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How We Will Work – A Paradigm Shift in the Employer / Employee Relationship

Posted by Scott Fiore on September 6, 2011

Everywhere we look, we can see the global workforce undergoing a massive structural change. We don’t work at the same company for life, expecting the benefits and security that come with full-time employment. We’re no longer defined simply by our title, such as customer service representative, or designer, or reporter. Instead, we’re part-time CSR’s who design or blog on the side.

We call them freelancers, contractors, sole proprietors, consultants, temps, and the self-employed.  There are more and more of them every day.  They will make up more and more of your workforce every day.  And, perhaps most surprisingly, many of them love it, and once we accept this new phenomenon we will like the results as much as they like working this way.

This transition is nothing less than a revolution. We haven’t seen a shift in the workforce this significant since we transitioned from an agricultural to an industrial economy.  Now employees are leaving the traditional workplace and opting to piece together a professional life on their own. As of 2005, one-third of our workforce participated in this “freelance economy.” Data show that number has only increased over the past six years. Entrepreneurial activity in 2009 was at its highest level in 14 years, online freelance job postings skyrocketed in 2010, and companies are increasingly outsourcing work. While the economy has unwillingly pushed some people into independent work, many have chosen it because of greater flexibility that lets them skip the dreary office environment and focus on more personally fulfilling projects.

As employers how can you best take advantage of this new breed of employee?  Below I’ve provided some guidance for you – as well as some points to ponder as we deal with this revolution in how people work.

First – take a hard look at your staffing needs.  Identify those tasks or areas where traditional, full time employees are required – absolutely required.  Take a hard look at all of your other tasks and processes and ask yourself a simple question, “Do I need a full time, fully benefitted employee to perform these functions?”  If the answer if no, or even maybe, evaluate non-traditional arrangements to get these tasks done.

Second – understand you may be in somewhat uncharted or uncomfortable waters.  We don’t actually know the true composition of the new workforce. After 2005, the government stopped counting independent workers in a meaningful and accurate way. Studies have shown that the independent workforce has grown and changed significantly since then, but the government hasn’t substantiated those results with a new, official count. Washington can’t “fix” what it can’t count. Since policies and budget decisions are based on data, freelancers are not being taken into account as a viable, critical component of the U.S. workforce. We’re not acknowledging their prevalence and economic contributions, let alone addressing the myriad challenges they face.  Finding the right person and the right arrangement to solve your particular issue may be a challenge.  There may be times when you need a temporary or contract employee, and others where you can outsource the work to a consultant or consulting firm.  The trick is to know what you’re buying – and staying legal.  Once you start using 1099 consultants you open yourself up to scrutiny by the Federal government – who is looking very closely at contracting relationships – and believe me you do not want to be on the wrong end of a Federal Wage and Hour audit!  And when you do engage a contractor – please check them out thoroughly – (ok here’s my plug) or use a reputable staffing service who will verify their skills, background, employability and make mute the wage and hour issues.

Next, jobs no longer provide the protections and security that workers have come to expect. The basics ­ such as health insurance, protection from unpaid wages, a retirement plan, and unemployment insurance ­ are out of reach for one-third of working Americans. Independent workers are forced to seek them elsewhere, and if they can’t find or afford them, then they go without. Our current support system is based on a traditional employment model, where one worker must be tethered to one employer to receive those benefits. Given that fewer and fewer of us are working this way, it’s time to build a new support system that allows for the flexible and mobile way that people are working.  Think about this when you establish pay for these new employees.  They may be purchasing their own health insurance and making their own plans for retirement – and they may still be able to do this for less money than you would pay for traditional benefits for a full time employee!  Also, think about this as you react to legislative debates in Washington.  What sounds like a bad idea – may turn out to be quite beneficial to employers.  As always the devil is in the detail.

And finally – something to reflect on, this new, changing workforce needs to build economic security in profoundly new ways. For the new workforce, employment laws and protections may not apply based on how they are working as so many were designed for a traditional employer-employee relationship. Legislation has not evolved to address the changing employer-employee relationship: unemployment insurance does not apply to many consulting or freelance working relationships; no protections from age, race, and gender discrimination; no enforcement from the Department of Labor when employers don’t pay; and the list goes on.  These protections are for those workers defined as employees; many workers in the new relationship do not meet the current definitions of employees and may therefore not be protected.  While many think the government only protects workers – think about this one; Worker’s Compensation Insurance covers injuries to EMPLOYEES hurt on the job and at the same time protects the employer from being sued by those injured and covered by Worker’s Compensation insurance.  What happens when a freelancer or non-traditional worker is hurt on your premises?  I’ll tell you – the sky’s the limit.  If you’re not paying workers comp premiums on those workers they (well, their smart lawyer) can come after you with no limits.  See plug above – hiring these contractors from a reputable and professional staffing service will eliminate this risk – the staffing service will carry the required insurance and can help protect you and your business from significant loss.

As a Staffing Services firm dedicated to the best interested of our clients, we are actively monitoring, and responding to these developments.  If you think your workforce could look different tomorrow than it has traditionally we would be happy to discuss your specific situation.  While we hope to be able to help – we understand that we cannot fit every glass slipper.  We’ll listen, provide our expertise, and in the end, point you to the best solution, whether that is a solution we can provide or not.   As always I very much appreciate your thoughts on my ideas so please feel free to add comments.

TriStarr Staffing provides unique solutions for your staffing and HR Needs.  Whether you need short term temporary employees for a project, or sophisticated Recruitment Process Outsourcing solution, TriStarr has the experience to identify solutions right for your needs.  A free HR Audit will provide you with peace of mind knowing your HR Practices are up to date, and in compliance.  For more information click here and paste “I’m Interested in a FREE HR Audit” in the comment box.