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Contract Employee's Newsletter
Helping Contract Professionals
Manage Their Careers
Vol. 3, No. 4
February 14, 2003
Edited by James R. Ziegler
A Companion to:
The Contract
Employee's Handbook
www.cehandbook.com
Sponsored by:
P.A.C.E. - Professional
Association for Contract Employment
www.pacepros.com
About The Contract Employee's Newsletter
The Contract Employee's Newsletter is a free online publication
for technical and professional contractors containing news, commentary,
tips, links to useful resources, nuggets of wisdom submitted by
readers, and anything else that seems appropriate at the time. The
CENewsletter is published bi-weekly or whenever issues warrant and
time allows. The subscriber list is confidential and will not be
disclosed outside this organization.
In This Issue
Read recent
issues of The Contract Employee's Newsletter.
News and Views
Contractors File Lawsuit Against Hewlett Packard
Two agency contractors have initiated a class-action lawsuit against
Hewlett Packard in Santa Clara (California) Superior Court claiming
the hi-tech giant often made them work more than 40 hours a week,
but would only pay them for the first 40 hours.
Companies often make their exempt regular employees work more than
8 hours a day, and "professional days" up to 12 hours
long are not uncommon. But companies must pay hourly contractors
for every hour worked. These contractors, according to the lawsuit,
claim that they each routinely worked more than 80 hours in a week,
but were never paid for time beyond 40 hours.
By denying payment for work in excess of 40 hours HP was treating
the workers like their own regular employees. But that's not the
only way that HP treated the two workers like employees.
One of the contractors, a software programmer and software engineer,
had worked as a contractor at HP for more than seven and one-half
years, while the other, who is also a programmer, had worked at
HP for two years. Clearly, on this basis they resembled regular
employees of HP more than they resembled contractors on temporary
assignments.
At the core of HP's vulnerability, according to the lawsuit, is
the fact that the two software programmers were common-law employees
who did work that was "part of the regular and customary business
of HP." They worked on-site at HP, side-by-side with HP employees,
doing the same work as HP employees, under the close supervision
of an HP project manager.
Also, according to the lawsuit, their HP supervisor told them that
"they will be terminated if they offer any objections or resistance
to receiving no compensation for the hours that they work in excess
of 40 hours per week." IRS guidelines are very clear on the
point that companies may fire an employee, but they may only terminate
the contract of a staffing vendor or independent contractor.
Apparently, HP had bought into the common fraud perpetrated by
the temporary staffing industry that employment by a third party
employer of record is sufficient to protect a company from claims
of co-employment. This is patently false.
P.A.C.E. has identified at least 35 different risk factors associated
with hiring contingent workers, and third-party employers of record
offer protection against none of them. Running contingent workers
through an ordinary staffing vendor may mitigate (lessen)
some of the tax risks. But that's all, and that's not
enough.
Government agencies with jurisdiction over employees, including
the IRS, are very clear on the point that co-employment is determined
by the relationship between the company and the worker regardless
of who actually processes the worker's payroll.
One would hope that a company the size of HP would have systems
in place to prevent the kinds of abuses claimed in the lawsuit.
But the reality is that very few front line and middle managers
understand the complexities of co-employment law, preferring instead
to outsource their concerns to temp agencies, recruiting firms,
and to on-site vendor management services.
Companies need a strong division of employment to provide an effective
affirmative defense against reclassification and class action lawsuits,
and using a staffing vendor to mitigate co-employment is a very
weak defense, indeed, as the HP lawsuit demonstrates.
Fortunately, P.A.C.E. offers companies the nation's first and only
automated digital division of employment for the contingent workforce.
P.A.C.E. ProTect with ComplianceSecurityTM tracks, manages,
issues alerts, and generates reports on every conceivable risk factor
associated with a company's contingent workforce: Tax risks, ERISA
risks, EEOC risks, Retroactive Benefits risks, Title VII risks,
ADA risks, Unemployment risks, Permatemp risks, OSHA risks, Security
risks, Workers Compensation risks, Intellectual Property risks,
Visa risks, and the list goes on.
If a company's Legal Counsel can identify a risk factor, P.A.C.E.
ProTect with ComplianceSecurityTM will track it and manage
it.
ComplianceSecurityTM manages all types of contractual
staffing arrangements, including sole proprietors (1099s), one-person
corporations, consulting firm employees, and agency temps.
