The Staffing Edge Blog

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The Staffing Edge and Their Website Are Moving to People 2.0

Posted by Stacey Jones


Apr 15, 2019 9:00:00 AM

The Staffing Edge and Their Website Are Moving to People 20As you know, in 2018, The Staffing Edge (TSE) partnered with People 2.0 to expand into the global staffing market. As a leading provider of global back-office solutions for staffing firms, People 2.0 takes on your temporary placements as our own compliantly-classified employees—helping you grow your business and focus on doing what you do best: placing top talent for your customers.

Now, after a year together, we’re excited to announce that The Staffing Edge is officially moving under the People 2.0 umbrella!

Our Website Will Be Sunset on May 6, 2019

On May 6, 2019, The Staffing Edge is moving to People 2.0’s website, where you’ll still be able to find all the same great content at our new web address.

From industry news to trends and tips, you can continue to learn from our expertise by visiting us at the official People 2.0 site.

If you try to access after May 6, 2019, you’ll be redirected to the People 2.0 website.

Join Us at the ACSESS 2019 National Conference in Quebec

We’re looking forward to launching our rebrand debut at this year’s ACSESS National Conference!

If you’re attending the ACSESS 2019 National Conference in Quebec next month, make sure to stop by and see The Staffing Edge at our official People 2.0 booth.

TSE and People 2.0 would like to thank you for your support. We look forward to our continued partnership, and the new global reach we can offer under the People 2.0 brand!

Interested in learning more about People 2.0 and how we can help you grow your staffing business? Make sure to stop by booth #11, or feel free to check out our website!


Topics: The Staffing Edge

3 Easy Ways to Misclassify Employees

Posted by Corinne Camara


Apr 8, 2019 9:00:00 AM

3_Easy_Ways_to_Misclassify_EmployeesAs the gig economy has gained steam in Canada, there’s been more attention paid to how companies are hiring and employing people. While there are many upsides to newer forms of employment, some advocates and government officials are concerned about employers taking advantage of uninformed workers.

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One of the emerging concerns is employee misclassification. Some people worry unscrupulous employers are purposefully misclassifying their employees to circumvent their obligations. These might include paying employer portions of benefits or providing paid vacation and holidays.

While there are undoubtedly some employers who seek to take advantage of these “loopholes,” it’s much more common for employers to accidentally misclassify employees. Here are a few easy ways misclassification happens. Once you’re aware of them, you can take steps to avoid classifying your employees incorrectly.

1. The Most Common Mistake Is to Misclassify Employees as Contractors

Most concerns around employee misclassification have cropped up due to the increasing number of people who work as contractors. Often known as freelancers or self-employed professionals, these workers are not considered employees.

Contractors are considered to be businesses, and when they work with your business, it’s a business transaction rather than an employee-employer relationship. The contractor has increased freedoms, such as negotiating their rate of pay, determining their schedule, the ability to outsource work, and ownership of tools.

Since contractors aren’t employees, you aren’t responsible for withholding tax or offering paid vacation.

It’s relatively easy to misclassify employees as contractors. You may believe you’ve hired a contractor. However, you might determine their wage, when they work, and how the work is completed. If so, you may actually have an employee on your hands.

2. Misclassifying Permanent Employees as Temporary

As the staffing industry has grown, a lot of people have decried unscrupulous firms that take advantage of workers who may not know their rights. While many staffing firms are legitimate, these “bad apples” give everyone a bad name.

A supposedly common practice among these agencies and their clients is to define permanent employees as temporary for as long as possible. This usually means the “temporary” employee isn’t entitled to wage increases, benefits, or other perks that would be afforded to a permanent employee. The problem arises when the worker continues to be employed steadily, sometimes for years at a time.

It can actually be somewhat easy to misclassify a permanent employee as a temporary one. You may have a project continue on, so you renew an employee’s contract several times over. They may move to new positions within the company, so you believe they’re “temporary.”

A government official may have another view.

