Tag Archives: Recruiting

Misclassification in 2019: 4 Key Developments

The very words worker misclassification can strike fear in the heart of any business that relies on an independent contractor workforce. To be sure, the negative effects of misclassification can be staggering. One worker claim can trigger an audit of your entire workforce by any number of state and federal agencies. These agencies have the right to issue heavy penalties and interest on taxes and wages, liens, and even injunctions. Not to mention that businesses can still be subject to crippling class-action suits with multi-million dollar consequences.

Recent trends make it painfully obvious that misclassification can affect any company that uses ICs, no matter the size or industry. Meanwhile, the complexity of the misclassification landscape, the number of agencies involved, and a constant stream of evolving guidelines and new court decisions make it difficult to navigate. But there are several critical developments proactive companies should be aware of as this year takes shape.

DEVELOPMENTS SHAPING MISCLASSIFICATION ENFORCEMENT TODAY

1. Trump administration signals shift away from prioritizing classification enforcement

Recent changes in the Department of Labor’s (DOL) suggested interpretation of classification guidelines and a new proposed rule for determining joint-employer status under the Fair Labor Standards Act (FLSA) both indicate that under the Trump administration federal agencies will pull back a little when it comes to pursuing classification enforcement.

However, this shift does not mean that businesses should breathe easy when it comes to misclassification. While administrative priorities seem to be shifting away from worker classification rules, it will take some time for this high-level change in agenda to filter down. Moreover, courts are not bound to follow federal agencies’ interpretative guidance so businesses will remain vulnerable to unfavorable rulings in private lawsuits.

2. State taskforces double-down on industries with large IC workforces

Even if enforcement at the federal level is less vigorously pursued, enforcement at the state and local levels are more aggressive than ever.  In general, state rules used to determine worker status have become less favorable to IC classification (for instance, the notorious ABC Test). But some states, like New York and New Jersey, have also begun forming taskforces by executive order to investigate worker misclassification and target the companies and industries that rely heavily on ICs.

3. Growth of gig economy and changing expectations about work

The explosive growth of the gig economy over the past several years is a familiar headline staple, but accompanying this has been a sizable segment of workers actively embracing on-demand work. Anecdotal evidence of this popped up last year when all of a Sacramento barber shops’ IC barbers quit en masse rather than be reclassified as employees under a new court ruling. This indicates a growing tension between workers’ expectations to be able to work on demand and state agencies’ increasingly forceful pursuit of misclassification.

4. New case law favoring IC classification

Three recent decisions have been favorable for classifying workers as ICs. The National Labor Relations Board reversed a stringent test for IC status and replaced it with a more IC-friendly standard. The U.S. Court of Appeals for the Sixth Circuit ruled in favor of insurance agents as ICs in a major case. And in an unemployment claim, the Indiana Supreme Court found a referral company met the state’s ABC test for IC classification.

However, these decisions are part of a larger mixed-bag of rulings that often still favor classifying workers as employees. Combine these with several recent costly class action settlements and the message is clear: stay vigilant about your IC classification practices.

WHAT TO EXPECT GOING FORWARD 

These developments demonstrate the fundamental messiness of the misclassification landscape. While some signs are encouraging for IC classification, the contradictions in the rules used by federal, state and local agencies and the tendency—on the whole—to favor employee classification leaves businesses highly vulnerable to expensive misclassification audits. In the coming year, businesses can expect:

  • More states to target specific IC-heavy industries through misclassification taskforces
  • Continued use of the ABC Test and other tests that favor classification as an employee
  • Increased likelihood that one worker claim will trigger a full-blown workforce audit

Having solid best practices in place that support your workers’ independent contractor status is your absolute best bet for avoiding claims in the first place and combating them if they arise.

Get in touch to learn how Openforce can help reduce your risks and get a complementary compliance assessment.

 

 

Driver Shortage: You Can’t Recruit Your Way Out

Are you using the same tactics to keep up with driver turnover and expecting different results? Costly recruiting methods and increasing pay just don’t compare to having a sustainable, holistic strategy to keep drivers contracted.

Today’s need for drivers is at an unprecedented level with the turnover rate reaching its highest point in five years. According to the latest data from the American Trucking Associations’ (ATA) Trucking Activity Report, the annualized turnover rate increased 4 percentage points to 98 percent in the second quarter.

Just when you think things can’t get worse, the ATA estimates the industry is now short 51,000 drivers on a base of about 500,000 drivers. If nothing changes, the industry will be short 160,000 drivers by 2026.
 

BETTER WAYS TO REMEDY DRIVER SHORTAGE

As every driver is unique, when it comes to finding and keeping qualified drivers in this competitive landscape—there is no one quick fix. However, new tactics and retention strategies made possible by a 1099 management platform can simplify processes, improve communication and provide additional value to drivers, while keeping an arm’s length distance to support the independent contractor (IC) model.

Here are some proven driver management strategies that help Openforce clients get out of the driver administration business and retain high-performing independent contractors.
 

1. Reduce contractor drop offs with automated enrollments

According to a CareerBuilder survey, companies that automate their onboarding process experience significant benefits.

93 percent report they saved time and money. 69 percent saw reduced errors. 67 percent said they saved money.

Traditional onboarding methods require owner operators to print out applications, sign, scan or fax documents, which creates friction and increases the risk of drop off. A streamlined and automated enrollment eliminates human error and the arduous task of ensuring that all contractual information has been properly captured. Openforce’s platform additionally verifies the owner operator’s information in near real-time by accessing public records from the IRS, USPS, DMV and LexisNexis. And it’s easier for drivers who are out on the road and doing everything on their phone or mobile device. Openforce’s mobile-first process dramatically simplifies enrollments with friendly screens, uploads, e-signature and fast response times, all designed to speed enrollments.
 

