruiters who are not subject to the employer mandate, but were hoping to benefit from it, stay the course.  You should still discuss the healthcare reform law with clients and the eventual impact it will have on their costs and administrative burden.

There is no indication at this time that the employer mandate will be repealed, so they can’t lose anything by preparing now.  In fact, they can immediately start reaping the other benefits of contract staffing: workforce flexibility, reduced legal liability, the ability to “try-before-they-buy” through contract-to-direct arrangements, etc.

The bottom line is that ALL recruiters should stay on top of this law and the impact it could have on their clients.  Companies often look to recruiters as employment experts and may turn to you for advice on how to best navigate the law.

(Editor’s note: This article is for informational purposes only and should NOT be considered legal advice.)

The Affordable Care Act (ACA), the healthcare reform law often referred to as Obamacare, is being credited for a spike in contract staffing, which is at its highest level since 2006 and is outpacing traditional, direct hiring.

The Bureau of Labor statistics reported that 2,679,800 workers were employed in contract/temporary positions in May, inching ever closer to the all-time record of 2,767,300 contractors working in October 2006, according to ere.net.

Moreover, year-over-year contract staffing growth was 7.5%, which is five times the growth of the overall economy’s jobs increase of just 1.56%.  The contractor penetration rate (the percent of workers who are contractors) has hit 1.98%, close to all-time high of 2.03%.

Investors Business Daily is pinning some of this contract staffing growth on what are being called ‘Obamacare-Dodgers’ — employers trying to get around the employer mandate portion of the ACA by utilizing contractors instead of direct hires.  The employer mandate, which begins in 2015, will require employers with 50 or more employees to provide healthcare insurance to their employees or pay a per-employee penalty.

Utilizing contractors who are W-2 employees of a contract staffing back-office is a legitimate strategy for reducing or eliminating an employer’s responsibilities under the employer mandate.  Basically, companies are outsourcing the employer responsibilities to the back-office.

Recruiter Joell Iskander of Select Hire Resource is seeing more of her clients go the contract staffing route as a result of Obamacare.

“When clients utilize contractors, benefits and other employer issues are no longer their problem,” Iskander said.  “If they put someone on as a contractor, it’s something the recruiting firm or back-office handles.”

This is a safer alternative to another popular Obamacare avoidance strategy — classifying workers as 1099 Independent Contractors.  Companies may use this technique to reduce their number of employees that must be counted to determine if they fall under the employer mandate.  However, simply calling a worker an independent contractor doesn’t make it so.

They must meet the IRS guidelines for independent contractors.  The Obama administration has been very diligent in targeting companies that misclassify W-2 employees as 1099 independent contractors because the proper employer taxes are not being paid on those individuals.  This is not an issue when companies utilize contractors employed through a back-office because that back-office classifies the workers as W-2 employees, pays the employer share of payroll taxes, and takes responsibility for Obamacare compliance.

The continued growth of contract staffing in light of Obamacare presents a huge opportunity for recruiters willing to place W-2 contractors.  Unfortunately, some recruiters will pass up this opportunity because they are reluctant to delve into contract staffing due to the misconception that it is more difficult than direct hire.

But contract staffing does not have to be any more difficult than direct hire placements when you utilize a contract staffing back-office.  The back-office becomes the legal W-2 employer of the contractors and handles all of the financial, administrative, and legal details of the contract placement.  This leaves you to handle the traditional recruitment tasks: get the job order, find the candidate, and negotiate the rates.

Additional placements are yours for the taking IF you are willing to stretch a little outside of your comfort zone.  Not only can you increase your sales, but you can also become a valuable partner by providing clients with a viable solution to one of the most challenging staffing issues they’re facing.

(Editor’s note: this article is for informational purposes only and should NOT be considered legal advice.)

New York City has become the latest area to pass a law banning what has been called “unemployment discrimination.”

So just what is unemployment discrimination?  It refers to denying candidates employment based solely on the fact that they are not currently employed.