Many governments are now taking steps to make it more difficult to do this, such as forcing temporary contracts to have end dates. In some countries, employers are forced to make an offer of permanent employment if a temporary employee stays on for a certain period of time.

3. Misclassifying Full-Time Workers as Part-Time Workers

This is another relatively easy mistake for employers to make. You hired someone on and allocated them a certain number of hours or shifts per week. You believe they’re part-time workers.

This can depend on the industry you’re in. Some industries have higher or lower hour totals to be considered full-time or part-time. You may also run into a situation where a part-time employee begins working full-time hours regularly, but you don’t change their employment status.

Much like the temporary employee, a part-time employee may not be entitled to the same benefits as full-time employees. This is why it’s a problem when workers who are classified as part-timers put in full-time hours.

If employee misclassification is a concern in your firm, then you’ll want to carefully review the legal definitions and ensure your employment contracts use the same definitions. If you need help checking or maintaining compliance, get in touch with a back office service provider. They can help you avoid misclassification missteps.


Topics: Compliance and Legislation

5 Signs It’s Time to Break up with Your Back Office Service Provider

Posted by Ray Gonder


Apr 3, 2019 9:00:00 AM

5 Signs Its Time to Break up with Your Back Office Service ProviderYou’ve been working with your back office service provider for some time, but you’re not sure they’re still the right fit for your business. Maybe they were at first, but you’ve outgrown them. Maybe they made you a promise that seemed too good to be true, and it’s turned out that way.

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If you notice any of these five signs, it’s time to break up with the service provider you’ve been working with. There’s a better partnership waiting for you.

1. Your Back Office Service Provider Makes Promises But Doesn’t Deliver

If you’ve been having issues with service delivery, it may be time to part ways. Time and time again, you complain to the provider about an error or a task that isn’t completed on time. They promise you they’ll get it done or correct the problem.

Maybe everything operates smoothly for a week or two. Then the problem returns. A payroll error you thought was resolved happens again. Your remittances are sent out late. Training for new software is delayed.

While it’s understandable these kinds of issues will happen eventually, it’s disruptive when they occur on a regular basis. If your provider keeps making promises but seems unable to deliver, it’s time to break up with them.

2. You’ve Outgrown Their Services

This is a problem that is neither your fault nor your provider’s. When you first signed up with this back office provider, they were able to meet all your needs. Now, as your business has grown, they’ve become less able to provide services.

This could be an issue of scaling services. Your provider isn’t large enough to keep up with you, meaning you experience “growing pains” and service interruptions. It may also be an issue of the provider not offering the services you need.

In either case, it’s time to move on. There are other providers out there who can meet your needs readily. Rest assured someone else offers the services you require.

3. You’re Paying Too Much for Services You Don’t Use

This is a common problem for staffing firms that outsource any service, not just back office administration. Your contract may include services you don’t need, want, or use. As a result, you end up paying far too much for the services you do use.

At the time you signed your contract, you may have envisioned using these services, or perhaps the price was low enough to justify them even if you didn’t use them. Now, however, price increases or a lack of use have made it clear how much of a cost these services represent to your business.

As you head into your next contract, carefully review the terms to make sure you’re paying a fair price for the services you need and use. Try to find providers who will let you unbundle services so you get what you want.

4. You’ve Landed in Trouble with Compliance

One of the reasons you may be working with a back office service provider is to maintain compliance. If you’ve been penalized for non-compliance in payroll or another area, it could be time to break up.

If the provider flagged issues but didn’t suggest how you could follow up, they may not have the expertise you need. If the issues were missed altogether, it’s definitely time to seek out a new team, so you can have access to the experience and advice your business requires.

5. They’re Not Up to Date

Another reason you may want to consider seeking a new partnership is technology. Many staffing firm owners seek to work with back office service providers to leverage newer technology, such as the latest ATS or payroll software.

If your provider is using outdated technology, you’re not receiving this advantage.

