First let me state that I’m not a lawyer, just a law-abiding citizen.  I do pay attention when folks mention problems in the HR world and it seems complying with IRS rules for contractors is very important, and receives a lot of attention. So I’ve hunted around to get input from various groups on what to watch out for.  Here goes.
First, the guiding principles of a contractor vs. employee:
The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. The earnings of a person who is working as an independent contractor are subject to Self-Employment Tax.
You are not an independent contractor if you perform services that can be controlled by an employer (what will be done and how it will be done). This applies even if you are given freedom of action. What matters is that the employer has the legal right to control the details of how the services are performed.
From another source, findlaw.com, I find a 20- factor checklist to determine whether you are an independent contractor.  Lawyers can always give more detail. I’ve highlighted most of the list. Here is the quicksummary of when you’re NOT independent.
1. You receive specific instructions on how to do the work from the employer.
2. Training to perform the task in a specific manner, by an experienced employee.
3. Integration of the “contractor’s” services into the business operations.
4. Services must be rendered personally.
5. If the hiring supervisor is responsible for hiring and paying assistants but not contractors, the inference might be made that it’s an employment situation.
6. Continuing relationship – contracts should have a clear ending
7. Set hours of work.
8. Full time required.
9. Doing work on employer’s premises required.
10. Order or sequence of how to do task is set.
11. Regular oral or written reports – implies control.
12. Payment by hour, week or month rather than by task performed or contract term.
13. Payment of business or travel expenses.
14. Furnishing tools or materials
15. If worker has significant investment in the workspace not reimbursed by employer it indicates independence.
16. Working for only one entity implies control and thus employment.
Isn’t life interesting?

Tags: candidates, For Employers, Independent contractor, industry news, recruiters

As we all have heard, corporate profits dropped significantly (some sources say by 1/3) in the latest economic downturn, and companies were cutting and slashing wherever they could, including eliminating some product or service lines.  Because  of the belt tightening companies have become very efficient at delivering their product or services with fewer resources.  As a result, second-quarter 2010 profits for industrial companies in the S&P 500 stock index were $189 billion, up 38% from a year ago.  The outcome in many cases was as much a result of cost savings as revenue growth.
But..how does that affect the staff that got to keep their jobs?  And what are the long-term effects of this new way of working?
An article in the Society for Human Resource Management news (1/7/2011) highlights some of the problems in doing more with less.  Companies know they cannot continue cost-cutting to success, but for the last two years that was the major tool in the toolbox. 
Among the problems mentioned in the article are:  Diminished capacity, capability and agility, misaligned organizational structure, broken business processes and declining workforce engagement.  These issues can greatly affect future success.
Diminished capacity refers to not having enough staff, which can directly affect the company’s cost structure and ability to deliver the goods.  In well-staffed organizations there is the ability to shift people rapidly to respond to shifting business needs.  In a reduced-staff organization the employees have to focus on their immediate responsibilities, leaving little time to help in other areas.  Obviously the inability to respond will affect the company’s ability to compete.
Misaligned Org Structure can, as a result of rapid reorganization, leave an organizational chart that no longer is aligned to support the business. There are resulting gaps in roles, work process, accountabilities and information flow.  Structural gaps also occur when companies eliminate middle management positions without eliminating the work, forcing employees to take on added responsibilities.  Employees unprepared for management issues often end up “winging it” to the detriment of the company.
There are also broken business processes, partly as a result of prior reliance on long-term employees for “tribal knowledge” of the operation.  By failing to document or address the broken processes the companies can lose core efficiencies – and have to re-invent the wheel.
Eventually the workforce becomes disengaged.  In the short term everyone was glad for the job, and willing to pitch in.  It has become obvious, however, that this  situation is going to continue for quite awhile.  Not only that, but these loyal employees aren’t seeing monetary rewards for their efforts.  These employees are hunkered down until new opportunities arise, and then some organizations may lose a lot of valuable talent.
Unless companies address the problems created by the downsizing, they will start to lose the advantages gained by the initial cuts.  They need to be able to manage the new structure and reevaluate skills needed to stay competitive – and be ready for the next wave of new business!

Tags: change management, employee morale, Hiring Trends, industry news, job seeker attitudes, performance management

Keeping you informed!  Just in case you were feeling slighted, a recent survey on pay raises found promotions and raises down significantly.  WorldatWork’s Promotional Guidelines Survey, conducted last fall, focused on promotions because that seemed to be the only way employees could earn substantial pay raises in this economy.  What the survey found was that only 7 percent of the employees in large U.S. organizations received promotions last year, down from the average of 8.1 percent.  The survey also noted that the raises themselves were down considerably.  Officers and executives, the hardest hit, saw raises go from an average 11.4 percent in 2005 to 9.5 percent in 2010.  The problem for companies is that they have to show opportunities for career advancement to keep top performers, thus companies budgeted separately for these increases. 
It seems from other economic news that non-executives are taking pay reductions, or their benefits are being cut.  Overall it is now a waiting game as companies try to manage growth without having to add a lot of employees.  Hang in there!