It’s no secret that companies have probably always preferred actively employed candidates, but some companies took it a step further in the wake of the recession by stating in job postings that unemployed candidates would NOT be considered.

The practice had people crying foul because many workers on the employment lines were victims of the recession’s mass layoffs and were not necessarily poor performers.

As a result, three states have passed laws against unemployment discrimination.  In general, these laws prohibit companies from posting ads stating that current employment is a job requirement or that unemployed candidates won’t be considered.

New York City has become the first city to pass such a law, which took effect on June 11.  The law makes it illegal to base employment decisions (hiring, compensation, terms, etc.) on a person’s employment status.  According to the Associated Press, NYC’s law is the most far-reaching of the unemployment discrimination laws, since it is the only one that allows applicants to sue for damages.

While it may not be spelled out in writing, many companies have a strong preference for currently employed candidates.  They might even go as far as to tell recruiters not to present any unemployed candidates.

Recruiters should make clients aware of the laws against unemployment discrimination and of the drawbacks of arbitrarily discounting the unemployed.

Even if it’s not illegal where your clients do business, overlooking candidates based solely on their employment status is not the best business strategy.  There are a number of reasons a candidate could be laid off that have nothing to do with their quality of work.

If you have a candidate you feel strongly about, but who is being overlooked due to their employment status, you may want to consider offering that candidate on a contract-to-direct basis.  This allows clients to “try-before-they-buy.”

If the candidate doesn’t work out, they can simply end the contract and try someone else.  But if they have found a great worker, they can extend the direct hire offer, and in most cases

As the number of wage-and-hour lawsuits under the Fair Labor Standards Act (FLSA) hits an all-time high, recruiters can help clients avoid what one attorney calls “one of the top threats to U.S. employers.”

Human Resource Executive Online recently reported that 7,764 FLSA lawsuits were filed between April 2012 and March 2013, which is the reporting year that is used by the Federal Judicial Center.

“With no clear catalyst during the past 12 months, this strong spike and new high for FLSA claims makes them one of the top threats to U.S. employers,” Richard Alfred, chair of Seyfarth Shaw’s wage-and-hour litigation practice, told Human Resource Executive Online.

While there is no obvious reason for the spike, Alfred largely blames the economy.  As the economy improves, he believes attorneys are targeting new companies with growing workforces.

On the flip side, the long, stretched out recovery has put increased pressure on existing employees who might be looking more closely at their employer’s pay practices as a result.  Social media has also made employees more aware of the FLSA and the rights that they have under it.

As a recruiter, clients often look to YOU as an employment expert, so it’s important that you are familiar with the FLSA and counsel your clients on the proper application of the law to help them avoid this fate.  Below are six key points to remember:

1. Overtime (1.5 times the regular pay rate) must be paid to most employees for any hours worked over 40 in a workweek.
2. Your clients also need to be aware of state laws that may be more generous to employees.  For example, in California, employees must be paid overtime (OT) for any hours worked over eight in a work day.
3. Your clients MUST prohibit off-the-clock work.  They should require that employees get pre-authorization before working overtime and that they keep accurate records, Alfred told HRE Online.
4. Some employees may be considered exempt from OT, but they must fall into the Executive, Administrative, Learned Professional, Computer-Related, or Outside Sales classifications.  They must meet speific requirements to fall under these categories. Please see the exempt requirements provided on the Department of Labor website.
5. Exempt individuals must also be paid on a basis of at least $455 a week on a salary, not hourly basis.  There are a couple of exceptions to this rule.  Computer-Related professionals may be paid at an hourly rate of at least $27.63 per hour ($39.90 per hour in California). Additionally, the salary requirements do not apply to those under the Outside Sales exemption.
6. DO NOT let your clients misclassify W-2 employees as Independent Contractors to avoid the overtime rules.  Doing so is just asking for Internal Revenue Service audits and FLSA lawsuits for back OT wages.

