Blogs Articles ‘ghostwritten’ for Synergy Services
By Jill Roblyer
Florida signs MOU, DOL states “Legitimate IC’s are important to Business”
Last week Florida became the 19th State to partner with the Department of Labor
(DOL) by signing a Memorandum of Understanding (MOU) aimed at cracking down
on worker misclassification.
What is refreshing about this news is not that Florida ‘joined the MOU club’ but
rather the comments that were made by the new administrator of the Wage and
Hour Division of the US Department of Labor, David Weil. In his address, he
emphasized the “Importance of legitimate Independent Contractors to US
Why is this refreshing? If one were to review news from the past several years, it
would appear as though the term ‘Independent Contractor’ is used almost in the
same context as, say, the term ‘problem child.’
At Synergy Services, we’ve heard many companies reiterate strong policies against
using Independent Contractors. IC’s simply expose the companies to too much risk.
Yet, true to David’s Weil’s comments – legitimate Independent Contractors are not
only important to companies but necessary to the economy.
Companies that state a refusal to work with any independent contractors, even
legitimate ones, risk losing out on key knowledge workers and talent that may not
be available via a typical employment arrangement. Non-traditional workers,
particularly professional Independent workers, are absolutely critical to today’s
fast-paced, highly technical world.
True, intentional misclassification of workers remains a serious matter as evidenced
by the ongoing focus across Federal, State and Local governments. However,
recognizing the benefits of the legitimate Independent Contractor is just as
It’s about time to take away the negative connotation or ‘problem child’ aspect of the
term “Independent Contractor.” Instead, companies who embrace the necessity of
the Independent Contractor to round out their talent sources, and utilize companies
who are able to accurately vet them to prove proper classification – is a win-win for
everyone. Particularly the Independent Contractor themselves.
Contingent Workforce Statistics 2015 – The First Data of Its Kind in 10 Years
The last time an official federal government survey report came out regarding the
Contingent Workforce was 10 years ago in 2005. Why the delay in getting this
information out? A combination of lack of funding along with the difficulty of
pinning down definitions for this group of non-employee workers are two of the top
The US Government Accountability Office (GAO) – an independent, non-partisan
agency that works for Congress - released a draft report this month regarding the
Contingent Workforce. 10 years’ worth of data for the industry to consume. In
reality, there are data points for 2005, 2010, 2012 and a few other years, but not
year-over-year statistics. Nonetheless, the draft report delved into several different
categories in putting forth data on for the Contingent Workers, including
demographic data, overall impressions of these workers job security, job
satisfaction, earnings, health insurance, etc.
As can happen with surveys of this kind, interpretation is everything. In
determining the classification of Contingent Worker, respondents were asked, “How
would you describe your work arrangement in your current job?” Based on their
answers, they were put into the following categories:
1) Core Contingent Workers (made up of Agency Temps, On-Call Workers, and
Contract Company Workers)
2) Independent Contractors
3) Self-Employed Workers
4) Standard Part-time Workers
For Synergy, we are particularly interested in data relating to those who responded
in the ‘self-employed’ or ‘independent contractor’ space. What stood out in these
categories may or may not be surprising. For example, Independent Contractors,
are largely made up of white males, college educated often with advanced degrees.
This group reports a high level of satisfaction with their job situation with over 56%
“very satisfied” with their jobs. In general, Independent Consultants rank almost
even in education, satisfaction and stability as related to their full-time
Compare that to the “Core Contingent Workers” category. This group includes a high
number of blue-collar workers, made up mostly of Hispanic workers without high
school diplomas, and report much higher levels of job instability, and much less
satisfaction their jobs.
These results certainly do not seem surprising. However, what is a cause for
concern is how the industry is looking at the trending workforce and making
assumptions based on numbers gathered across such a wide-range of non-employee
workers. Can we really compare and draw conclusions for workers that may range
from on-call construction workers all the way to highly educated skilled
professionals. When we see total numbers of “Contingent Workers” – it is important
to recognize that those numbers include a wide range of workers demographics.
The summary? Remember when you see those percentages stating the overall
percentage of Contingent Workers trending up over time, it is important to separate
out the specific types of Contingent Workers that are important to your business.
For example, while “alternative work arrangements” increased from 35% to just
over 40% from 2005 to 2010, the number of Independent Contractors during that
time actually decreased from 13.5% in 2005 to 12.9% in 2010. That drop could very
well be attributed the financial crisis and to Federal Audits that started in and
around that time to rout out misclassified workers. As audits began, companies
fought back by eliminating the hiring of Independent Contractors. Alternatively, the
economy started picking up so some “IC’s” may have decided to change course to
become full-time employed workers (or were forced to because of the audits.)
New York’s Report finds Professional, Technical and Scientific industries are
prone to IC misclassification.
The Joint Employment Task Force of New York just released their annual report on
Misclassification for 2014.
