The unemployment numbers for February came out today and many were happy to see we added 227,000 jobs last month and the jobless rate didn’t go up, staying at 8.3 percent.
Well, realistically the economy only created 182,000 real jobs. Why do I say “real”? Because 45,000 of those 227,000 jobs came from temp jobs.
There may be some people out there would don’t mind holding temporary positions, but most folks are looking for permanent gigs.
Many of you have long been searching for a permanent gig with good pay, benefits and a little job security but companies are loathed to offer that.
“It’s cheaper to hire contingent workers, but also more flexible for employers,” Bill Kahnweiler, associate professor and human resource expert at Georgia State University’s Department of Public Management and Policy, told me a while back about the growing practice.
It may be easier for employers, but not on the average working stiffs who want to be permanent working stiffs. Also, some employers may be thwarting the law by keeping on temps and freelancers that are actually full-time employees under the law.
Alas, the use of temporary trend isn’t going anywhere.
A report titled “The Emerging New Workforce” by one of the biggest employment law firm in the nation, Littler Mendelson, projected:
that 50 percent of new jobs that emerge after the recession will be contingent positions, and as a result “as high as 35 percent of the work force will be made up of temporary workers, contractors or other project-based labor.”
Is it fair? It depends who you ask, but it’s definitely not good news for the nation’s middle class.
A “transient” work force could end up hurting workers because many of the protections and benefits of being full-time employees, including unemployment insurance and some labor laws, don’t apply to free agents. Contingent workers typically don’t get sick or vacation days, retirement accounts or health coverage. “Companies want a more flexible work force, but we have to think about what’s the next way we’re going to protect people,” said Sara Horowitz, founder of Freelancers Unions.
The other issue is whether a temp or contract worker is actually an employee under the law. To often, employer misclassify workers either knowingly to save a buck, or due to ignorance of the law.
The Internal Revenue Service guidelines spell out 20 factors in distinguishing between contract and permanent worker:
1. The IRS uses three characteristics to determine the relationship between businesses and workers:
* Behavioral Control covers facts that show whether the business has a right to direct or control how the work is done through instructions, training or other means.
* Financial Control covers facts that show whether the business has a right to direct or control the financial and business aspects of the worker’s job.
* Type of Relationship factor relates to how the workers and the business owner perceive their relationship.
2. If you have the right to control or direct not only what is to be done, but also how it is to be done, then your workers are most likely employees.
3. If you can direct or control only the result of the work done — and not the means and methods of accomplishing the result — then your workers are probably independent contractors.
4. Employers who misclassify workers as independent contractors can end up with substantial tax bills. Additionally, they can face penalties for failing to pay employment taxes and for failing to file required tax forms.
5. Workers can avoid higher tax bills and lost benefits if they know their proper status.
6. Both employers and workers can ask the IRS to make a determination on whether a specific individual is an independent contractor or an employee by filing a Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, with the IRS.
7. You can learn more about the critical determination of a worker’s status as an Independent Contractor or Employee at IRS.gov by selecting the Small Business link. Additional resources include IRS Publication 15-A, Employer’s Supplemental Tax Guide, Publication 1779, Independent Contractor or Employee, and Publication 1976, Do You Qualify for Relief under Section 530? These publications and Form SS-8 are available on the IRS website or by calling the IRS at 800-829-3676 (800-TAX-FORM).
Misclassification of workers is rampant but The Department of Labor has been cracking down on the practice. There has also been a spike in the number of class action suits against employers in this regard.
While workers do have legal recourse if they believe their employer is not playing by the rules, many employees are hard pressed to take that route because today a temp job is better than no job at all. Hopefully, moves by the DOL and state governments to derail the practice will spook companies enough to get them considering those productive temps for a permanent cubicle.