If you notice any of these signs, it’s time for a new partnership. Do your research and talk to other service providers. The right one is out there.



Topics: Back Office Service Provider

5 Mistakes You’re Making as an Independent Recruiter

Posted by Stacey Jones


Apr 1, 2019 9:00:00 AM

5 Mistakes Youre Making as an Independent RecruiterStriking out on your own as an independent recruiter can be a great opportunity. However, running your own recruitment firm is also a challenge in many different ways. It’s easy to hit some stumbling blocks on the road to success. What matters is recognizing when you’ve made mistakes, then taking steps to correct them.

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Here are some of the most common mistakes independent recruiters make. If any sound familiar, it’s not too late to adjust your procedures.

1. An Independent Recruiter Tries to Source Clients from Ex-Employers

If you’ve been in the staffing industry for some time, you may have a lengthy list of people you’ve worked with. Many people mistakenly believe they can take this list of potential clients with them when they strike out on their own.

Always check your contract with any current and former employers for non-compete clauses. These clauses prevent you from “poaching” clients when you decide to leave. Even if a client liked working with you specifically, reaching out to them once you’re independent could be a contract violation.

Most non-compete clauses eventually expire, but many last for years. Before going solo, review the terms of your contracts with previous and current employers. Then make a list of clients and when you can contact them. You may find your list substantially narrowed, which can affect your business outlook.

2. You Price Yourself out of the Market

It’s a scenario you might have thought about as an independent recruiter. If your prices are too high, you could find yourself unable to compete with other staffing firms in the area.

Your clients are likely willing to pay a premium to work with you. This is particularly true if you work in a certain niche or you’re considered one of the foremost recruiters in an area.

By contrast, it’s also possible to set your prices too low. This is a much more common mistake. Independent recruiters worry their high rates won’t attract any business, so they lower prices. Sometimes, they lower their rates too much and aren’t able to make ends meet or grow efficiently.

Finding the right price is difficult but possible. Do some careful research, ask current and prospective clients for feedback, and consider your costs to make the right decision.

3. You Ignore Your Niche

Independent recruiters are often most successful when they develop their expertise in one area or industry. For example, you may develop expertise in helping healthcare firms meet their staffing needs.

As an independent recruiter, it can be tempting to focus on horizontal expansion, rather than vertical growth. This creates a twofold problem. First, you go too wide and spread yourself too thin. Second, you fail to capitalize on your expertise and talent.

If you have a niche, be sure you’re giving it attention. If you’re not sure what your niche is, take a step back and identify the industries you do the most business with.

4. You Offer Only Permanent Staffing

Another mistake independent recruiters often make is offering only one type of service. This is most often permanent staffing.

You may feel you can’t compete with larger staffing firms that offer better terms and lower prices. You may also worry about the additional paperwork offering contract staffing services can create.

It’s easy to offer contract staffing services to your clients, even as an independent recruiter. All you need is some back office help.

By expanding your service offerings, you’re better able to serve your clients’ needs.

5. You Don’t Get Feedback from Candidates

Have you asked your candidates why they liked working with you, or why they didn’t return? If not, it’s time to collect their feedback. It could help you identify why candidates aren’t sticking around or how you can source more candidates more effectively.

These common mistakes can be easily resolved. If you see any of them in your business, take corrective action immediately.



Topics: Independent Recruiters

Networking Strategies for Recruiters

Posted by Mai Dowdie


Mar 27, 2019 9:00:00 AM

Networking Strategies for RecruitersRecruiters rely on networking. Almost anyone you encounter could be a client or a candidate. Whether you meet them at the gym or scope out their profile on LinkedIn, you never know who will prove to be a valuable lead.

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Networking is one of the most crucial parts of any recruiter’s job. If you’re not networking, you could be restricting your agency’s growth, either by not finding new clients or by not being able to source the candidates you need.

Recruiters sometimes find networking intimidating. After all, there are many different ways to go about it, and every social interaction could become a lead. How can you be sure what you’re doing is effective?

