HRO Today December 2014 - 51

Contingent Labor
Seventy-seven percent
of respondents believe
their total financial risk
exposure to failing a
worker misclassification
audit is below $100,000.
The reality is that for 100
independent contractors
paid on average $100,000
annually, a company's
financial risk could
exceed $4.5 million.
worker misclassification and the costs associated
when getting it wrong? In a recent survey from ICon
Professional Services, nearly 70 percent of organizations
had great confidence in passing an audit, yet according
to the government, only 55 percent report actually
passing. Some additional haziness in this critical area:
* Only 57 percent of respondents report they have
great confidence in knowing the exact number of
independent contractors they are currently using,
increasing overall risk exposure.
* Seventy-seven percent of respondents believe their
total financial risk exposure to failing a worker
misclassification audit is below $100,000. The reality is
that for 100 independent contractors paid on average
$100,000 annually, a company's financial risk could
exceed $4.5 million.
Many misclassification cases are settled privately and
remain out of the public domain, which makes it even
more difficult for senior executives to understand
their total risk and the significant costs associated with
misclassification.
Independent Contractors-and More Risks-on the Rise
When it comes to the overall contingent workforce
landscape, ICon's survey reveals that independent
contractors play an increasingly important role in the
labor market:
* Eighty-four percent of respondents said they would
maintain or increase their investment in independent
contractors in 2015.
* Half (50 percent) of those surveyed utilize up to 20
independent contractors per year, while 30 percent
engage up to 100 per year. Fifteen percent utilize more
than 500 contractors per year.
* The largest proportion of respondents (37 percent)
retains their relationship with contractors for up to a
year, while almost a third (28 percent) engage them for
up to three years.
* Nearly seven in 10 respondents use independent
contractors because of their unique specialist skills.
As demand for independent contractors grows,
legislation continues to evolve as states and the
Department of Labor/IRS try to get a handle on this
workforce segment. Constantly changing regulations
can create a risky environment for businesses of all sizes,
especially those in the Fortune 2000 that leverage large
numbers of independent contractors. Be sure to arm
yourself with the appropriate knowledge to avoid fines
associated with worker misclassification.
What determines an independent contractor versus a
full-time employee is an overall picture of behavioral,
financial, and relationship factors? What does an
independent contractor look like?
DECEMBER 2014 | www.hrotoday.com
[51]
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HRO Today December 2014

Table of Contents for the Digital Edition of HRO Today December 2014

HRO Today December 2014 - 1
HRO Today December 2014 - 2
HRO Today December 2014 - 3
HRO Today December 2014 - 4
HRO Today December 2014 - 5
HRO Today December 2014 - 6
HRO Today December 2014 - 7
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HRO Today December 2014 - 12
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