Emerging Trends

New 1099 Law Pierces the Corporate Veil of Hidden Independent Contractors

The impacts of the new healthcare laws on contingent workforce management will not be fully understood for some time, and could be subject to change before they take effect. But some provisions of great concern are approaching rapidly, including a little understood and newly highlighted 1099 reporting provision slated to take effect on January 1, 2012.

Like the proposed Employee Misclassification Prevention Act (EMPA) bill, this new requirement would "pierce the corporate veil" of hidden independent contractor vendors and require immediate discovery and control over challenging spend categories such as statement of work consultants and sub-contractors.

According to Michael Tanner, a senior fellow of the CATO Institute:

The latest surprise is Section 9006(b)(1) . . . which requires that businesses provide a 1099 form to every vendor with whom they do more than $600 worth of business over the course of a year. . . Of course businesses already have to file 1099s for outlays on items like consultants. But the new rule will mean that even the smallest of businesses will have to issue a form — and file with the IRS — for virtually every purchase or payment. Consider how many business transactions go on every single day in a $14 trillion U.S. economy. Millions, perhaps hundreds of millions, of forms will be winging their way between businesses and between businesses and the IRS. The potential for mistakes and lost forms would be tremendous. And with errors would come audits and penalties."

With legislation like this already passed into law, there is no need to wait for the Employee Misclassification Prevention Act to start bringing SOW consultants and incorporated independent contractor vendors -- including project services spend -- into your centralized Contingent Workforce Management program.

You will be required to not only track this spend, but issue 1099s, starting in just a year and a half. Given the tremendous amount of organizational change such a requirement represents, enterprises should look to starting the process of a deep contractor risk assessment now.

After all, even if this particular provision affecting 1099s laws is extended or overturned, the message from legislators and regulatory agencies is clear -- there will be no more hiding of independent contractors for purposes of misclassifying workers.

If you already have a managed CWM program, check with your VMS or MSP program providers and find out if they work with an Independent Contractor Engagement Specialist (ICES) that has expertise in capturing independent contractor spend and, in particular, SOW and project spend.

If not, call Cutting Edge at 561-910-8000 today. We can provide you access to one of these experts.

Posted by Liz Greene via ASA.

Emerging Trends

Top 3 Business Challenges in 2010

There has been plenty of talk lately about the changes businesses will need to make, to experience growth in 2010 - and beyond.

The Conference Board's 2010 CEO Challenges Survey reflected a shift into post-recession initiatives nationwide. The item at the top of their list was not surprising: Business growth basics - the same as before the recession, but what does this entail.

Execution, Consistency, Top-Line Growth, Customer Retention and Stimulating Innovation

Cutting Edge Recruiting Solutions Founder, Andy Cohen, has listed 3 critical areas which business leaders will need to gain a better understanding of, in order to grow this year and position their organizations for the future...

• Employee Retention
  This will continue to be one of the toughest challenges for leaders. According to the Bureau of Labor Statistics (BLS.gov) this is the first time since late 2008 that the number of employees voluntarily quitting has surpassed the number being discharged or fired. This is significant as recent sentiment indicates that this will continue in the coming months.

  According to a survey published in the May edition of the Harvard Business Review, 25 percent of companies' top performers said they plan to leave their current job within a year. The survey questioned 20,000 workers who were identified by their employers as "high potential."

  Are you at risk of losing your key employees? Visit www.losingakeyemployee.com to learn in less than 2 minutes the questions you have to be able to answer in order to protect your business's most important assets.

• Talent Management
  If the reports are true and employee disengagement is on the rise, when 25% of your Key Contributors, Mission Critical players and Next level leaders become the departed, how will you execute and maintain your competitive edge?

  Execution is critical in today's competitive market; therefore, talent management is critical to growing your organization. Bob Parsons, CEO & Founder of Go Daddy says, "measure everything of significance, anything that is measured and watched, improves". This includes your employees' performance.

  Are your disengaged or problematic employees putting you at risk of losing your best customers? Visit www.losingakeycustomer.com to find out!

• Talent Acquisition
  Combining all of the statistics from The Harvard Business Review, BLS, as well as various polls and employee surveys have left many leaders wondering if the "War for Talent" has already begun. The answer is YES!

  Having the right people, in the right place, at the right time, and with the right skills is the recipe for growth both in 2010 and for the future. The reshuffling of the workforce is your opportunity to engage a passive jobseeker who will impact your organization.

  Leaders across all industries, at some point have been held hostage by their underperforming staff simply because they did not have the pipeline of candidates to choose a replacement. Now is the time to build that pipeline, so you can employ the best and brightest as the market is turning.

Emerging Trends

More Workers Starting to Quit: Has the war for talent begun?
Managers are hearing something they have not heard in a while, I quit!

Dating back to the early 1970's every recessionary period has been followed by a period of reduced unemployment. Although, each downturn is unique, a constant is the war for talent which begins as soon as the recession ends.

According to the Bureau of Labor Statistics (BLS) this is the first time since late 2008 that the number of employees voluntarily quitting surpassed the number being discharged or fired. This is significant as recent sentiment indicates that this will continue in the coming months. A poll conducted by Right Management at the end of 2009 had roughly 60% of the participant's state; they intended to leave their positions when the market improves.

Cutting Edge Recruiting Solutions, a South Florida based Recruiting & Consulting Firm, has seen several clients request candidates for key positions after employees made surprise resignations, says, Founder & CEO, Andy Cohen. While it appears to be relatively contained, Mr. Cohen has recently launched a web-site to help business with critical questions they must be able to answer in order to minimize their risk of losing a key employee(s). You may visit, www.losingakeyemployee.com for additional information and the 8-critical questions that you must be able to answer to protect your company.

A recent article by the Wall Street Journal cited a series of expert testimony about this very subject. One VP said "We're preparing for a massive reshuffling of talent at all job levels in all industries", noting this recession was very different from the short and shallow one earlier this decade. Turnover will be much greater this time.

Another expert spoke to the mindset of the employee. "During the recession, even if they heard of an opening, employees were reluctant to switch employers. The idea of moving when the world was already in uncertainty was quite scary," he said. But those hang-ups are disappearing, and employees are becoming more receptive to recruiter calls and beginning to tap their networks again for signs of opportunities, he says.

It's not all doom and gloom as we experience another shift in this economy says, Andy Cohen of Cutting Edge. "This is a great time to evaluate your team, reengage your workforce, and acquire talent that will build your business for the future". If you have not built a formal succession plan make sure you at least have a proactive recruiting strategy so should you need bench strength you have it, he said.