July / August 2012 Volume 23, Number 4 | |||||
Managing the Contingent Workforce For most companies, managing human resources will probably require more attention than any other aspect of your risk management plan. Workers’ compensation, safety, compliance with wage/hour laws and avoiding discrimination—these responsibilities can keep one or more managers busy full-time. Using contingent workers can relieve your organization of some human resource functions; however, it can create other risk management exposures. Over the past two decades, contingent work has moved into a wider array of occupations. According to the Bureau of Labor Statistics, by 2008, the types of clerical positions commonly associated with temp work, such as secretary, typist, receptionist, data-entry operator and office clerk, represented less than a quarter of overall temp help services industry employment. Today, you can hire anyone from manufacturing help to a CEO on a contingent basis. When you hire individuals on an independent contractor basis, they act as their own employer, retaining responsibility for payment of any employment taxes, workers’ compensation and insurance, including any professional liability coverage needed. They simply invoice the employer, often on a per-job rather than a per-hour basis. When you hire temporary or leased employees, the agency acts as the employer. The agency is responsible for screening employees, paying employment taxes, providing workers’ compensation and, in some instances, providing employee benefits. The agency pays the employee directly, invoicing your organization (at a marked-up rate) for hours the employee works. Professional employer organizations, or PEOs, are similar to temporary agencies, except they handle long-term relationships that involve all or most of a company’s employees. The National Association of Professional Employer Organizations (NAPEO) estimates between 2 and 3 million people are currently covered by a PEO arrangement. Under a PEO arrangement, the company and PEO enter a contractual agreement to become co-employers and share or allocate employment responsibilities. The PEO generally handles all human resource and benefit management functions. It hires workers, controls payment of wages, provides unemployment insurance and other benefits, and handles employment taxes. The subscribing company retains some employer responsibilities, including supervision, to ensure the delivery of the company’s products or services. Smaller employers in particular find advantages in PEOs and leasing. Benefits of temporary employment or PEO arrangements include:
Still, using contingent employees can create risk exposures, including:
We can review your insurance program to help you manage any employment-related exposures, no matter what type of employees your organization has. For more information, please call us.
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Managing the Contingent Workforce Property Valuation: How to Get It Right Professional Appraisal Services Can Save Money
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