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Hire More Staff or Contract Out?A Question for Every Small Business

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About the ModeratorRobin Fray Carey is the co-founder and CEO of Social Media Today, LLC, a blogging network that assembles the world’s best thinkers on business and public policy. Carey launched Social Media Today in 2007 with the goal of connecting leading experts across a variety of business conversations. As traditional media went digital, and the Internet went social, Carey realized the huge potential for social media platforms to facilitate direct communication among customers, their employees, and experts from academia, business and government.

Robin speaks on social media around the world, and blogs at socialmedatoday.com. She has volunteered as a board member of the Women’s Refugee Commission, which she now co-chairs. She is also an advisor to the Society for New Communications Research, and a member of the Overseers of the International Rescue Committee.

These communities have attracted over 100,000 registered members and over half a million monthly visits. Social Media Today’s advertising roster includes Fortune 500 companies like DuPont, SAP, Siemens and Microsoft. Carey also serves the non-profit world, offering expertise and leadership as the co-chair of the Women's Refugee Commission, member of the International Rescue Committee Board of Overseers, and Business Advisor to the Society for New Communications Research. Ms. Carey graduated with distinction from the University of Virginia, where she was an Echols Scholar.

About the Panel

Elizabeth Milito Elizabeth Milito serves as Senior Executive Counsel with the National Federation of Independent Business (NFIB) Small Business Legal Center, a position she has held since March 2004. Ms. Milito is responsible for managing cases and legal work for the Legal Center. She frequently counsels businesses facing employment discrimination charges, wage and hour claims, wrongful termination lawsuits, union avoidance and, and in most other areas of human resources law. She also provides and develops on-line and on-site training on a variety of employment law matters and is a frequent media spokesperson on employment and labor matters.

David BranchDavid Branch brings more than 17 years of Staffing & Human Capital Management experience to ICon® Professional Services. As the Vice President of Business Strategies, he is responsible for developing client services and expanding ICon's product offering around the classification and management of independent contractors.

Dale JensenDale Jensen is an attorney with the Zobrist Law Group located in Charlottesville Virginia. Mr. Jensen specializes in employment law, intellectual property law and litigation. Mr. Jensen and the Zobrist Law Group counsel numerous business clients of various sizes in employment law matters.

Jennifer MarionJennifer Marion is the Senior Advisor in the Office of the Administrator, Wage & Hour Division, U.S. Department of Labor, in Washington, D.C. As the Senior Advisor, she is responsible for a wide range of activities related to policy development, analysis, and implementation, with a particular focus on issues relating to immigration and the misclassification of employees.

April, 26 2012Hire More Staff or Contract Out?A Question for Every Small Business - Webinar

Hire More Staff or Contract Out?

A Question for Every Small Business

Elizabeth Milito

Senior Executive Counsel

NFIB Small Business Legal Center

The Perfect Storm

1. Higher unemployment means more lawsuits.

2. Individuals are more aware of their rights.

3. Emphasis on enforcement.

State of the Nation

DOL estimates 70 percent of employers are out of compliance on wage and hour issues.

Don’t Get it Wrong

• Incorrect classification: – IRS actively pursues

companies that misclassify workers.

– State revenue agencies will come calling.

– Liability for workers’ compensation costs and unpaid overtime.

Independent Contractors

Minimize Risk– Conduct regular reviews of Independent Contractor (1099)

Classifications– Consider how much control your business has over

Independent Contractors: Is the individual generally told (1) when, where, and how to work, (2) what tools or equipment to use, (3) what workers to hire or to assist with the work, (4) where to purchase supplies and services, (4) that work must be performed by a specified individual, and (5) what order or sequence to follow?

Independent Contractors

Minimize Risk– Require documentation to establish that the consultant is

truly an independent contractor, such as business cards, licenses, and certificate of insurance

– Put your agreement in writing – set forth the terms of your relationship with a consultant to show the IRS and state agencies that the consultant is an independent contractor

– Do not treat contractors like employees

Dale JensenAttorney at Law

Hiring Employees

An employee is a person who works in the service of another person under an express or implied contract of hire, under which the employer has the right to control the details of work performance. When you hire an employee, the advantages are:

being able to completely control and direct that person's work during work time; to train the person in the way you want the job done; to require that person to work only for you; andtypically more loyalty and team spirit than contractors.

When you hire an employee, the disadvantages are:requirements to comply with many laws and regulations (e.g., laws regarding wages, overtime, work rules, unemployment insurance, worker’s compensation insurance, and payroll tax requirements, including paying half of the FICA taxes); andtypically more difficult psychologically to terminate relationship.

If You Decide To Hire Contractor

Make sure to have a written contract that thoroughly and unambiguously establishes the relationship with the contractor including payments and provisions for terminating relationship. Consider only contracting with a corporate entity (e.g., an LLC):

governmental entities typically have some form of multi-factor test for determining whether someone is an employee or contractor, which can result in unexpected negative consequences if someone you intended to be a contractor is determined to be an employee; if you contract with a corporate entity, a governmental entity will typically have to get a court to pierce the corporate veil, which typically requires some form of fraud or failure to observe proper formalities – this is typically more difficult for the governmentally entity to do than simply showing that an individual is an employee rather than a contractor.

Thank you!

For more information about the NFIB Small Business Legal Center contact:

elizabeth.milito@nfib.orgor

202-406-4443

Visit the TriNet Hub on TriNet.com for free articles,podcasts, whitepapers and on-demand webinarsfocusing on HR and human capital management

http://www.trinet.com/hub/default.html

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