Freelancers, the DOL and the changing face of HR
There are many reasons why organizations hire freelancers. From a purely economic standpoint, it often can be a cheaper alternative to hiring a full-time employee. What’s more, you can sometimes test the waters before you commit to a full-time position if you contract the work out first. And if you only need a high level of expertise on a limited basis, experienced, savvy consultants can fit the bill nicely.
A 2014 study conducted by the independent research firm Edelman Berland and commissioned by Freelancers Union in partnership with Elance-oDesk found that 53 million Americans are now freelancers—that’s 34% of all workers in the U.S., or more than one in three! Some of the key findings in the study were:
- Freelancers are seeing more demand for their work — Twice as many freelancers have seen an increase in demand in the past year as have seen a decrease (32% increase, versus 15% decrease).
- Technology is helping freelancers find work — Nearly seven in ten (69%) freelancers said technology had made it easier to find freelance work, and 42% said they have done freelance work via the Internet.
- As demand increases, so does reputation — Almost two out of three (65%) freelancers said freelancing as a career path is more respected today than it was three years ago.
- Millennials (workers under 35) are more likely to freelance — 38% of Millennials are freelancing (compared to 32% of those over 35) and Millennials are also most optimistic about the future of the freelance job market, with 82% saying that the best days are ahead (compared to 74% of those over 35).
Something to keep in mind when you have freelance help: the DOL
“Technology today allows for so much more flexibility for workers, including freelancers,” says Tina Hamilton, PHR, president of myHR Partner. “The results can be a real boon for businesses. But as with any type of worker, there are human resources considerations to keep in mind when you hire.”
Compliance with the U.S. Department of Labor (DOL) statutes and regulations is top of the list. Recent vigorous DOL enforcement across the country underscores the need for employers to make sure workers aren’t being misclassified as independent contractors. The Society of Human Resources Managers (SHRM) recently wrote on it’s website about this issue. Among the many words of wisdom offered in the article from Michael Moschel, an attorney with Bass, Berry & Sims in Nashville, TN in regards to hiring freelance contractors:
Moschel said there are a number of signs that an individual has been misclassified as an independent contractor, such as the following:
- The individual is compensated any way other than on a per-project basis. Payment by the hour is particularly suspect.
- The employer grants the individual paid vacation or sick leave.
- The employer reimburses business expenses incurred by the individual.
- The type of work performed by the individual is typically paid by the employer on a W-2 basis.
- A noncompete agreement is in place; such agreements are not used for independent contractors.
Moschel added that the longer-term the relationship is, the more likely it is an employer-employee relationship.
The article goes on to state that since 2008, the DOL has hired 2,000 investigators, doubling its total number, which allows it to look more closely than ever before as to whether individuals have been misclassified as independent contractors. It is important that employers carefully consider from the very beginning as to whether an individual is an independent contractor or not. Organizations should re-evaluate the relationship annually, as well.
Stay compliant. Stay competitive. Stay sane.
myHR Partner understands that it takes a strategic, broad approach to effectively manage your HR functions and stay on top of issues of compliance in today’s business world. It also takes knowledge, skill and time to conduct the work that needs to get done to maintain a positive, productive and profitable workforce. Our team of HR experts is here to help you achieve your goals. Email us, or call us at 610-443-0119 to discuss how myHR DirectLink Services can help your business.