Horizon Point Consulting

Category: Human Resources

We know HR. Read our Human Resources blog archives for stories and best practices from our work with real clients and personal experiences in the world of HR.

  • Taking the Guess Work Out of 1099s

    Taking the Guess Work Out of 1099s

    In fifteen years as an HR practitioner, there’s one question I can probably pinpoint as the most asked question I have gotten over the years.

    “Why can’t I just classify them as an independent contractor?”

    It’s estimated that by 2020 40% of the US workforce will be freelancers or temp employees, up from 30% in 2006. With that number growing, it’s even more important for organizations to understand the independent contractor classification and when it can be used. The penalties for misclassifying employees as independent contractors can include back payment of taxes, interest owed to employees for wages not paid, fines, and even criminal or civil charges. It’s a costly mistake, and yet it’s one I see way too often.

    Here are just a couple questions I’ve answered in the last few weeks alone:

    1. “I have a candidate that would like to be classified as a 1099, can I do that?” Simply put, no, you cannot classify someone as an independent contractor just because that’s how they prefer to be classified.
    2. “We have a candidate that we want to bring on as an employee, but we’d like them to complete a trial period. Can we classify them as an independent contractor during that trial period and then hire them as an employee at the end of that period if they are a good fit for the position?” No, you cannot temporarily bring someone on as an independent contractor to see if they’re a good fit for your company if you’re otherwise going to treat them as you would any other employee. You can certainly have a probationary or trial period during which time you evaluate them and they get to evaluate the company, but you have to pay them as you would any other employee.

    So when can an organization pay someone as an independent contractor? Here are a few questions to ask yourself about the assignment:

    1. How will the work be assigned and completed? Will regular direction be given or will an overall scope of work be provided? Who will dictate the work schedule? Where will the work be completed? If there will be regular direction given or delegation of tasks to which specific deadlines are set and the company dictates when and where the work is to be performed, chances are they should not be classified as an independent contractor. If an overall scope of work is agreed upon and they determine their own work schedule and where the work is completed, then move on to the next question.
    2. Who will provide the necessary resources to complete the work? Will the company provide necessary equipment such as computers, phones, etc.? If the company will be providing the necessary resources and equipment, there is a strong chance the position does not qualify as an independent contractor. There are some exceptions to this, for example, they provide their own computer, but the company provides them with access to software programs required to complete the work.
    3. How will they be compensated for the work completed? If they are paid as any other employee of the company, chances are they should not be classified as an independent contractor. If they are paid a set contract amount, even if paid in equal intervals such as monthly, or they provide an invoice for work completed that is then paid through accounts payable, it is possible that they are in fact an independent contractor.

    For more detailed information on evaluating the independent contractor classification, you can go to the IRS website. Many years ago the IRS designed a 20-Factor Test for Independent Contractors. They no longer support the test on their website, but it’s still floating around out there and I still recommend it to clients as the best source for helping to determine 1099 status. The information on the IRS website is not as clearly defined in my opinion as the test is.

    I recommend that if your organization currently has independent contractors, you check their status against the 20-Factor test. If the position does not meet the requirements of the test, proactively take action to remedy the error and classify them correctly as an employee and ensure that they are afforded all of the benefits that an employee receives.

  • Why a Decline in Teens Working is Bad For Them and Bad For Business

    Why a Decline in Teens Working is Bad For Them and Bad For Business

    The diamond on my ringer finger I can thank in part to a teenager engaging in summer work. My husband worked during the summer every year starting at age fifteen. And although I wasn’t even on his radar at age 15, nor do I think marriage to anyone was at that point in time, his hard work and savings from that hard work led to a lovely diamond on my hand that he paid cash for.

    He worked painting schools, mowing grass, driving a forklift at a lumber yard and building tree stands while in high school. His college work experience transitioned from labor-intensive endeavors to work related to his college major and ultimate career goals.

    My husband was fortunate that he didn’t have to pay for college. His parents saved for it and paid for it as did some scholarship money. And he was fortunate that he didn’t have to buy his own car. His grandmother did. So, you can say he was fortunate that he had money saved from summer work that didn’t go to pay for things that most kids use summer earnings for.  But in my opinion, it wasn’t so much about the money he gained from summer work, it was what he learned from it that created value.