If HP had managed its contingent workforce risk factors with ComplianceSecurityTM
it would have certainly avoided a class-action lawsuit. That is
because with ComplianceSecurityTM in place a company
no longer has to rely on the judgment of front line managers or
a vendor management service to manage compliance. ComplianceSecurityTM
does all the tracking, alerting, and reporting automatically.
ComplianceSecurityTM even has a built-in procedure for
handling internal complaints by contract workers so they cannot
be mishandled as was apparently the case with HP. When issues arise
they are dealt with immediately by the appropriate authority in
a manner that assures full accountability.
In addition to managing the risk factors associated with hiring
contingent workers, ComplianceSecurityTM facilitates
direct sourcing of Contract Professionals for huge savings
by incorporating the industry's most comprehensive automated recruiting
systems.
Companies can choose from three levels of direct sourcing technologies:
- Automated e-recruiting using any of several highly sophisticated
direct sourcing engines.
- Human assistance with the evaluation of resumes, verification
of availability, background checks, initial interviews, and preparation
of a short-list of candidates.
- Ongoing mentoring and coaching of the company's staff on direct
sourcing techniques so that HR can learn to compete effectively
with costly and contentious recruiting firms.
When companies direct source their talent, Contract Professionals
are free to contract directly with the client company or, if necessary,
select their own employer of record (such as P.A.C.E.). This is
good for Contract Professionals, and it's good for the companies
that use their consulting services.
In this regard, P.A.C.E. operates on the principle that independent
contract professionals and the companies that use their consulting
services will both benefit from an open, ethical, and evenhanded
alternative to traditional staffing vendors. Contract Professionals
and companies know this. That's why they recommend P.A.C.E.
ComplianceSecurityTM is a Linux-based ASP application
that integrates fully with existing HR information systems and applicant
tracking systems, and with all the major ERP systems.
The system requires no change management by HR professionals and
project managers, so companies that adopt ComplianceSecurityTM
may continue to recruit and hire contingent workers the way they
always have. It's just that with ComplianceSecurityTM
it will be far more difficult to make the kinds of mistakes that
lead to government audits and class-action lawsuits.
ComplianceSecurityTM renders ordinary staffing vendors
and vendor management systems just plain obsolete.
Read more about the HP class-action lawsuit at http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2003/01/22/BU217297.DTL&type=business
Return to Table of Contents.
Marketing Tips
Create A Killer Ad
While reading the newspaper recently I came across an ad for a
Real Estate seminar that really caught my attention. The header,
in large, bold print, proclaimed:
156 IDEAS
Guaranteed to Improve
Your Real Estate
Advertising & Marketing.
Followed by:
In this fast-paced workshop you will discover…
- How to create dynamic personal promotion
- How to write ads that grab attention & get calls
- How to gain more qualified buyers & sellers
- The newest marketing trends to increase your sales
Immediately below this bulleted list was a textbox with another
header and two compelling testimonials. The header shouted:
Write Ads That
Make Your Telephone Ring!
More Calls = More Sales
Adjacent to the box was a picture of the smiling, confidant, and
obviously successful presenter, under which were the words:
Acclaimed International Speaker
"Speaker's Name In Large Typeface"
Below the speaker's name was this very compelling summary of experience:
Pick up valuable tips from someone who really knows real estate
markets. [Speaker's Name], CEO of [Name of the speaker's company],
is an experienced real estate broker/owner and full-time trainer
and consultant. For eleven years, he has been invited to speak
at the National Association of Realtors annual convention. Audiences
enjoy his up-beat and humorous presentations plus his business-boosting
ideas.
Now I am not at all interested in Real Estate, but this ad really
"grabbed" my attention. In fact, I am thinking of going
to the seminar just to learn about the marketing techniques for
their own sake. To heck with the Real Estate tips.
Could you adapt this ad to create a flyer for your own consulting
business? I bet you could. Pull out all the stops. Create your own
headers and bulleted list of benefits.
Throw in a few, short, snappy testimonials from happy clients,
and a compelling summary of experience adapted from your 30-second
pitch. Are you photogenic? Even if you aren't a professional
photographer can create a studio photo that projects the image of
a confident, capable professional, under which you might write:
Acclaimed Software Developer
"Your Name In Big Print"
Attach this flyer to your skills profile (Needy victims of unemployment
use a resume. Confident consultants use a skills profile). Send
it to your contacts along with a letter announcing your availability.