Smart Phones are also coming to the attention of mobile security experts as more and more business is conducted on these devices.  Hackers are developing malware  to exploit security issues that may include a less-than-optimal browser, user authentication, and data encryption technologies.  According to an item in SHRM News, in 2010 more than 1 million smart-phone users in China were infected with a “zombie” virus hidden in bogus anti-virus programs.  Another case involved a worm connecting infected iPhone devices to a server in Lithuania, enabling criminals to control the phones.  Adding to the problem, according to the January 2011 article, is the bring-your-own-computer movement allowing employees to use their own mobile devices in the workplace, which can infect company servers.  It is up to companies to either disallow the use of those devices as is done in the national laboratories, or to restrict important data so it cannot be accessed through these devices.  If a document has to be emailed the sender needs to strip any identifier info such as social security numbers from the mail.  Hopefully soon the security systems will be upgraded to deal with these issues, as the world is certainly addicted to the Smart Phone!

Tags: benefits, employee benefits, employee morale, industry news, performance management

An article in Time (January 17, 2011) as well as other business publications, predict that those working in the technology sector should fare better this year.  The Time article gave a number of statistics that are interesting to those seeking jobs.  The volume may not be what it was, but there are definitely opportunities.
Jobs in network-systems and data analysts are the second only to biomedical engineers in growth in that sector.  Companies have been spending more on software and computer services, and internet marketing and social networking companies are doing well. 
Health services is another area of positive growth, and again requires training and education, just like the technology services areas.  In fact, the Time article shows that in 2011 and 2012 over 37% of the new jobs will require a bachelor’s degree or higher. 
There is also some good news for the manufacturing sector, as some companies are going to lean manufacturing and bringing the work back to the states.  Various companies have stated that they want more control over their process and product.  General Electric’s head of technology for the appliance section sees lean manufacturing as a way to lower manufacturing costs as much as 30%.  Unit labor costs have fallen across the country. 
In New Mexico the growth is slow, and appears to be focused in manufacturing and mining sectors.  The UNM Bureau of Economic Research predicted that it will take years to replace the 50,000 jobs lost in the state.  The Bureau director predicts that the job growth for 2011 will be about 1.3%.  The manufacturing sector accounts for about 3.5% of GDP in New Mexico, as opposed to approximately 9% of GDP nationally.
The New Mexico Manufacturing Extension Partnership works with New Mexico manufacturing companies to improve processes and increase efficiency.  Ron Burke, Center Director, said that in the last 5 years the number of manufacturing companies in the state dropped from 1700 to 1500.  On the other hand, those who have survived the downturn are coming out strong, and some even have a backlog of orders – hopefully that means more job opportunities in the industry.  Ron said that one reason for the successful survival of these businesses is that they have worked on training employees and improving their processes.
Let us hope that these smart technology and manufacturing companies in our state can add good jobs for the people here who have great skills and need them!

Tags: applications, hiring talent, Hiring Trends, industry news, job seeker, technical jobs

Most U.S. employees currently relying on a 401K plan will not be able to retire by age 65. A study published by Nyhart’s employee benefits consultancy has come up with some interesting information.  The six-month study looked at retirement accounts from employees at 110 U.S. public and private companies, and found that most employees aged 45 to 55 need to contribute 19% of pay to be able to retire at age 65.  Employees aged 60-64 will probably have to work until age 75 to afford to retire.
The study, based on current contribution rates, found that 81% of employees 18 or older won’t be able to afford to retire at 65.  Also 70% of employees 18-24 aren’t expected to retire by age 65, as 30% of them don’t participate in a 401K. 
The leading cause impacting retirement age is the contribution rate of the employee.  Across all age groups, the greater the contribution rate the better the opportunity to afford retirement.  By increasing the percent contribution by 2-4% of total income, employees can shave years off the age of retirement. 
Another factor influencing the ability to retire is the gender of the employee.  Current stats show that women live longer than men, and so definitely need to save more. 
The economic recession of 2008-2010 had a major impact on employees 55 or older who wanted to retire at 65.  The hardest hit were those 60-64, who will need to contribute approximately 45% of income to retire at 65. 
The U.S. has gone from a country where most large organizations had company-funded defined benefit plans to a n era of varying levels of employee contributions in order to have any retirement options. 
The Society for Human Resources website, www.shrm.org, has pointers on managing 401K’s and other retirement issues. 

Tags: benefits, employee benefits, employee morale, industry news