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Independent Workforce Resources
Companies use direct sourcing to improve onboarding time, decrease sourcing costs, and increase talent satisfaction. Working with a vendor and platform often dramatically increases the effectiveness of direct sourcing.
Many enterprises believe that working with a vendor may go hand-in-hand with a co-employment risk. We’re here today to play MythBusters—and see just how much of this anxiety is rooted in legal precedent.
What is Direct Sourcing?
Direct sourcing is a strategy that enterprises can use to find and engage independent contractors. It involves identifying candidates for an open project or role using their own internal resources rather than a third party to find talent on their behalf.
Businesses use direct sourcing to reduce the time to fill positions, improve the onboarding process, and reduce the business’s costs of filling open positions.
In many cases, businesses engage a vendor that provides a recruiting team to find and source contingent labor or temporary talent. Talent are then engaged by the vendor to provide services on a project basis. or for a limited period to the business. The vendor’s recruiting team may use the business’s logo or brand to attract candidates and may create a pool of talent on which the business can draw.
What is Co-Employment?
The term co-employment refers to situations in which two companies both have rights and obligations as an employer with respect to the same employee or employees. In a typical contingent labor situation, a client supervises and direct the day-to-day work of the employee and provides the workspace while the vendor pays the employee, withholds payroll taxes, provides benefits, maintains workers compensation insurance, and manages personnel-related functions. In most contingent labor situations, the business and vendor are co-employers. In a typical contingent labor situation, it is a question of the facts in the situation as to whether a client exercises sufficient control over a worker to be a co-employer.
What’s the Difference between Co-Employment and Joint Employment?
The terms co-employment and joint employment are often used interchangeably. Most statutes and regulations use the term joint employment, but co-employment is used more commonly in the industry. While there may be technical differences between the terms, this paper uses the term co-employment which includes most, if not all, relevant joint employment situations.
Am I an Employer or Not?
For there to be co-employment, there must first be employment. Whether a worker is an employee of a business (as opposed to an independent contractor) can be determined by reviewing the factors in the United States Supreme Court in Nationwide Mut. Ins. Co. v. Darden, 503 US 318 (1992). The court said that the primary factor for determining if a worker is an employee is whether the business controls the manner and means by which the work is performed. Other factors that are relevant include:
- The skill required
- The source of the instrumentalities and tools
- The location of the work
- The duration of the relationship between the parties
- Whether the business has the right to assign additional projects to the hired party
- The extent of the business’s discretion over when and how long to work;
- The method of payment
- The business’s role in hiring and paying assistants
- Whether the work is part of the regular business of the business
- Whether the business provides employee benefits
- How the business treats the worker from a tax perspective
The court said that all the factors need to be weighed and no one factor is decisive.
Recruiting by a vendor and/or sharing a business’s logo with a vendor is not factor that affects whether a worker is an employee or not or shows that the business controls the worker. The primary question —whether the business exercises control over the worker or not – is not affected by sharing a logo and/or using a vendor to recruit a worker does not demonstrate control.
Co-Employer or Not?
Agencies and regulations provide different standards for when an entity is a is a co-employer or joint employer.
- Equal Employment Opportunity Commission’(EEOC). Contingent workers typically qualify as employees of the vendor, “the client to whom they are assigned, or both.” An entity will qualify as the worker’s employee if, “one or both businesses have the right to exercise control over the worker’s employment.” Enforcement Guidance: Application of EEO Laws to Contingent Workers Placed by Temporary Employment Agencies and Other Staffing Firms, EEOC Notice, Number 915.002 (Dec. 3, 1997). The most important consideration is, “the right to control the means and manner of her work performance rests with the firm and/or its client rather than with the worker herself.” The EEOC goes on to state the entire working relationship must be assessed.
- Department of Labor (DOL) Family and Medical Leave Act (FMLA). “Where two or more businesses exercise some control over the work or working conditions of the employee, the businesses may be joint employers under FMLA….A determination of whether or not a joint employment relationship exists is not determined by the application of any single criterion, but rather the entire relationship is to be viewed in its totality. For example, joint employment will ordinarily be found to exist when a temporary placement agency supplies employees to a second employer.” 29 C.F.R. § 825.106
- DOL Fair Labor Standards Act (FLSA). For a long time, the DOL regulation said that two entities were not joint employers unless, “employment by one employer is not completely disassociated from employment by the other employer(s).” The Trump administration DOL issued a rule that narrowed the circumstances in which two businesses would be considered joint employers. A business would only be a joint employer if it actually exercised control over a worker—it was not enough that the business had the right to exercise control. The Biden administration DOL has rescinded the Trump DOL joint employer rule and has not proposed a new rule yet.