Keep extra copies of this flyer in your car, purse or briefcase
so you can hand it out to prospects and interested parties. Include
your flyer along with a note to people with whom you exchange business
cards.
Consultants don't have a product that they can shrink-wrap in fancy
packaging with pictures of sexy models, but they can "package"
their skills in a snappy flyer with compelling ad copy.
If this sounds too forward, it may indicate that you are not very
confident of your skills and ability. Confident consultants know
how to blow their own horn when they have to. As a result, confident
consultants work more hours at higher billing rates.
Test your confidence and create your own dynamic ad. Check out
your local newspaper for further examples of effective ads. Use
these ads as templates for your own ad. It's simple. All you have
to do is change a few words, and voilà, an ad for Dr. Feelgood's
Painless Laser Surgery is transformed into an ad for Mary Business
Analyst's Painless Business Consulting.
Return to Table of Contents
Contract Employee's
Glossary
Terminology For Contract Professionals
More terms from Appendix
B: Glossary of Terms for Contract Professionals of The
Contract Employee's Handbook.
Legal Representatives, Successors and Assigns
Contracts commonly contain language similar to the following: “This
agreement shall be binding upon and inure to the benefit of the
parties, their legal representative, successors, assigns, and personal
representatives.” These are nonparties to a contract who may
acquire or exercise rights under the contract through inheritance
or acquisition, or through other means.
Letter of agreement
An informal contract in the form of a letter.
Limited liability company (LLC)
The limited liability form of business affords most of the protection
of the corporate form, but with simpler reporting requirements,
and generally lower fees. Like shareholders of a corporation, LLC
members are protected from personal liability for business debts
and claims. As with sole proprietorships, partnerships, and S-corporations
the business income of an LLC passes through the business to each
LLC member, who reports their share of profits or losses on their
individual income tax returns. Each LLC member makes quarterly estimated
tax payments to the IRS. An LLC may have a single member in all
states but Massachusetts and the District of Columbia.
Limited liability partnership (LLP)
A limited liability company with more than one member. Some states
reserve the designation LLP for professionals, such as lawyers,
accountants, architects and health care providers.
Litigation
Litigation is a judicial proceeding by which parties seek to settle
a dispute in the courts through a lawsuit or a judicial contest.
In addition to litigation, parties to a contract may seek a settlement
through arbitration (enforced settlement) or mediation (facilitated
meeting of the minds).
Return to Table of Contents.
The Contract Employee's
Project
The Contract Employee's Project is the larger context under which
the following interrelated vehicles operate to promote and defend
the interests of Contract Professionals:
Copyright and
Publication Info
Copyright (c) 2003, James R. Ziegler. All rights reserved.
You may copy or forward this free publication provided it is left
intact with all links and this notice unchanged. Any unauthorized
duplication, including republication in part or in full for commercial
use, is an infringement of copyright.
Published by:
P.A.C.E. - Professional Association for Contract Employment
1355 Willow Way, Suite 244
Concord, CA 94520
USA
http://www.pacepros.com/
Editor:
James R. Ziegler, Ph.D.
Executive Director
P.A.C.E. -- Professional Association for Contract Employment
(925) 680-0200
cenewsletters@pacepros.com
Return to Table of Contents.
Disclaimer
The Contract Employee's Newsletter is designed to provide information
in regard to the subject matter covered. Use is granted with the
understanding that the publisher and authors are not engaged in
rendering legal or financial advice. If expert assistance is required
you should seek the services of a competent professional.
The purpose of this information is to educate and entertain. The
publisher and contributors shall have neither liability nor responsibility
to any person or entity with respect to any loss or damage caused,
or alleged to be caused, directly or indirectly, by the information
contained in this Newsletter or by information contained in any
web site or resource referenced by citation or hypertext link within
the pages of this Newsletter.
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Sign-off
I hope you have found the information in this newsletter to be
interesting, informative, and provocative. I encourage you to share
the CENewsletter with your friends, colleagues, coworkers, clients,
and agency recruiters.
Why clients? Because you need every ally you can get. Why agency
recruiters? Because they need to know the jig is up.
Wishing you success in your contracting career,
James R. Ziegler, Ph.D.
Executive Director
P.A.C.E. -- Professional Association for Contract Employment
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