2. Leverage compliance tools that improve communication, set expectations and empower drivers

Compliance is, and will continue to be, the primary focus for any company that chooses to work with independent contractors. The risks associated with noncompliance are rising, and organizations must ensure that all owner operators remain compliant with state and federally mandated regulations. To minimize risk, companies are leveraging automated compliance tools that help initiate and establish proper business agreements. A clear communication path through a back-and-forth negotiation process and transparent agreement signed off by both parties, work to protect both companies and independent contractors against any potential issues that may arise. What’s more, drivers feel greater respect through this processes—are ultimately more satisfied being treated as an empowered independent business owner—which results in lower turnover.
 

3. Accurate, reliable pay that also provides early access to settlements

The accurate and on-time delivery of settlements are extremely important to the livelihood of contractors and their subcontractors. That’s where a secure payment platform designed specifically for independent contractors makes all the difference. Not only does this help create a seamless and expedited settlement process, it also removes administrative burdens that often result in unintended errors. Companies can put settlement processing and 1099 filings on autopilot, while independent contractors are supported by live customer service agents. Additionally, as part of Openforce’s settlement platform, contractors have the ability to receive early settlement transfers for a low, flat fee. Designed to help contractors improve access to cash, when they need it, Openforce helps independent contractors stay contracted by managing their cash flow challenges.
 

4. Draw on qualified drivers while helping owner operators maximize capacity

Even with a full staff of talented HR professionals, aggressive recruiters and social media ads—it’s tough to find qualified drivers to fill your immediate needs. Before spending additional time and money to find new drivers, with Openforce’s 1099 management platform, clients can complement traditional recruiting methods by first reaching out to existing drivers. Target contractors by specifying your need and location, and the system does the rest. When drivers log into their contractor portal, they’ll immediately receive an alert with these details. It’s a true win-win for both the contracting company and owner operator.
 

Splash alerts are a convenient and effective way to notify your carriers of travel team opportunities. We are exploring ways to use them for other business needs.

– Steve Whalen, General Manager

5. Keep contractors happy and reduce their financial stress through specialized benefits

Some of the perks that help attract and retain independent contractors are surprisingly simple. Contractors are looking for more than good pay. They’re looking for much needed benefits, discounts and resources to build their business. But without an employer to provide these benefits, it can be difficult and stressful to find, particularly ones that are geared for independent contractors. To help fill this gap for both contracting companies and independent contractors, Openforce offers an array of resources such as discounted insurance programs, truck leasing programs, cash advance services, and more. Whether it’s establishing a business entity, filing taxes, specialized training or taking advantage of deep retail discounts, Openforce’s built-in member benefits can provide the valuable support that companies are unable to offer.
 

Openforce clients experience a 30% decrease in contractor turnover when compared with the industry average in transportation.

Considering the thousands of dollars it costs to find and recruit just a single driver, it pays to have an established independent contractor management (ICM) platform to keep your driver turnover rates to a minimum.

Openforce is well-versed on the challenges and leading 1099 technologies and services for reducing independent contractor turnover. Screening and onboarding the right drivers for your fleet, offering valuable business tools and benefits, and setting clear expectations right from the start are just a few ways to improve the turnover rate and retain highly qualified contractors.
 

Contact us to learn more

 

Looking for Drivers?

Through Openforce’s independent contractor management (ICM®) platform, an available source of drivers are ready to step up when you need them. Before spending additional time and money to find new drivers, complement traditional recruiting methods by first reaching out to your existing drivers. These owner operators may have additional capacity you’re not aware of, and many with aspirations to expand their team and business. It’s a true win-win for both the contracting company and owner operator.
 

BREAK THE DRIVER SHORTAGE CYCLE

  • Find qualified drivers fast: Eliminate the hassle of recruiting drivers thru ineffective, conventional methods. Openforce helps maximize your existing contractor workforce.
  • No need for enrollments: Drivers are already contracted, so they’re ready for immediate dispatch. Also, dealing with known entities comes with less risk for the contracting company.
  • Reduce overall costs: No more ongoing staffing or ad fees. As you need drivers, let existing owner operators raise their hands to pick up deliveries and get on the road fast!

Whether you’re managing seasonality, unexpected peaks or expanding into a new territory, ICM Splash alerts can help fill those driver seats. We just need the following details for your customized communication:

  • Company location(s)
  • How long you’d like to run the Splash alert
  • Owner-operator requirements, such as vehicle type, to help identify the right contractors for your needs
  • Rate of pay (if you’d like to share upfront)

Don’t let finding drivers be your problem. Use ICM Splash alerts to help owner operators maximize capacity while fulfilling your urgent delivery needs. In fact, Openforce clients are already seeing results using this smart, no-cost tactic to reach existing drivers.
 

Splash alerts are a convenient and effective way to notify your carriers of travel team opportunities. We are exploring ways to use them for other business needs.

– Steve Whalen, General Manager

HOW DO I GET STARTED?

Openforce clients may reach out to their account managers or contact us directly at CustomerSupport@openforce.com.

New to Openforce? We build and deliver flexible solutions that address the HR and compliance needs of independent contracting, including:

  • Finding qualified drivers
  • Fully mobile and automated onboarding
  • Settlement solutions
  • Insurance products
  • Member Benefits and retention
     

Contact us to learn more and build your customized solution.