1. The Pitfalls of Payrolling Temporary Workers
The Pitfalls of Payrolling
(and Employing) Temporary Workers
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2. The Pitfalls of Payrolling Temporary Workers
INTRODUCTION
Emergent employs the contingent workforce.
The Emergent family of companies,
founded in 1976, is one of the largest
U.S. employers of contingent labor.
EMERGENT CORPORATE HEADQUARTERS, BURBANK, CA
ABOUT WWW.EMERGENT.COM TWITTER: @EMERGENTDOTCOM
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3. The Pitfalls of Payrolling Temporary Workers
PRESENTATION OVERVIEW
Temporary and project-based contingent worker
usage is increasing for all types of companies.
Many companies have a limited
understanding of the risks that
accompany utilizing these types
of workers.
This presentation explores:
• Temporary/Contingent
Workforce Overview (History,
Growth, and Segments)
• Avoidable Contingent
Workforce “Pitfalls” and Worker Payrolling & Worker
Risks. Classification Regulations Management
OVERVIEW 3

4. The Pitfalls of Payrolling Temporary Workers
DISCLAIMER
Nothing on this presentation is intended to create any contractual or other
legal relationship between the presentation viewer and Emergent or any
of Emergent's staff, and should not be construed as legal advice or
professional opinion for handling a specific factual situation.
Emergent cannot guarantee or warrant the accuracy or completeness of
posted information in any way.
Readers should not act upon any information from this presentation
without consulting with the appropriate legal, financial, or other business
professional for guidance and advice.
LEGALESE 4

5. The Pitfalls of Payrolling Temporary Workers
CONTINGENT WORKFORCE HISTORY
Prior to this point temps a
"stop gap“. After a
Corporate "Restructuring"
standard staffing strategy
Wave. 3.1M Full-Time
Demand Increases
William Russell Kelly Jobs Eliminated
Provides Office Temps Temps = 1 of 13
at Client Site CA Grants Temp Firms
Employer Status New Jobs. Manpower
Temp Labor passes GE. US Contingent Workforce
Professionalized Recession Employment Estimated to be $164B
Recovery, Led by 2X 2009 Figures
Contingent Labor
1940 1950 1960 1970 1980 1990 2000 2010 2020
Post WWII Employment Great Recession =
Model, Open- Massive Layoffs. US
Ended, Single Companies to 'Attack'
Employer, EE Protected Vizcaino v. Microsoft Labor Costs Contingent
Against Arbitrary Permatemp Suit Labor Expected To Be Up
Dismissal Global Competition & 3rd Party Contingent To 50% of Workers Hired
Stagnating Profits Labor (MSP/VMS) Back
US Companies to 'Attack' Services Increase
Labor Costs Contingent
Workforce Increased
OVERVIEW 5

6. The Pitfalls of Payrolling Temporary Workers
U.S. CONTINGENT WORKFORCE SIZE
TOTAL ANNUAL SPEND & AVERAGE DAILY # OF WORKERS
2018 (Projected)
$164 billion
2011 6M Workers
$87 billion
2.58M Workers
1999
$17 billion
990K Workers
Increased Usage = Increased Risk
Source: Staffing Industry Analysts and Bureau of Labor Statistics
OVERVIEW 6

7. The Pitfalls of Payrolling Temporary Workers
SOURCING CONTINGENT WORKERS
Outsourcing
Staffing Internal
Service
Suppliers ‘Self-Sourcing’
Providers
Project- Previously
Temp
ICs SOW Based Alumni Used Referrals
Workers
Workers Workers
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8. The Pitfalls of Payrolling Temporary Workers
CONTINGENT WORKFORCE SEGMENTS
Hourly
„Temps‟ Contractors
Fixed Bid
Freelancers SOW
OVERVIEW 8