(Editor’s note: This article is intended for informational purposes ONLY and should not be considered legal advice.)

Many recruiters and employers are still trying to wrap their arms around Generation Y (or Millennials, if you prefer) and their unique look at the workplace.

Now, according to Workforce, recruiters may want to start bracing for the next generation in the workplace.

The article “Another Generation Rises: Looking Beyond the Millennials” states that there are a number of monikers used to refer to these individuals born in 1995 or after: Pluralists, Re-Generation, Generation Z, and Homelanders.

The youngest of this generation are just turning 18, and some are already making their way into the workforce.

Of course, with any new generation, experts have predicted some characteristics they think will come to define this generation:

• Environmentally conscious
• Fiscally conservative and willing to delay gratification
• More likely to rent than own
• Indifferent to technology: they grew up with it, so they aren’t as obsessed with it as Millennials
• More likely to stay close to home due to the domestic and international turmoil they have witnessed (hence the name “Homelanders”)

There is some debate among experts whether these individuals really constitute a new generation or if they are just “late-wave Millennials.”

One thing is clear, though: the life experiences of people correlate strongly with how they work, so it is helpful to consider the events and environmental factors that have shaped their lives.

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Think you don’t have to worry about healthcare reform because you don’t have 50 or more employees? Think again!

Most of the hype about the Affordable Care Act (ACA), the healthcare reform law better known as Obamacare, has been surrounding the employer mandate.  Employers with 50 or more employees will have to provide affordable health coverage to those employees by 2014.

If you have contractors who are on your payroll, they count towards your total employee count.  Many recruiters, even those who employ some contractors, won’t get anywhere near this 50-employee threshold.  But that doesn’t mean they are out of the woods when it comes to Obamacare.

There are administrative tasks tied to the ACA, even for the smallest of employers.  For example, even if you only have a couple of employees (in-house, contractors, or a combination), you will have to provide those employees with a notice about the healthcare exchange, which has now been dubbed “The Marketplace.”

The Marketplace is supposed to provide individuals with a place where they can compare and select healthcare plans.  Depending upon their income, they may qualify for premium tax credits to reduce the cost of the coverage they select.

Any employer who is subject to the Fair Labor Standards Act (FLSA), which is almost EVERY employer, must provide a notice to employees letting them know that the Marketplace will be available starting January 1, 2014.

The notice must let them know what services the Marketplace provides and how to contact it.  It must also inform them that they may be eligible for a premium tax credit and that they may lose the employer contribution (if applicable) if they choose to purchase their insurance through the Marketplace.  You have to provide this notice even if you do not offer insurance.

On October 1, 2013, employers must begin providing this notice to new employees at the time they are hired.  All existing employees must receive the notice by October 1, 2013.  For details on how to implement this, the Department of Labor has provided a Technical Release.

Very small firms and companies may have other responsibilities under Obamacare, as well, especially if they offer health insurance.  For instance, the health reform law mandates some changes to the COBRA notices employers send to plan participants who lose their coverage.  The law also has certain reporting requirements for employers who offer health insurance, regardless of how many people they employ.

For these reasons alone, it’s important that recruiters don’t ignore Obamacare.  Be sure that you are aware of your responsibilities based on the number of employees you have, and make sure you educate your smaller clients about these provisions, as well.

Editor’s note: This article is for informational purposes only and should NOT be considered legal advice.

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There’s a new sheriff in town when it comes to worker misclassification.

Many employers use 1099 independent contractors (ICs) to reduce the costs associated with workers. By utilizing ICs, employers avoid paying the employer share of payroll taxes, the expenses associated with Workers’ Compensation and unemployment, employee benefits costs, and the time and money associated with administering various employment tasks.

However, employers can’t just call a worker an IC to avoid those costs. The worker must meet certain criteria to qualify as an IC.

The Obama administration has been particularly concerned about cracking down on the misclassification of ICs who really should be W-2 employees.