    But according to a report by the Brooking Institute, “all school and no work becoming the norm for American teens”:

    From 2000 to 2018, the labor force participation rate of 16- to 64-year-olds fell 3.6 percentage points. In previous work, we have shown that declining labor force participation among young people contributed substantially to this decline. In this analysis, we describe how teenagers (16–19-year-olds) have shifted away from working or seeking work and the impact this shift has had on the aggregate labor force participation rate.

    The lack of labor participation from teens is contributing to the overall lack of labor supply in the United States.  This is a problem at the macro level.

    But a bigger problem I see at the micro-level is that teens are spending so much time on school and other endeavors that they aren’t learning the value created from first jobs at an age where that learning is truly more valuable than what can be learned in the classroom or in trying to pursue two more points on an ACT score.  And this is actually hurting the macro picture more by affecting the ability of teens to transition into the labor force successfully full-time and contribute in meaningful ways.

     

    This is because work at an early age teaches:

    1. The value of a dollar.  In a workplace where financial stress is an increasing concern, early work could help students understand earning their own money, saving, and how far their earnings actually go. You never know when you are going to want to buy a diamond. Thank goodness we didn’t start out our marriage strapped with a loan to pay off the ring on my hand.
    2. Showing up on time and being present is more than half the battle. My husband often says that his summers were more demanding than his school year.  He had to be at football workouts at 5 AM in order to be at work by 7 AM.  Having to maintain a full work schedule and juggle other activities is an important learning step and is one in which a lot of teens may be learning too late.  And one in which I fear school and sports/extracurricular activities don’t accurately mirror in the real world.
    3. An understanding and exposure to different things that can help teens best discern what they want to be when they grow up. My husband learned really quick the value of education (much more than focusing on it directly like a lot of teens do now) sweating in 100+ degree heat building tree stands and working at a lumberyard for minimum wage.  When he was older and working in the field he thought he wanted to pursue, it helped to confirm a connection to the work and the types of role(s) and work environments he’d like to pursue.  For example, he realized that even though he was good at it, he preferred operations over financial areas of health care administration, and discovered he desired to work in a not-for-profit setting as opposed to a for-profit one.

     

    We’ve got to stop and think for a moment as individuals and as a society, what are the best means to an end?  In the end, I think we as parents, teens, teachers, and business leaders want to help young people engage in things that lead to long term success and allow them to define what that success looks like for themselves.

  • If You’re Not Onboard, Get Off the Ship!

    If You’re Not Onboard, Get Off the Ship!

    The best piece of advice I heard at the recent SHRM19 National Conference came from Cy Wakeman’s session “Business Readiness: Ensuring Our Teams are Ready for What’s Next.”

    As a consultant, I spend a great deal of my time helping organizations navigate change, from determining what change is needed to creating the roadmap of how to accomplish the change to how to get employee buy-in. The hardest part is often getting employees on board, helping them understand the need for change and addressing their resistance.

    The current change management process caters too much to the individual employee when it should focus more on the overall business need for change. Leaders spend a great deal of time sitting on the sidelines with those few employees on the bench trying to convince them why they need to get in the game with everyone else. They allow the minority of employees who want to resist the change to stall the process or to even quash it.

    According to Cy, leadership needs to stop trying to please everyone and focus on those employees who are champions for change and who understand the vision, because they will be the ones who drive change forward. And change is all about ensuring the sustainability of the organization and creating an opportunity for growth. Those resistant will only hold the organization back and will never support the change. Their resistance is driven by their own ego, not what’s in the best interests of the organization.

    So how can organizations effectively navigate change management?

