The Contingent Worker

The nature of the contingent employment allows for flexibility on both sides. Not only does it allow more freedom for contingent workers, but it also provides financial benefits for the employer. While hiring contingent workers reduces the need for staffing in certain areas, an employer lacks control over the contingent worker. Because a contingent worker manages himself, a company has only monetary control over the worker. The company cannot set work hours or treat contingent workers as employees.

Often hired through staffing agencies, they can be hired directly by the company. The Occupational Safety and Health Act requires employers to maintain a safe and healthy workplace for their employees. The act does not distinguish contingent workers from other employees and covers contingent workers except for independent contractors and other self-employed workers.

The advantages of a contingent workforce compared to contractual employees include that the company does not have to collect and pay quarterly taxes from paychecks. Instead, only an IRS 1099 tax document is created at the end of the year for payments to contingent workers when the year’s payments were $600 or more.

Who Is Considered My Employer If I Am A Temporary Or Leased Worker?

It is important for a business and its human resources department to correctly classify the contingent worker, even if the worker is not full time. According to guidelines by the Department of Labor, an independent contractor is different than a temporary employee. While the business does not have to offer benefits to a temporary worker, they do have to follow other employment laws that pertain to permanent employees, such as overtime pay and minimum wage. Despite some disadvantages, both the worker and the company benefit from the contingent workforce.

They generally receive fewer benefits and less pay than full-time workers, according to the U.S. Department of Labor, and are less likely to be protected by labor and employment laws. According to the US Bureau of Labor Statistics , the nontraditional workforce includes “multiple job holders, contingent and part-time workers, and people in alternative work arrangements”. These workers currently represent a substantial portion of the US workforce, and “nearly four out of five employers, in establishments of all sizes and industries, use some form of nontraditional staffing”. “People in alternative work arrangements” includes independent contractors, employees of contract companies, workers who are on call, and temporary workers. The Immigration Reform and Control Act requires employers to verify and document employees’ legal entitlement to work in the United States.

I Work For A Company That Subcontracts My Services To Other Employers Who Is Considered My Employer?

Hiring a contingent worker is also a tax deduction as it is considered an expense, especially if a staffing firm manages the workers. In addition, employers do not have to pay payroll taxes, unemployment taxes or benefits for these workers, which can save the business money. Known as independent contractors, contractors, temporary workers, freelancers or consultants, the contingent workforce differs from regular employees. They are not true employees of a company.

Such employees may defined as freelancers, consultants or independent contractors. They can either work in the company’s offices or remotely. They are highly skilled and experts in their areas of specialization. On October 26, 1998 the DOL filed suit against Time Warner, Inc. in the U.S. District Court for the Southern District of New York, alleging that the company denied benefits to eligible full-time workers by incorrectly classifying them as temporary employees or independent contractors. According to the complaint, the workers were common law employees because, among other things, the company controlled their schedules and issued business cards to them.

• Organizations can hire a contingent worker directly or from a staffing agency.
• According to the US Bureau of Labor Statistics , the nontraditional workforce includes “multiple job holders, contingent and part-time workers, and people in alternative work arrangements”.
• Such workers are usually added on an ad-hoc basis to a company’s workforce and work either onsite or remotely.
• They generally receive fewer benefits and less pay than full-time workers, according to the U.S.
• freelancers, independent contractors and consultants who are not on the company’s payroll because they are not full-time employees of the organization.

The DOL has issued regulations specifically addressing joint employment under the FMLA in the contingent worker context. According to the FMLA regulations, two or more employers may be joint employers where each exercises some control over the working conditions of the employee. The regulations specify that joint employment will ordinarily be found to exist when a temporary or leasing agency supplies employees to a second employer. As explained below, application of the joint employer doctrine varies somewhat under the different employment and labor laws.

Advantages For Businesses

Also, many employers seem to believe that simply classifying a worker as an independent contractor relieves the employer of any employment or labor law related obligations to the worker. Businesses representing virtually every sector of the South Carolina economy “from textiles to technology” are turning with increasing frequency to so-called “contingent” workers to supplement their regular workforces. Although many employers assume that contingent workers are not their employees for liability purposes, this is far from true. The reality is that hiring contingent workers can be risky. This article highlights a few of the risks involved with the use of contingent workers.