- Nation Labor Relations Board (NLRB). For a long time, the NRLB considered businesses to be “joint employers” if they shared or co-determined the essential terms and conditions of employment and exercised the right to control. The NLRB consists of five (5) members appointed by the President and its approach changes when the administration changes. In 2015, the NLRB eliminated the requirement than a business exercised control. In 2017, the NLRB reverted to the standard that required a business to have exercised control over a worker. Most commentators expect the NLRB under President Bident to adopt a standard that expands the broadens standard and makes it more likely that a business is considered a joint employer.
Recruiting and/or sharing of logos is not a factor in any of the co-employer tests. There is no suggestion that direct sourcing has any effect on whether a business is a co-employer or not. The primary question is the extent of the control that the business exercises over the worker.
Co-Employment—Much Ado About Nothing
Being a co-employer does not create any liability in and of it itself. If a worker files a lawsuit alleging that a business was a co-employer, the lawsuit would be dismissed with a big “So what?” Being a co-employer only means that a business exerts some control over a worker.
Exerting control over a worker is just one of several flags to determine if a worker qualifies as an independent contractor. When engaging via a qualified workforce management platform, such as MBO Partners, a worker’s classification status is evaluated and determined to maintain compliance against legal issues such as worker misclassification, which can result in brand damage, hefty fines, and legal penalties.
The Benefits of Co-Employment
While many businesses are afraid of being a co-employer, there are significant benefits to being a co-employer.
- Workers’ Compensation is Employee’s Exclusive Remedy. If a worker is injured at a business’s location, the worker may be able to sue the business unless the worker is an employee in which case the worker is limited to making a claim under workers’ compensation.
- Hostile Work Environment Claims. If a worker makes claim that the manager of a business has created a hostile work environment, an employer (and co-employer) can avoid liability if it can provide that, “1) it reasonably tried to prevent and promptly correct the harassing behavior; and 2) the employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer.” For a business that is not a co-employer, then the business may be liable to the worker.
A Business Controls Control Its Co-Employment Destiny
A business controls its co-employment destiny—whether it is co-employer or not—by the amount of control it exercises over a worker. Where, when, how, and by whom the worker is recruited or whether the business uses a vendor to recruit or shares its logo does not factor in the co-employment determination. A business becomes a co-employer by exerting control over a worker—supervising the work, providing training, or specifying the manner and means by which the work is to be performed.
The Direct Sourcing—Co-employment Myth: Busted
By reviewing the factors that determine when a business is a co-employer, it is easy to see that direct sourcing does not present a co-employment risk—it is a myth that direct sourcing increases as business’s risks with respect to co-employment.
About The Author: Eric Rumbaugh, Partner, Michael Best
Eric is a Partner at Michael Best, where he leads a recognized practice in the area of contingent labor and regularly prepares and reviews policies, procedures and contracts and litigates contested matters for users and providers of temporary employees, consultants, independent contractors and other contingent talent.
Eric is a prominent national speaker and writer and regularly presents and writes on employment law topics. He also teaches a course on co-employment for Staffing Industry Analysts.
While your favorite apps might involve matching sets of candies, launching birds at unstable structures, or chasing around lovable pocket monsters, you don’t always have the luxury of playing the day away when you run your own business. Luckily, there’s another category of apps that are equally engaging—and can help you maximize productivity.
We’ve assembled a list of 12 productivity apps to assist with some of the most important parts of your daily work life. These productivity apps can help with the collaboration, organization, and dedication it takes to be an independent professional.
1. Stay Organized
Task management app Todoist is an organization master for independent professionals on the go. Create projects along with task to-do lists, sub-tasks, and color-coded priorities. Todoist is a cloud-based service, so it will integrate wherever you have it enabled, whether that’s your tablet, smartwatch, or Gmail or Outlook inbox.
2. Automate Social Media
Maintaining an active social media presence can be an essential part of your marketing strategy, but monitoring your accounts can also cut into valuable time. Use Buffer to create a queue of posts for all your social networks for the day, week, or beyond. Customize messages for each account, pick the time and date you want your posts to go live, or let Buffer decide when to post.
