3 Major Issues Currently Impacting the Staffing Industry

Fri, Nov 18, 2011 @ 09:23 AM / by ATR International

issues impacting staffingThe legal and regulatory environment is constantly shifting and it is a challenge to keep up with all the news and developments.  Nothing can take the place of your own research, good counsel and proper legal advice in ensuring compliance with all applicable laws and regulations.  What I offer today is nothing like that kind of advice, it’s simply a few things that caught my eye as being pretty relevant to those of us in the staffing industry.  My aim is to raise awareness, whether it is the first time you hear about something or it’s just a timely reminder.

1. Americans with Disabilities Act Amendments Act
In March 2011, The Equal Employment Opportunity Commission (EEOC) released its final rule implementing the equal employment provisions of the Americans with Disabilities Act Amendments Act (ADAAA). The ADAAA, signed into law in 2008, significantly expanded the definition of “disability.”  A session at the SIA CW Risk Forum on recent developments in CW law reminded both staffing suppliers and buyers of the importance of understanding the changes in the ADAAA.  Many more people will now fall under the ADA as a result of these expanded definitions.  The risks and responsibilities for compliance are often shared, and regardless, it’s a smart idea to work together, sharing knowledge and implementing procedures to provide compliance on both sides.  If you haven’t already started, now’s the time to understand how the new rules impact you and to review interviewing, hiring, on-the-job and other procedures and protocols to avoid problems.

2. Independent Contractor Classification
The importance of correctly classifying Independent Contractors should always be top of mind in our industry.  The SIA’s November webinar on legal and regulatory developments had several reminders of why it is so important:

A. As you have probably heard, the Supreme Court has agreed to decide on the constitutionality of the Health Care Reform law, specifically the individual mandate and whether without that mandate, the law must be scrapped in its entirety.  No one can predict the outcome but ensuring that your workforce is properly classified will put you in the best position to avoid potential issues as a result of the several possible outcomes.

B. In October, California Governor Brown signed the Independent Contractor Misclassification Law, one of the strictest in the U.S. with some hefty penalties – from $5,000–$25,000 per violation.  It becomes effective quite soon too, January 1, 2012.  Penalties of that size can quickly grow and easily affect the bottom line.  If you think this is just an issue for those of us working in CA, be advised – what happens here often replicates in other states.  More incentive to get it right now!

C. In a discussion of “retro-benefits,” it was suggested that proper IC classification, along with appropriately written benefit plans, were a better defense against these types of lawsuits than term limits and breaks in service.  Classifying your IC’s correctly separates them from your employee population.  One of the recommendations for your benefit plan is that it should clearly state who is included and excluded from participation (e.g., ICs, those treated as ICs, etc.). Together, this can help provide a valid defense.

3. Independent Contractor Misclassification Voluntary Settlement Program
Related to the topic of Independent Contractor misclassification is the news that the IRS has launched a voluntary settlement program.  The program allows employers to become compliant by making relatively minimal payment in lieu of back payroll tax obligations, instead of being subjected to a potential future audit.  Since the IRS has previously stated its intent to increase these investigations and audits this is presented as an opportunity to get out ahead of that effort and settle problems now.  It may be that this is a good opportunity for some, but most advice since the announcement has been to carefully consider this and absolutely to consult a lawyer first.  The SIA’s webinar discussed the possibility that a strong program of remediation and future compliance might be just as effective.

Those are just a few issues that came out of my own attempts to stay abreast of legal and regulatory developments but there are others that might merit your attention as well.  I encourage you to take advantage of the information provided via website, newsletter or other venue from staffing industry groups, national and state government and, of course, your own legal counsel to ensure that you have the latest information and are making the best decisions.

Jerry Brenholz 
President and CEO
ATR International

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Topics: job legislation, contingent workforce, independent contractor, JerryBrenholz

ATR International

Written by ATR International

Founded in 1988 in response to the burgeoning demand for temporary personnel, ATR International has been providing our clients with IT consultants and enterprise-wide staffing services for over 25 years.

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