Social media is helping people build their own private portfolio, especially since companies are starting to recognize that tenure is not that important, but rather it is who you’re connected with and where the next opportunity will come from. The mindset of the independent contractor is to move faster. They want to have a one-click approach when applying for a job, so they will definitely use social media to connect with somebody who may have an opportunity for them. The internet allows them to find job posts, but it is the social web that allows them to make a trusted connection. You can see who the contractor’s contacts are. You can see who they are associated with. As a result, you have a lot more confidence in who you’re hiring to get things done.
The rise of LinkedIn is a great example of this. LinkedIn has become one of the largest staffing companies in the world. How is this when most LinkedIn profiles have less work experience background on them than the average resume, which traditionally makes up 80%+ of a resume. For the users, it is the offering beyond the work background. What you get out of it is you become part of a social community where you can put forth your expertise, skills, and experience online. You can also get recommendations and endorsements from other people. You also gain access to groups and online communities.
The Complications of Labor Compliance within the Independent Workforce
Gene Zaino, CEO and President of MBO Partners is a thought leader on labor compliance and risk assessment. He offers a unique perspective on the topics:
With the numbers of the independent workforce showing its might in recent years, the regulation and the legal implications are never far behind. When you think about it, our payment structure is what actually funds our government. As of today, companies outsource their employment tax compliance to payroll processing providers such as ADP and Paychex. These businesses provide companies with built-in systems to help them easily pay their workers, and at the same time still be compliant with government regulations. The government gets its resources from our paychecks. We all know what our salary and our take home pay is, and we know how much there’s a big gap between the two. That gap funds your local, state, and federal governments. However, as more and more people migrate away from that traditional employment structure, our government is also becoming concerned.
The increase of independent workers will result to an increased level in the enforcement of regulatory laws as well. There’s always a need for the government to classify everything properly, and this includes people working in the independent workforce industry. As a result, it is up to the private industry to provide a structure that allows companies to be more independent and do their own thing, but still have an easy way to comply with government regulations. Tax collection and enforcement of tax laws aren’t something that’s going to go away.
But because one size doesn’t fit all, you can’t apply the same regulations and rules across the entire industry. After all, there are different types of contractors. There are people who want to be employees, but they are categorized as contractors because that’s the way their industry works, but they would love to be an employee if given the chance. Then there are companies that try to take advantage of people – instead of paying their benefits and taxes, they pay them as a contractor. This is why there is a need for regulation – as a form of protection to ensure that people get what they are entitled for, and to make sure their taxes are being paid. On the other hand, there is this other group of people who do not want to be anybody’s employee. They want to take care of their own career, and they want to take the taxes out.
Unfortunately, it’s hard for a startup company to understand all the regulatory issues such as sales tax, income tax, payroll tax, workers’ comp, and local taxes. Large companies usually have their own accounting department, or will use a PEO. The good news is that labor market platforms help both the company and the independent contractor stay within the legal bounds.
Jeffrey Leventhal, CEO of Work Market adds, “It’s not just income tax to consider, there’s also sales tax. When you’re working as an independent contractor, taxes may be due for certain services that you’re rendering. The Affordable Care Act is also helpful to independent contractors as they can find good health care plans now. Previously, a lot of people would stay on as an employee even though they weren’t happy because they needed the benefits. Now that they can procure these benefits elsewhere, they’re going to be able to work independently and live the kind of life they want.”
Keeping it Legal
There are a number of drivers that contribute to whether a company should bring on an individual as an independent contractor or an employee from the business need to remaining compliant. The use of independent contractors by private industry has been in place for decades through the advent of temp agencies offering companies the flexibility and ease of a non-employee based workforce while remaining compliant. As the need for a more independent and flexible workforce increases, so will the options for recruitment, selection and engaging them beyond the traditional temp agencies. Hence, the rise of the human cloud and online talent platforms.
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