In contrast, an advantage of a contractual workforce is that it ensures that staff is available during specific hours to handle business needs. The U.S. Department of Labor defines contingent workers as independent contractors or freelancers as opposed to contracted employees.

freelancers, independent contractors and consultants who are not on the company’s payroll because they are not full-time employees of the organization. Organizations can hire a contingent worker directly or from a staffing agency. Such workers are usually added on an ad-hoc basis to a company’s workforce and work either onsite or remotely.

When the Contingent Hiring feature is activated and configured by the system administrator, users can start acquiring contingent workers. Once the candidate is hired, the system does not provide additional support like time sheet and billing. To feed such systems, integration with worker information, billing rate and suppliers can be done upon hiring. Companies who want to improve their overall output may hire contingent workers to expand their labor force. Tapping into the contingent workforce can also help companies save a lot of money on expenses associated with direct exits of contracted workers, training new employees and lost productivity. Companies also save by not hiring employees for skills that may not be useful in the next six to 12 months.

The DOL’s regulations interpreting IRCA, however, remove most client companies that receive contingent workers from the definition of employer. See 8 C.F.R. 274a.1 (In the case of an independent contractor or contract labor or services, the term employer shall mean the independent contractor or contractor and not the person or entity using the contract labor.). Accordingly, contingent worker providers and independent contractors will usually be solely responsible for IRCA compliance. According to the NLRB, FP&L exercised sufficient control to justify joint employer status because it was involved in hiring, firing, promoting, and determining the wages of the temporary employees. There are varieties of reasons why a company would prefer contingent workers. Since contingent workers are not permanent, the workforce can rise and fall according to the workload.

The most important factor under almost every statute, however, is supervisory control. Generally, if both the client company and the provider of contingent workers exercise control, both may be considered joint employers. In our insecure economy, temps and independent contractors allow employers to get the work done while allowing the companies to stay flexible enough to survive and, we hope, thrive. But there are abuses, and dangers if employers misclassify workers, or if they keep their “temps” around so long that they become “perms” in reality if not in name. Here are four reasons to be very careful about how you use contingent workers. Compared to ‘classic’ employees, contingent workers are often not as committed to the organization they work for. This is, among other things, due to the temporary nature of their relationship with their employer and the fact that it can be difficult for them to integrate into the company.

Contingent Workforce

The party (whether the recipient employer or temp agency/leasing firm) responsible for unsafe conditions in a workplace will be liable for OSHAct violations. Which of these statements about contingent workers is true? Typically contingent IT workers work as a separate, independent group of workers and move from project to project working for the same firm. A firm is likely to use contingent IT workers if it experiences pronounced fluctuations in its technical staffing needs. Contingent workers are eligible for most company benefits such as vacation, sick pay, and medical insurance. Because they do not receive additional compensation through company benefits, contingent IT workers usually make less that full-time employees doing equivalent work. One practical effect of a joint employer determination is that the client company may be held liable for the provider’s unfair labor practices.

An additional question that may arise is whether contingent workers should be included in a bargaining unit with regular employees of the client company. At the urging of the AFL-CIO, the NLRB is now considering liberalizing its joint employer status and consent tests in the context of two cases involving temporary employees. Using contingent workers can help employers reduce personnel costs, retain flexibility, and remain competitive. However, employers often assume, incorrectly, that they have no legal obligations to temporary, leased, or outsourced workers because they “belong” to the firms that provide them.

For business owners, the advantages of a contingent workforce are mostly financial. They do not have to collect and pay taxes from the workers’ pay cheques.

You may also hear the term “contingent worker” used to refer to temporary and leased employees, as well as other kinds of non-permanent work arrangements. A worker who seeks employment through a temporary agency is the most common type of leased employee. A temporary agency is a company that contracts with businesses to provide workers on a contingent basis. These temporary agencies handle all payroll, tax, and other human resources functions for the workers.

When a company hires an employee on a permanent or temporary basis, it becomes responsible for ensuring that taxes are deducted and paid for the employee. On the other hand, when the company hires an independent contractor or contingent worker, that individual becomes responsible for all taxes, as she works for herself. Employees who do not want to work in a certain company for a long period of time also fall under the category of contingent workers.