FreshView
a publication of Cascade Employers Association
DECEMBER 2011
Dollars & Sense Poll |
In This Issue:
- 2012 Salary Budget Survey Indicates Improving Trend
- Risky Business:
Independent Contractors - Survey Spotlight
- FreshView on Compliance
- Did You Know?
2012 Salary Budget Survey Indicates Improving Trend
By Jerry Bumgarner, CCP
Director, Research and Compensation Services
jbumgarner@cascadeemployers.com
Results from the SalaryTrends® 2012 Salary Budget Survey indicate that more area employers are planning to award wage/salary increases in 2012 with statewide increases projected to average about 3.1% for those employers awarding increases (2.3% when pay freezes and negative pay adjustments are factored).
The survey includes projected average pay changes and projected variable/bonus award opportunities applicable to 330 employers from throughout the Oregon and Southwestern Washington region. Total employment of the responding organizations is nearly 84,000.
Whereas the 2012 average increase projections are similar to those awarded in 2011, the trend towards more employers awarding increases and fewer freezing or decreasing pay is worth noting.
76% of the respondents are projecting pay increases for non-executive level positions during 2011-2012. This is up from 70% during the 2010-2011 survey period.
60% of the respondents are projecting pay increases for executive level positions during 2011-2012. This is up from 53% during the 2010-2011 survey period.
24% of the respondents are projecting either zeros or negative pay adjustments for non-executive positions during 2011-2012. This is down from 30% during the 2010-2011 survey.
40% of the respondents are projecting either zeros or negative pay adjustments for executive positions during 2011-2012. This is down from 47% during the 2010-2011 survey.
SalaryTrends®, from Cascade Employers Association, provides comprehensive pay data. For greater details regarding projected 2012 salary increases and variable/bonus awards for Oregon and Southwestern Washington employers, contact us.
Risky Business: Independent Contractors
By Jenna Reed, JD, MBA
Director, HR & Compliance Services
jreed@cascadeemployers.com
I recently got a call from a company requesting an independent contractor agreement. This isn't unusual, but when I get that request I usually ask a few more questions before sending over the agreement. In this instance, the company had experienced a reduction in force but was looking to bring a few people back. Rather than bring back employees, they decided to obtain the services of independent contractors.
The problem was that they were offering the work to several former employees, who would be performing the same work as they did when they were employees, and who were not performing the work for anyone else. I'm glad they called because what they described was an employee, not an independent contractor. Had they moved ahead classifying these individuals as independent contractors the company may have been in for a huge expense if this mistake was exposed.
I've been getting more and more of these calls from companies and it is a bit alarming because what sounds like an attractive deal is extremely risky, especially because the Department of Labor and IRS are cracking down on employers who have misclassified employees as independent contractors.
A recent case called Solis v. Cascom, Inc. involved a group of cable installers that the company classified as independent contractors. Here were some of the problems with that classification: They were performing a core business operation (cable installation); they were not hired for a specific amount of time or project; they completed an application for employment; they could not hire anyone to help them perform the work; daily work was largely controlled by Cascom - mandatory check-ins during the day, mandatory paperwork, meetings, etc.; they were required to wear shirts with the company logo; they had to request leave; had virtually no control over how their time was spent; and the installers did not advertise their work to other businesses nor did they perform work for others.
It's no shock, then, that the court said they were employees, not independent contractors. Cascom is now on the hook for up to $1.6 Million in back wages and damages. This case was pretty clear, but what I worry about are all of those other situations that are not this clear.
The definition of an independent contractor varies depending on what agency is looking at the issue, but here is a list of factors to consider:
- Provides and controls his/her own equipment and tools and has other business assets.
- Operates from his/her own business location.
- Is free from direction and control over the means and manner of providing service.
- Is customarily engaged in an independently established business.
- Serves customers of his/her own choosing.
- Provides materials and supplies, has money invested in the work and may risk loss.
- Has his/her own processes for the job.
- Sets his/her own schedule and determines which contract will be worked on at any given time.
- Must complete work according to the terms of the contract. Quitting or termination may bear legal consequences.
- Warrants work at his own cost or may provide warrantee insurance coverage.
- Is responsible for all business licenses, certificates and registrations.
- May advertise, have business cards, signs, and logos.
- Fills out form W-9 when hired and receives 1099 at year-end.
- Hires and pays his/her own workers.
- Upon hire, has all required skills (no on-the-job training).
- The person employing the independent contractor may specify the final result, but may not specify how the final result is achieved.
- Must maintain a business location that is separate from the business or work location of the person contracting services.
- Must bear the risk of loss.
- Provides contracted services for two or more different persons within a 12-month period.
- Makes a significant investment in the business through means such as purchasing tools or paying for premises or facilities.
- Has the authority to hire and fire other persons to help them perform services.
An independent contractor does not have to meet all of these requirements and every relationship should be reviewed on a case-by-case basis. However, knowing the incredibly high standard that exists, unless you are absolutely brilliant diamond clear, don't take the risk. Classify them as employees. If you want to learn more, check out our webinar entitled "How to Determine if you Have an Employee or Independent Contractor."
Survey Spotlight
By Tina Hamel, Survey Manager
thamel@cascadeemployers.com
SalaryTrends® surveys from Cascade Employers Association cover the pay practices of diverse organizations from various markets (Oregon, SW Washington, Northwest Regional, and National), and include multiple relevant data summaries. These valuable tools enable users to evaluate their competitiveness within specific talent markets.
Now Open for participation:
- Oregon Regional Pay Survey (24/7/365)
Contact us with questions at surveys@salarytrends.com.
FreshView on Compliance
By Cascade Staff
info@cascadeemployers.com
FreshView Compliance Scenario: Frankie has a habit of working a lot of unauthorized overtime. Your handbook prohibits working overtime without prior authorization from a supervisor. Since the overtime is unauthorized, which violates company policy, Frankie's supervisor notifies payroll that no overtime is due. Any problems?
Answer: The problem is that Frankie has not received his overtime wages.
Even if an employee works overtime without prior authorization, payment for the overtime must be made. Failure to pay could result in significant penalties for the company. Rather than refusing to pay, Frankie's supervisor should have had a conversation with Frankie about the company's policy about working overtime. A tool employers can use to help minimize this risk is a supervisor manual that communicates the company's policies and procedures.
Did You Know?
Do you reward employees for good attendance? If you don't, who does? Most companies do not reward for good attendance, according to the 2011/2012 National Policies & Benefits Survey. Over 75% of organizations do not give out any rewards at all, even when given a list of choices such as a certificate or plaque, a monetary award, lunch, or a gift. The only notable exception in the responses was for union companies with under 500 employees – 24% of these companies gave a monetary award.
Cascade Members, would you like a sample attendance policy? Just log in to the Member Area on the Cascade website to download the comprehensive policy that is available for you to use.
©2011 Cascade Employers Association. All rights reserved.
SalaryTrends® is a trademark of Cascade Employers Association.
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