Worker misclassification robs both state and federal governments of taxes and unemployment funds.  Up until now, most of the news about worker misclassification enforcement has come out of the IRS.  But according to a Forbes column titled “Independent Contractor Enforcement: There’s More Than The IRS To Fear” by attorney John Thomas, the U.S. Department of Labor (DOL) has stepped up its own enforcement efforts against the misclassification of independent contractors.

This is all part of the Misclassification Initiative in which the DOL announced they would work with the IRS and share information to crackdown on worker misclassification.

This effort has resulted in several recent high dollar judgments against employers.  Most recently, the DOL announced it had recovered more than $1 million in back wages for workers at a Kentucky-based cable installation company. The Forbes column warns that many more DOL investigations are being conducted now.

It is important that you educate your clients of the ever-increasing focus on worker misclassification. Encourage them to look at their IC workforce and determine if those workers truly qualify as ICs.  In general, government agencies will be looking at the degree of control a company has over a worker and how financially dependent the worker is on the company when determining a worker’s correct classification. The best place to learn about correct IC classification is the IRS website.

Recruiters can help their client companies by offering to convert current 1099 ICs to W-2 employees.  You can offer to put those workers on contract assignments and outsource their employment to a contracting back-office that serves as the W-2 Employer of Record.

That way, your clients can still escape the administrative and financial burdens of employing their workers without the risk involved with making them ICs.

For many years, The Cornerstone, the newsletter of Top Echelon contract staffing, was sent to the recruiters of Top Echelon Network.  The Cornerstone was eventually discontinued in favor of another newsletter, Contracting Corner, which is now published once a quarter.

However, we at Top Echelon Network still run contracting statistics in select issues of The Pinnacle Newsletter Blog.  These statistics include Non-Split Contract Placements, Split Contract Placements, and Non-Recruited Placements, among others.

And in this week’s issue of The Pinnacle Newsletter Blog, we have a boatload of contract staffing placements to show you!  As you can see, many of these placements come with hefty recruiter shares, such quite a few over $20 per hour.

Remember, that’s money that these recruiters will earn hour after hour after hour . . . while they work making direct-hire placements at the same time.  If you want to be part of this “boatload of placements,” then don’t “miss the bus.” Are you noticing a transportation theme?  That’s because contract staffing can take you where you want to go.

You’ve been a great audience! Thank you and goodnight!

Many of the Top Producers in Top Echelon Network have added contract staffing to their recruiting firm’s business model.  Not only that, but they’ve also taken advantage of the services provided by Top Echelon Contracting, the recruiter’s employer of record services.

For more information about contract staffing and the back-office services that Top Echelon Contracting provides, call (888) 627-3678, Ext. 2.

According to a recent Society for Human Resource Management (SHRM) article, I-9 audits are on the rise (SHRM membership may be required to access this article).  In 2004, only three audits were conducted compared with 3,004 in 2012.  Simple paperwork errors can cost employers up to $1,100 per violation.

If you serve as the W-2 employer for your contractors, YOU are responsible for I-9 compliance . . . and any fines assessed in an I-9 audit.  Here are some tips for making sure your I-9s pass muster.