9. The Pitfalls of Payrolling Temporary Workers
TEMPORARY WORKER CO-EMPLOYMENT
When the company that utilizes the contingent worker‟s services (client
company) manages the workers on a day-to-day basis they often
become a co-employer or joint employer along with the supplier of
the contingent worker.
Co-employment could mean that the
client company may be held liable for
the decisions and mistakes of the
staffing supplier – and vice versa…
“PITFALLS” & RISKS
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10. The Pitfalls of Payrolling Temporary Workers
RECENT CONTINGENT WORKFORCE LAWSUITS
State Compensation Fund
vs. Large Staffing Company
Workers’ Compensation ‘Piggybacking’ by
One of the Largest U.S. Staffing Company
CA Self-Insurers’ Security Fund
vs. Staffing Industry PEO
Client companies named in lawsuit to pay
workers’ comp claims of insolvent company
“PITFALLS” & RISKS
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11. The Pitfalls of Payrolling Temporary Workers
SOME CONTINGENT WORKFORCE
EMPLOYER RESPONSIBILITIES
• Properly issuing paychecks • HR (discipline & discontinuation)
• Withholding federal and state tax • Managing/Evaluating performance
• Providing required insurance • Training and development
• Sourcing the worker • Workers‟ compensation insurance
• Selecting the worker • Documenting right to work in U.S.
• Assigning work It takes knowledge and resources
• Negotiating pay rate to compliantly employ contingent
workers.
• Negotiating duration of
assignment
• Complying with
FLSA, FMLA, Immigration and
other regulations
• Supervising
“PITFALLS” & RISKS the worker
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12. The Pitfalls of Payrolling Temporary Workers
WORKER CLASSIFICATION
• 46% of Independent
Contractors are found to be
Misclassified
• Penalties can be severe
• In 2011 the Department of
Labor dedicated $25 million
to uncovering
misclassification
• The IRS uses a 20 factor
test to determine proper
classification
“PITFALLS” & RISKS
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13. The Pitfalls of Payrolling Temporary Workers
PAYROLLING & REGULATIONS
• Wage & Hour • OSHA
• Meal & Rest Periods • FMLA
• Paying Taxes • FLSA
• Record Keeping • State Specific Requirements
• Right to Work • Background Screening
“PITFALLS” & RISKS
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14. The Pitfalls of Payrolling Temporary Workers
WORKER MANAGEMENT
• Accident and Incident • Performance and
Procedures disciplinary action
• Safety Training • Ending assignments
• Recording injuries and • Documented standard
OSHA regulations operating procedures
“PITFALLS” & RISKS
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15. The Pitfalls of Payrolling Temporary Workers
AVOIDING THE PITFALLS
In order to ensure that your contingent workforce is compliant we
recommend:
• Workforce Supplier/Employer Qualification
• Proper Agreements
• Worker Management Best Practices
• Gain Workforce Visibility
SOLUTIONS
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16. The Pitfalls of Payrolling Temporary Workers
WORKFORCE SUPPLIER QUALIFICATION
• Ensure financial stability of the
supplier.
• If not using a client agreement then
make sure the supplier has well
articulated agreements that outline
responsibilities for the laws and
regulations discussed in this
presentation.
• Make sure the supplier has proper
insurance.
• Make sure the supplier has
documented human resources and
safety policies (ideally outlined in a
employee handbook).
SOLUTIONS
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17. The Pitfalls of Payrolling Temporary Workers
SUPPLIER EMPLOYEE HANDBOOK
SOLUTIONS
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18. The Pitfalls of Payrolling Temporary Workers
SUPPLIER AGREEMENT
• Consider moving away from timecard
only agreements.
• Clearly outline responsibilities of each
party.
• Identify proper insurance limits in the
agreement.
• Ensure proper indemnification is in
place.
• Complete a Statement of Work for each
new assignment.
• Consider consolidating contingent
workforce employment under one
company.
SOLUTIONS
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19. The Pitfalls of Payrolling Temporary Workers
INTERNAL POLICIES
• Mention exemption of contingent workers
from regular employee benefits in the
employee handbook.
• Develop an internal contingent worker
best practices manual.
• Educate the managers who use temporary
contingent labor on procedures.
• Understanding what to do when
discontinuing an assignment.
• How to communicate performance
issues and recognition with the
supplier.
• NOT disciplining the worker.
SOLUTIONS
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20. The Pitfalls of Payrolling Temporary Workers
SOURCING AND SELECTING
• Clearly define and document the assignment
description for the supplier and contingent
worker.
• The supplier should screen and select the
worker (including performing background
checks when appropriate).
• Engage a worker with sufficient skills to
perform the tasks and who does not require
general training.
• Clarify that the workers‟ compensation code
that the worker will be classified under is
appropriate for the role.
• It is the responsibility of the supplier to select
the worker.
SOLUTIONS
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21. The Pitfalls of Payrolling Temporary Workers
INCREASING WORKFORCE VISIBILITY
You can gain more contingent workforce visibility
at your organization by:
• Centralizing contingent workforce
management at your organization.
• Using a workforce management system or a
vendor management system to track your
contingent workforce and their suppliers.
• Standardize agreements and processes with
staffing suppliers and individual consultants.
SOLUTIONS
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22. The Pitfalls of Payrolling Temporary Workers
SUMMARY
• Contingent workforce usage is increasing.
• Companies must be strategic about temporary
contingent worker compliance because of the co-
employment responsibilities that come with
managing this workforce on a day to day basis.
• By wisely and consistently qualifying and
monitoring your contingent workforce, your
company‟s risk can be mitigated.
SUMMARY
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23. The Pitfalls of Payrolling Temporary Workers
THANK YOU / Q&A
Contact Emergent for a
no cost contingent
workforce evaluation
.
TWITTER: @EMERGENTDOTCOM
EMERGENT.COM/NEWS
INFO@EMERGENT.COM
THANK YOU
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