The result? Over 12,000 audits netted 113,000 misclassified workers. That is a lot
of misclassified workers. Perhaps more important to routing out specific companies
who have been found to be culpable, is to look at overall industries that are turning
up in these audits over and over. The domino effect is likely at work here, find one
company in a specific industry with issues, and others will follow. Add to that the
individual reporting via online forms, hotlines, and/or complaints to government
agencies and some overall trends start to play out. But, which industries are at the
top of the list?
Professional, Scientific and Technical Services;
Construction of Buildings;
Food Services and Drinking Places;
Administrative and Support Services;
Specialty Trade Contractors;
Ambulatory Health Care Services;
Personal and Laundry Services:
Performing Arts, Spectator Sports, and Related Industries;
Motion Picture and Sound Recording Industries; and
Merchant Wholesalers and Nondurable Goods.
It is not surprising to see many of these industries make a top offender list, but it
does raise the question; If New York is finding red flags across these specific
industries, and the government entities across all localities are teaming up to rout
out misclassification – shouldn’t we assume that companies in those same industries
across the county might be particularly concerned that they may be at the top of the
list for audit?
Indeed, that seems to be the case based on what Synergy has experienced. The
financial, technical, healthcare, and professional services arena is a particularly ripe
place to find incidences of misclassification. Particularly when companies try to
replace a former employee with an Independent Contractor who is doing the same
thing. Take one misclassified professional, and more will be found. In the highly
skilled categories – this can equate to large penalties and tax implications.
While these top industries show a reasonable portion of ‘blue-collar’ industries
(Construction Services, Food Services, etc.) the majority of industries fall into a
As states begin releasing similar reports on how their misclassification dollars are
being spent, it will be interesting to see which industries continue to top out the list
in both intentional and unintentional misclassification.
Two IC Misclassification Cases – Two Potentially Different Outcomes
Worker classification remains a hot topic today, and is definitely causing a ruckus
across multiple industries. But one significant industry has two high profile cases
worth investigating further.
Massachusetts has one of the most stringent misclassification laws regarding
Independent Contractors. For that reason, it is interesting to note that in an April
21, 2015decision, Sebago, et al. v. Boston Cab Dispatch, Inc., et al, Taxi cab drivers were
found to be Independent Contractors by the Massachusetts Supreme Judicial Court.
In the case, taxi drivers brought suit against three separate defendants; taxicab and
medallion owners, dispatch service companies, and a taxicab garage. The Taxi
Drivers claimed they should be considered employees of these defendants and
entitled to the same minimum wage and overtime laws under Massachusetts law.
Not so, said the ruling. In fact, the cab drivers were found to meet the requirements
of Independent Contractors in all three areas defined.
Drivers were free from direction and control in connection with performance
of the service
Service being performed must be outside the usual course of business of the
drivers must be customarily engaged in an independently established trade,
occupation, business, profession of the same nature as that involved in the
Let’s go across the country to look at a similar case that is making headlines.
Uber/Lyft – two ride-share companies, with a class action lawsuit brought forth by
drivers claiming they, too, belong in an ‘employee’ classification versus an
Independent Contractor classification.
Everyone is waiting to see what happens with the Uber and Lyft cases in California
are decided. At issue is whether Uber drivers should be classified as employees
versus Independent Contractors. A class action lawsuit was filed by Uber drivers
claiming that they indeed should be considered employees, not Independent
Contractors, to be protected under California Labor Code laws of minimum wage,
overtime, reimbursement for expenses, etc.
Uber maintains that the service it provides is a technology platform. But judges in
the case suggest that is not so, and that they are advertising a service. Direction and
Control will be at the center of the decision by the jury.
The outcome in California will only affect California Uber drivers, but it will likely
set a precedent across the country for much of the “sharing economy”. At the same
time, the decision in Massachusetts will likely be the case that becomes the
precedent for taxi drivers across the country.
2015 – Any month
Is there a Talent Shortage in 2015? You bet there is.
In case you didn’t notice, we are in the midst of a major talent shortage.
Who is feeling the pinch? According to Dr. John Sullivan of ere.net, he believes it is
the large corporations who simply lose out on top candidates to the start-ups that
lure the savviest individuals to their companies using a variety of bleeding edge
practices for bringing them on – even if there isn’t a job opening at the time. It’s a
candidate driven market and companies are having to adjust to the demands of the
top talent who are writing their own ticket from when they will work, to where they
will work to whom they will work for.
But where are the shortages causing the most pain? If you look at the numbers of job
openings compared to the number of applicants per job opening – some interesting
trends pop out. Ashley Zita Rowe of Wanted Analytics, a company that measures
hiring demand against talent supply, has looked at the number of job openings
compared to the number of candidates applying per opening – which they define as
“Demand Pressure.” They analyzed the top 30 most commonly advertised positions
and the number of available candidates per job ad. Those positions with 15 or fewer
candidates had the highest demand pressure.
What are the top 5 types of positions with the highest demand pressure?