1. The newest version of Form I-9 must be used exclusively starting May 7, 2013.
2. Make sure the employee completes Section 1 on their first day of work.  Inspect it to be sure that all the required information is provided and that Section 1 is signed and dated.  If anything is incomplete, don’t fill in the missing information.  Only the employee can complete or correct Section 1.
3. Be sure that you complete Section 2 within three days of the employee’s start date.  So if a contractor starts an assignment on a Monday, Section 2 must be complete by Thursday.
4. Remember that you must physically view each original document the employee presents in order to complete Section 2.  So what if you are too far from the employee to meet them?  The I-9 does allow for an “authorized representative” to complete Section 2 instead of the employer.  You could ask the client or a Notary Public to serve as the authorized representative.  If you encounter a lot of reluctance, you may want to work with an attorney to draw up a disclaimer that assures them they will not be held liable for I-9 penalties.
5. Conduct annual I-9 audits and make corrections where needed.  But remember, don’t white out mistakes.  Cross them off, initial, and date any changes.  Don’t make changes to Section 1—again only employees can make changes there, so if you find a mistake, ask the employee to make the correction.  And be sure not to back date anything.  While correcting I-9s may not eliminate penalties, they could reduce them.
6. U.S. Immigration and Customs Enforcement (ICE) normally audits companies that are connected to the nation’s “critical infrastructure,” such as power plants, food-service businesses, airports, etc., according to SHRM.  But complaints to ICE from disgruntled employees can also now initiate an audit, so don’t assume that your firm is flying under the radar.

Disclaimer: This article is for informational purposes only and should NOT be construed as legal advice.

One of the trickiest things about running your own back-office is navigating the complex web of state and local laws.  Paid sick leave (PSL) is an area where recruiters need to be especially careful.  With no paid leave laws on the federal level, some states and cities are taking matters into their own hands.  Most recently, the city of Portland, Ore., passed a sick leave ordinance that will go into effect on Jan 1, 2014, according to HR Hero. If you’re running your own back-office, you are responsible, as the employer of your contractors, for providing PSL when required.  Here is a quick breakdown of the PSL laws currently on the books in specific areas: Portland, Ore.—Employers with six or more employees will be required starting 1/1/2014 to provide PSL to those working 240 or more hours per year within the city limits.  This will apply to employers even if they are not based in Portland and even if the employee only works in the city occasionally, as long as they meet the 240 hours per year requirement.  Employees will earn one hour of paid leave for every 30 hours worked up to a maximum of 40 hours per year.  They can also carry up to 40 unused hours over.  This law will also require employers with less than six employees to provide them with one hour of UNPAID sick leave for every 30 hours worked up to 40 hours per year. San Francisco—All San Francisco employers are required to provide one hour of PSL to employees for every 30 hours worked.  The maximum is 40 hours per year for small businesses (10 or fewer employees) and 72 for larger employers (more than 10).  Unused leave carries over every year, not to exceed the maximum limit.  Visit the City & County of San Francisco Labor Standard Enforcement site for more details. Seattle—Seattle’s PSL law applies to employers with a total of five or more full-time employees.  If any of those employees work at least 240 hours per year within Seattle’s city limits, the employer is required to provide one hour of leave for every 40 hours they work.  The maximum hours range from 40 to 72, depending upon the size of the company.  This law is unique in that it not only allows employees to use the time to care for themselves or a family member in the case of injury or illness, but it also can be used as “safe leave” if their place of business has been closed by a public official for health or safety reasons. Washington, D.C.—Under the Washington D.C. Paid Sick Leave Act, employees must be employed for a year without a break in service and work at least 1,000 hours prior to their request to take time off.  The law excludes the following types of workers: independent contractors, students, health care workers who have opted into a premium pay program, and restaurant servers and bartenders who receive both wages and tips.  The number of hours accrued depends upon the employer’s size, but cannot exceed seven days a year. Connecticut—With the only state-wide PSL law so far, Connecticut requires employers with 50 or more employees in the state to provide up to 40 hours of PSL.  The tricky part about this law is that it only applies to “service workers,” those who are not exempt from the Fair Labor Standards Act (FLSA) requirements and who fall into one of the positions listed in the legislation.  You can view a list and other details about the law by clicking here. Just because you don’t have contractors working in these areas doesn’t mean you don’t need to be concerned.  New York City is also close to passing legislation, and Philadelphia is considering its own PSL law.  Chances are that more will follow suit.  As a contract staffing recruiter running your own back-office, it’s important that you stay on top of these developments and make sure you’re following any applicable PSL laws. This article is for informational purposes only and should NOT be construed as legal advice.