Friday, May 20, 2016

1099 vs W2: The Employer Perspective

From an employer's perspective, it's often preferable to hire contractors instead of employees. For one thing, they won't have to pay for all the benefits they would offer employees, such as health insurance and perhaps life insurance, not to mention bonuses, stock options, 401(k) plan contributions, and so on. It can also be much easier to terminate a relationship with a contractor than with an employee.

The issue has increasingly been in the news, as many companies are increasing their proportion of contractors in order to spend less on staffing. Employers generally make these choices well within the law, but some have been accused of classifying workers who should be considered employees as contractors instead.

The IRS has issued guidelines on the matter, saying, "If you have the right to control or direct not only what is to be done, but also how it is to be done, then your workers are most likely employees." Meanwhile, "If you can direct or control only the result of the work done -- and not the means and methods of accomplishing the result -- then your workers are probably independent contractors." The distinction is important because there are penalties for misclassification.

But there is an answer. 

As an employer, you can avoid penalties for misclassification. Capstone Contract Solutions is a unique contract firm for insurance professionals - we provide insurance professionals on demand.  We help our clients fill interim needs in specialized disciplines while employing the same quality recruiting techniques utilized in our permanent search process. You avoid the hassles of misclassification as well as other related things such as payroll, etc. 

Contract insurance professionals can be a cost effective solution to your business’ critical staffing needs.  Faced with the necessity of project-specific labor services, many companies are finding contract services an effective means of alleviating short and long term staffing needs. We can help.


Thursday, May 12, 2016

What You Need to Know About Overtime Rules


The Department of Labor’s (DOL) proposed changes to the overtime rules is expected to be released as early as this month – under the Fair Labor Standards Act.

The proposed rules bump the salary threshold for overtime-exempt employees from $23,600/year to $50,440/year. If the final rules stay the same as the proposed rules, employees currently working in overtime-exempt positions who make less than $50,440 will now be entitled to overtime pay.

It’s possible the final rules could include a lower threshold – $47,000/year instead of $50,440 – but even if that’s the case, it will still mean a big jump. Employers will have to decide whether to increase workers’ salaries to make them exempt from overtime or reclassify them as non-exempt.

And since many employers have different benefit structures for hourly and salaried workers, if some employees need to be reclassified as non-exempt they could see their benefits affected.

So what do you need to know about overtime rules?


This proposal represents a 113% immediate increase plus an annual increase. The proposed overtime rule would initially raise the salary threshold defining which employees must be paid overtime by 113%, from $23,600 to $50,440. In addition, the DOL has proposed increasing this minimum salary on an annual basis.

The proposal will impact millions of workers and cost billions to businesses. According to the DOL, the rule will affect over 10 million workers – workers who may see their workplace flexibility diminished or a loss in other benefits they rely on, says the Partnership to Protect Workplace Opportunity (PPWO). The National Retail Federation estimates retail and restaurant businesses will see an increase of more than $8.4 billion per year in costs.

The implementation window is very short. As proposed, the implementation timeline for this rule is only 60 days, which will place a massive burden on HR departments and organizations scrambling to comply, according to the PPWO.

Many employees will need to be demoted. This change could force employers to reclassify professional employees from salaried to hourly – including many managers and those with advanced degrees – resulting in a loss in benefits, bonuses, and flexibility, and a reduction in professional opportunities.