3. Manage Daily Tasks
If you work with multiple clients or if you partner with other independent professionals as part of your work, collaboration is essential. Stay on top of task management with Asana, a project management app. Asana lets you organize projects on a timeline, assign to-dos, and automate repetitive tasks.
4. Streamline Your Workflow
Imagine if after a big networking event you automatically received an email reminder to follow up with your new contacts, or if your work hours were seamlessly logged in a spreadsheet each day. IFTTT—short for If This, Then That—automates daily tasks by acting as a messenger between services and apps you use every day like Dropbox, Google Drive, social media accounts, and Todoist. IFTTT uses ‘Applets,’ combinations of triggers and actions, to complete tasks you set up. Choose from existing Applets or create your own to start optimizing your workflow.
Trello is another popular project management app that lets you organize work via a Trello board. You can add lists and cards to your board and assign and organize tasks. Trello is helpful if you are working one-on-one with a client or project team. It is a visual app, which is nice if your brain works that way, and easily syncs with apps you likely already use like Google Drive, DropBox, and Slack.
6. Visualize Your Ideas
Mind mapping is a visual way to present a big concept along with ideas, plans, words, or images that relate to the main topic. If you’re stuck in a creative rut, graphically planning out hierarchies and establishing relationships between pieces of a whole can help you more easily visualize a new idea or plan out how to tackle an upcoming project. With MindMeister, create a mind map right on your smartphone and customize each idea branch with different icons, colors, and text styles.
7. Track Your Hours
For independent professionals who charge their clients by the hour, HoursTracker is an invaluable tool. It allows users to list their various clients, as well as how much they are charging each one per hour. Clock in and clock out when you begin and finish work for a specific client. The app tracks time spent on each project as well as a running total of how much money has been made that day.
8. Manage Multiple Projects at Once
As an independent contractor, you are likely juggling multiple projects at any given time. Freedcamp is a completely free project management tool that can help you manage your business on a budget. Get projects up and running quickly, track costs, and upload corresponding documents. If you’re collaborating with others, set project due dates, create personalized task lists, and participate in discussion boards.
9. Host a Professional Virtual Meeting
One of the benefits of being independent is that you can work from where you want, but that can make it tricky to handle spur-of-the-moment client meetings or calls. Be prepared to meet with clients anywhere and anytime with Zoom. Chances are you’ve been on a Zoom call or happy hour some time in the past two years, but if you’re not familiar with the platform, Zoom is a user-friendly app where you can schedule video meetings from your phone or desktop computer (in addition to a lot of other collaboration and connection tools.) It’s always nice to talk to a client face-to-face, and video conferencing is the next best way to get that experience.
10. Google Drive
A maybe obvious but important app to mention is Google Drive. One of the big perks here is that it’s free—you can upgrade if you need more storage space. Google Drive is great for collaboration and file sharing. Google Drive’s Docs, Sheets, and Slides are very user-friendly and can be accessed via your computer or phone.
Scheduling meetings can often feel like a job in and of itself. Enter, Calendly. This app helps eliminate all those back and forth emails it takes to schedule a meeting by asking people for their availability preferences. It’s sort of like having a virtual assistant. Calendly has a wealth of integrations as well including Zoom, Webex, Microsoft Teams, and PayPal.
Sometimes, taking time to do nothing is just as important as filling your day with a lot of somethings. Boost productivity and take a few minutes to clear your head with a short meditation or breathing exercise from Calm. Just choose the amount of time and type of meditation you’re looking for and return to work less stressed and more focused.
As an independent business owner, who you know can be equally important as what you know. To ensure a steady flow of projects, it’s important to build and maintain a strong circle of business contacts you can rely on for work and referrals.
Below, Denise Thomas, owner of The Effective Communication Coach, gives her advice on the importance of networking. Then, we offer three networking tips to boost your business prospects.
1. Network by Mentoring or Becoming a Mentor
Yes, networking by reaching out to new people is helpful, but working closely with a mentor can build a mutually beneficial long-term relationship. A trusted colleague or industry expert can offer valuable business-related guidance and advice—especially if you’re new to consulting.
