Managing Your Contingent Workforce

September 12th, 2012

In the last three years, there have been significant changes to tax laws regarding the payment and treatment of contingent workers, or independent or freelance workers. Most notably, this change eliminated interns from working without compensation. This reaction from the U.S. Department of Labor was a response to the increasing number of instances in which companies were beginning to exploit the cheap or free labor of eager interns. Without being fully fluent in the new policies on contingent workers, companies fall into a dangerous ignorance that could be extremely costly.

The priority of understanding the newer guidelines pertaining to contingent workers is to define “contingent worker” against the more traditional definition of “employee.” Very simply, classifying workers into either of these categories comes down to management. If workers require specific training, instruction or management in order to complete the tasks to which they are assigned, these individuals are traditional employees. On the other hand, if a worker requires no guidance as to how, when or where to complete a task and is hired specifically to complete tasks or projects that require their expertise, s/he would be classified as a contingent worker.

The U.S. Department of Labor released a factsheet to help managers determine if their interns can remain classified as unpaid interns, or if they must be moved into the contingent worker classification.

Companies who are found to be out of compliance by inaccurately classifying individuals as contingent employees when they are fulfilling the tasks and duties of full-time employees will be charged significant fines and can be forced to pay back taxes of its misclassified employees to cover lost dollars for Medicaid, Medicare, social security and federal and state taxes. Many companies who are found guilty of misclassifying employees deny any malicious intent, but rather state that the definitions of contingent workers versus employee are too vague and even misleading.

Using a qualified staffing agency can help take the guesswork out of hiring and maintaining a contingent staff, including a pool of interns. Contact Olympic Staffing today to find quality candidates and the peace of mind that comes with insured compliance!

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