    1. Don’t jump the gun. Change management isn’t a race, it’s not about being the fastest out of the starting gate. Take the time needed upfront to thoroughly assess the need for change, the options for how to make the change, and the impact each option will have on the organization as a whole. Proper planning will lead to proper execution. Making snap decisions too often leads to the need to backtrack, which causes employees to lose faith in leadership’s ability to manage and makes them more resistant to change.
    2. Explain the why then move forward. It’s important to maintain a level of transparency with employees. Explain the why behind the change in terms that all employees can understand and outline how the change will positively impact the organization as a whole. But don’t dwell on it. Once you’ve explained it, move on to the how and when. Don’t let resistant employees continue to question the why this is where change stalls.
    3. Think inside the box. A key point that Cy made was that we’ve been conditioned to “think outside the box” and that method of thinking tends to lead to passing the buck. The tendency when we think outside the box is to think of how we can use others to get things accomplished. She recommends we start thinking inside the box by asking “what can I do” instead of “what can others do”.
    4. Stop trying to please everyone. You will have resistant employees, it’s inevitable. Stop focusing on pleasing them. Organizations change because it’s necessary to continue to thrive and grow. It’s best for the organization as a whole, so stop wasting your energy on that small minority who refuse to get on board, who protest change. They are stalling your organization’s growth and the majority of employees who are supportive of the change are suffering as a result, so is the organization. Those employees have a choice, and Cy put it so eloquently:

    “Stay in joy or go in peace, but you can’t stay in hate.”

     

    For more on change management, you may also enjoy our posts Change Management: Celebrating the Small Victories and 4 Ways to Help Change Happen When Change is Hard

  • All the Hype on Equal Pay. My Short Opinion.

    All the Hype on Equal Pay. My Short Opinion.

    The US Women’s Soccer Team. Some controversy over Taylor Swift’s contract. It’s all in the name of fighting for equal pay for women.

    Equal pay is a noble cause and one I support. But who owns fixing this?  Maybe we all do, but women own taking the actions to fix it for themselves.  And we all own helping teach the skills to do so.

    Publicity and activism help.  But teaching women:

    1. To know their value
    2. Know how to advocate for their value
    3. And walk if they don’t get what they are worth

    is the true way to fix this problem long-term. Blaming doesn’t fix it and theorizing or legislating over it won’t fix it.

    People empowering people (male or female) to understand the value they bring to the market, learn how to articulate that value, and leave or opt-out if they don’t get a fair exchange for their worth works.

    How are you advocating for your worth and/or teaching someone how to do the same today?

    Side note:  As a former Corporate Recruiter and a business owner, I have come to expect men to negotiate with me on salary and women to not.  I save when I don’t have to negotiate up on a salary offer and I get a better return on my dollar.  I am hard-pressed to pay more for someone than they demand to be paid for themselves.  Maybe I’m wrong in this, but don’t expect me to pay you more if you don’t know what you’re worth in the first place and can’t advocate for that worth through professional negotiation.  Your power lies in saying “no thanks” when I or anyone else offers you a certain salary that you don’t think reflects your value.  If I agree, I’ll come up on my offer, and quite honestly, I’ll raise my value of you when you negotiate because that is a skill I need.

  • 10 Quotes on Brave Leadership from Brene Brown at #SHRM19

    10 Quotes on Brave Leadership from Brene Brown at #SHRM19

    “Leadership isn’t about having all the right answers. It’s about having all the right questions.”

    “You cannot opt out of fear and feelings. Determine what fears and feelings are leading to behaviors. Don’t play whack a mole with bad behaviors. Address fears and feelings directly.”

    My Favorite: “If you cannot have hard conversations because they are making you uncomfortable you won’t be leading in the next five years.  And it’s not the responsibility of the target of the conversation to prompt it.  It is your job as a leader.” 

    “Courage is teachable, observable, and measurable. Fear is the biggest barrier to it.”

    “Vulnerability is not full disclosure and oversharing. It’s not crying. It’s leaning in and staying authentic when things are tough.”

    “It’s better to not have (organizational) values if values aren’t operationalized into behaviors.”

    “Clear is kind.  Unclear is unkind.”

    “The number one trust-building behavior: asking for help.”

    “The best kind of generosity is the assumption of positive intent.”

    “The most resilient people ask themselves, ‘The story I’m telling myself is….’  then they check in on it directly. What are you making up? Check the narrative to get the right meaning.”