Before talking with someone about becoming your mentor, think about what benefits you anticipate receiving from the experience. If you want to learn more about using tools such as Facebook and Twitter, perhaps a younger person in your field with tech and social media expertise is the right match. Or, you may be looking for advice from someone whose viewpoint and approach to work is drastically different from yours.
Acting as a mentor to someone else is valuable as well, and can provide an opportunity to reflect on your own experience and think about how you can improve your business. Regardless of the mentoring relationship you find, working with another person can help generate ideas, creativity, and innovation that inspires future work opportunities.
Check out: Do I Need a Mentor as a Consultant?
2. Network Online
Much of today’s networking takes place on the Internet, and social media can benefit your business so long as it is used in the right way. Here are two great ways to network online:
- Social Networks: One of the more difficult aspects of networking is regularly staying in touch with all of your contacts. Twitter can help maintain these professional relationships. Follow your contacts to keep up with their projects and share interesting articles. Establishing yourself as a trusted authority on industry news on Twitter builds credibility and shows potential clients that you’re informed on the latest trends.
LinkedIn can be a great way to introduce yourself to key people at companies you’re interested in working with. If you have one connection in common, reach out to that mutual friend for an introduction. Explain why you’re interested in making the new connection, and ensure your profile is up-to-date. This way, your new contact will truly understand your background and the value of networking with you.
- Professional Blog: Blogging about your industry or expertise is another way to network. Many bloggers will guest post, write articles in response to what others have written, and comment back and forth. By showcasing your talent and knowledge on a blog, you can meet potential clients as well as other independent consultants who may be able to offer support and advice.
3. Network By Attending Industry Events
While there’s a wealth of networking to be done online, meeting potential leads face-to-face is always valuable. To find an event that will be the most useful for you, start by researching groups and organizations that align with your goals and interests. Before attending an event, set a goal of the number of people you want to speak with, bring your business cards, and brush up on a quick elevator pitch about your business.
While it can be intimidating to attend a group event where you don’t know anyone, just remember that it’s normal to be nervous and feel uncomfortable at first. If you’re not sure where to start, begin by asking others about their business background and why they are at the event. Then, you’ll feel more comfortable when it comes time to speak about yourself. After an event, be sure to follow up with new contacts via email or LinkedIn.
Word of mouth can be one of your most powerful marketing tools. By building and maintaining your network through a variety of methods, you’ll create a reliable group of contacts that can help to sustain and grow your business.
Check out: How to Get the Most Out of Networking Events
MBO’s Advantage program offers members-only networking events to give busy business practice owners the opportunity to network with like-minded professionals. To learn more visit MBO Advantage.
Finding a way to grow as a small business owner can be a challenge. Teaming up with another independent professional is a great solution—a partnership can bring new skills to the table, help you manage your workload, or even land that big project you’ve had your eye on.
Once you’ve decided to partner with another independent and you’ve found the person you want to work with, you’ll want to focus your efforts on building the base for a successful working relationship. There’s a lot of details to consider when adding another person to your team. Follow these three steps to start out your new partnership on the right foot.
1. Consider How You Will Collaborate
One of the main keys to successfully working out a deal with another independent is to think of them somewhat as prospective clients. You would never approach a client proposal from the angle of how much you’d benefit from landing the job; instead, you’d focus on how what you can do would benefit them.
When approaching another independent with the idea of working together, focus the conversation on how they would benefit from collaborating and working with you on this project.
2. Use a Written Contract
Although you are both business professionals and have experience working independently, don’t make the mistake of assuming that professional respect and courtesy make a written contract unnecessary. On the contrary, it is very important to establish a clearly written formal contract when teaming up with another independent.
A formal contract will not only protect you both as consultants, but it will benefit the client as well. Use your contract as a place to outline roles and responsibilities, state project deliverables and milestones, and define how you will handle payment of both parties.
3. Discuss Roles and Responsibilities
When two people who are used to working alone are suddenly partnered on a project, there may be a bit of an adjustment period—or, worse yet, a power struggle. There is an even greater possibility of this if roles are not clearly defined. When collaborating with another independent to work on a project, defining roles and responsibilities should be an early step in your process.
Clearly spell out whether one person will be managing the project, or if responsibilities will be shared equally, who will be the point of contact with the client, and who is responsible for each specific deliverable or project component. With clearly defined roles and a strong communication process in place, the project will run more smoothly, and you’ll leave with a satisfied client and a lasting teaming relationship.