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| EMPLOYEE CLASSIFICATION: KNOWING THE DIFFERENCE |
 A Message from the Editor
Dear Recruiters,
Thinking about making some contract placements? Contract hiring is on the rise, and continues to be a great revenue source for recruiters and staffing firms. But do you know your 1099s from your W2s? If not, you could be putting your business, your clients, and your contract hires in legal jeopardy. In this quarter’s issue, we’ll help you demystify the employee classification process by explaining some of the differences and giving you tips on how to determine an employee’s classification.
Also in this issue, I’m also delighted to congratulate not just one but TWO Recruiters of the Quarter for this issue: Denise and Jason Delaney. The Delaneys are the husband and wife pair behind People Inc., and together they obviously make one very successful team. Congratulations, Denise and Jason!
Best wishes,
Gaby Mergenthal
Executive Vice President
Innovative Employee Solutions |
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Classified Hires: Distinguishing Between 1099 and W-2 Employees
With contract employment on the rise, an increasing number of businesses are looking to hire specialized workers on a contingent basis as a way to save money, reduce risks and liability, and maintain a flexible workforce. At the same time, more employees (or those looking for employment) are classifying themselves as independent contractors, preferring the flexibility and autonomy these project-based employment opportunities provide.
While contract placements can provide recruiters and staffing firms with a lucrative source of income, they can also raise confusion when it comes to what is (and isn’t) legal 1099 classification. Companies wishing to hire a contract employee may not actually understand the necessary job specifications that make up a 1099 position, while prospective employees cannot legally classify themselves as “contractors” just by saying so. Misclassifying employees can have serious legal and financial repercussions for businesses, recruiters, and employees. However, many continue to make the same mistakes time and again – and pay a hefty price for doing so. The fine for an intentional misclassification can be a penalty equal to 100% of the amount in taxes owed. In cases where an employer negligently reports or under-reports employee status, the IRS can impose a 20% accuracy-related penalty. What’s more, the IRS has recently taken special interest in worker classification, and has raised the number and amounts of the fines and penalties in an attempt to stop these mistakes once and for all.
Now more than ever, it’s important for recruiters and their clients to understand the ins and outs of contract hiring. Though the penalties for incorrectly classifying employees are steep, they can be avoided by knowing the differences between employee classifications.
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 Innovative Recruiter of the Quarter: Denise and Jason Delaney
 Meet the Delaneys: the dynamic duo behind People Inc., a full-service staffing firm headquartered in Fountain Hills, Arizona. Offering a variety of placement options, this husband-and-wife team specializes in recruiting for the sales, marketing, operations, IT, finance, digital media, and geo-spatial technology industries.
With a combined 20 years of experience in recruitment, the Delaneys launched People Inc. as an executive search firm in 2008, later expanding their offerings to include temporary services. Using IES as their payrolling provider “has opened up our resources to focus on sales, recruiting and growing our business,” says Jason.
The Delaneys’ personal recruiting mantra is that “your pipeline is your future.” Explains Jason, “it’s critical to have more positions to work on once your current requirements are filled. Maintaining that pipeline requires your constant attention and focus.”
When they’re not in the office, Jason, Denise and their three small children enjoy boating, camping, hiking, snowboarding and family trips to the beach. To honor their recruiting accomplishments, they will receive a $50 American Express gift card and certificate from IES. Congratulations!
The Recruiter of the Quarter award is an honor presented to an outstanding IES recruiter client after the close of each quarter. Honorees are selected based on a variety of criteria, including quarterly revenue generated, number of new clients and employees payrolled through IES, and jobsite safety success.
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Nervous about misclassifying your contract hires? We can help.
Call 858-715-5118 to learn more. |
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Tel. 858-715-5100 • Fax. 858-715-5110 • 9665 Granite Ridge Drive, #420 • San Diego, CA 92123
© 2010 Innovative Employee Solutions® • Innovative Employee Solutions® is a registered servicemark
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