1) Web Developers
2) Marketing Managers
3) Industrial Engineers
4) IT Project Managers
5) Medical Health Service Managers
So, combine ‘demand pressure’ with talent shortage and you get a ‘candidate’s
market.’ Even with the best recruiters on staff, companies are still finding the
referrals from friends/family are the key differentiators if finding the best talent
with the lowest likelihood of turning over (another huge problem in today’s
Online recruiting, personal referrals, corporate sabotage, are all ways companies are
getting candidates. In this market, anything goes. But, even the savviest recruiters
are finding that their old methods are falling short. In this booming economy, the
talent is being found right where it left off – with those individuals who have had a
successful run with a company, but were downsized, or RIF’d or even those who left
voluntarily. These Boomerang candidates – people who left but are rehired, have
proven to be some of the most successful rehires.
How do you keep track of these individuals so as to access and find them at a critical
time in your hiring? This is where a solid talent community of proven candidates
comes into play.
Synergy has been focusing on leveraging this specialized talent pool now for years.
As the platform continues to advance, Synergy is hopeful to contribute significantly
to remedying the talent shortage in the years to come.
Any Month, 2015
Who are the biggest losers when Companies don’t play by the Rules?
All it takes is a few ‘bad eggs’ to make a mess of a situation for the rest of us. You’ve
read about it ad nauseum for the past several years – “Get your contingent
workforce under control or you will be at risk for employee misclassification.” In
Obama’s Fiscal 2015 and 2016 budgets, employee classification has become a focus
with more and more ‘incentive’ dollars being targeted to finding and ‘outing’ those
companies who continue to infringe on employee rights through improper
And who is the biggest loser? Not the companies that are intentionally trying to skirt
around the law. It is those who play by the rules, the one’s who make sure they have
all their i’s dotted and t’s crossed that have the highest level of pain. Not unlike an
entire classroom of kids that get punished for the acts of a few – here is some data to
show how companies are paying for the actions of a few bad eggs.
A US DOL investigation has uncovered illegal classification practices of 16
employers in Utah and Arizona. Besides the $600,000 in back wages, and $100,000
in civil penalties, it is the ‘tactic’ of how these companies tried to skirt the law that is
most concerning. The companies forced a team of construction owners to become
member/owners of an LLC in order to prevent them from federal and state
protections that would come with employee status. When they were ‘caught’ and
charged, the companies picked up shop and moved to a different state and began
operating under a new name. This scheme is being perpetrated across the country,
and federal incentives are being put in place to rout them out.
At Synergy Services, our compliance team is dedicated to vetting client-referred
contractors in order to classify them correctly. Our client services team then ensures
the engagement is setup, managed, and paid correctly throughout the duration of
Any Month, 2015
Motivating Employees and Non-Employees
Total Talent Management has quickly become a top management buzzword in 2015.
So much so, that full reports are being written about it. If you haven’t already heard
the term, it’s pretty simple – instead of looking at your workforce needs in silos – or
more specifically – looking only at ‘full-time’ employees to do specific jobs, or
contractors to do specific projects – the idea of Total Talent management takes the
holistic approach of considering all types of talent when looking to fill a role.
Talent can be a full-time employee, contingent worker, independent contractor,
online workers, freelancers, professional consultants, temporary, part-time,
seasonal, even – as the report concludes – robots. (ERE Media and SIA Report –
Total Talent Management Towards and Integrated Strategy for Employed and Non-
The concept of Total Talent Management will be an ongoing topic, but for this
article, we want to focus on a small section of the report that caught our eye in
regards to Organizations and how well they understand their employees. When
they say ‘understand’ they are referring to what motivates there employees, what
makes them more productive, what makes them want to improve their skills, etc.
Organizations apparently report ‘understanding’ about 50% of their employees,
while at the same time understanding only 10-20% of their non-employees.
What Makes Your Employees Tick?
Why would it be so critical to understand what ‘motivates’ your workforce? Nothing
could be more important – from this writer’s opinion. In fact, it is so important, that
the Synergy HR team spent over 12 months analyzing personality traits via the
Strengthfinders 2.0 survey in order to better understand the personality types
working at the company. It was powerful information! Some might assume that
every worker would be motivated by money. Not so, not even close. Public
recognition is what drives some. Opportunity to extend their knowledge reach to
other parts of the organization, or utilize skillsets that are not part of their ‘day-to-
day’ job is critical to others. Others are motivated by working side-by-side with
certain personality types, while others get energy from being heads down in their
It is far more than an introvert/extrovert exercise. Once managers truly understand
that Bob wants a public speaking opportunity, while Sue would love a bonus in the
form on cold hard cash, Mary simply wants a public thank you from senior
Non-Employee Motivation – Why care?
Okay, so perhaps it is crystal clear why understanding your traditional ‘employee’
workforce is critical – these are the ‘core’ players in the game that potentially bring
the biggest bang for the buck. Or are they? I would argue that understanding non-
employee motivation, skills, and productivity drivers is just as important as
understanding employee motivation, skills, and productivity.
As the ‘flexible’ workforce continues to tip the scales against the more common
‘employee’ model, it becomes more and more necessary to understand what makes
your non-employees tick.