Try a few of these strategies to improve your networking efforts. Maybe you’re using some already. If so, you’re likely well on your way to recruiter success. If you haven’t tried these activities yet, the good news is it’s easy to get started.

Leverage the World of Social Media

The internet has made networking easier than ever. If you’re a recruiter, one of your first stops might be LinkedIn. On this social platform, you can connect with a number of different professionals.

You can also seek out potential clients and candidates on other platforms, such as Facebook and Twitter. Keep in mind that social media platforms have different demographics.

Don’t be afraid of networking with almost anyone on these platforms. It’s often tempting to aim for the top, connecting with CEOs and other members of the C-suite. You should also connect with hiring managers and other professionals. You may not think an engineer is a useful connection, but they could be involved in hiring decisions for their department.

Some of these people might also be passive candidates. They’re not looking for work right now, but they’d be open to the right opportunity.

Connect with Other Recruiters

As an independent recruiter, you may see all other recruiters as your competition. As such, you try to avoid them at conferences or on LinkedIn.

You should embrace other recruitment professionals. You never know who is going to move into a role as a hiring manager. Maybe someone refers a new client to you because you have expertise in a particular area.

Other recruiters also have the benefit of experience and insights on best practice. Getting great advice is never easier than when you can crowdsource the wisdom of numerous recruiters.

Research Events and Choose the Right Ones

If you’re a recruiting expert for the IT industry, it makes sense to attend a conference for cybersecurity professionals. If you primarily recruit engineers for the oil industry, this conference might have little to offer.

Research conferences and other networking events carefully. Choose those that most benefit you. Events that speak to your niche are good choices.

If you find it difficult to approach new people once you’re at the conference, there are some tactics that can help. One is to pretend you’re the host of the event. Since every host wants to make sure their attendees are having a good time, this mental roleplay can make it easier to approach other attendees.

Be Prepared

If you do head out to a conference or another event, make sure you’ve created a plan beforehand. Try to scope out some of the other attendees and ask if they’d like to meet with you.

Remember to be prepared whenever you head to a meeting. Keep business cards on hand.

These strategies can help as you try to network more effectively. By connecting with more people, you’ll grow not only your network but your business too.

Download The Complete Guide to Starting Your Own Staffing Agency

Topics: Independent Recruiters

Why Payroll Funding May Be a Better Choice Than a Bank Loan for Your Staffing Agency

Posted by Chelsea Henry


Mar 25, 2019 9:00:00 AM

Why Payroll Funding May Be a Better Choice Than a Bank Loan for Your Staffing AgencyWhere are you getting the money to pay your job candidates? You’ll need to be sure you have the funds to pay them each and every pay period. You may not be able to rely on incoming funds from your clients either. Clients may pay for your services on 30-, 60-, or 90-day terms. They may also pay late.

Download the Ultimate Guide for Independent Recruiters Looking to Offer  Contract Staffing Services

You might think a bank loan will be the solution to your problems. With an injection of cash, you’ll be able to keep operating and paying your workers, at least until your clients’ payments arrive.

The bank loan isn’t always the best option. In fact, you may have a better option available in the form of payroll funding.

What Is Payroll Funding?

Payroll funding is designed to help you manage the demands of payroll. Unlike a bank loan, it offers ongoing support.

In the staffing industry, this is incredibly important. Staffing is often a cash-negative business, with salaries and subcontracting accounting for more than 85 percent of operating costs. The more you grow, the more money you’ll need to pay additional workers, and your new clients’ bills may not be due for 90 days.

A one-time bank loan won’t resolve cash flow issues. Even if you think the issues are temporary, the staffing industry is full of twists and turns. You never know what the business cycle is going to throw at you.

Ongoing Funding as You Need It

What are the advantages of choosing payroll funding over a bank loan? The first major benefit has already been covered. It’s the ability to get the funding you need on an ongoing basis.

Bank loans are one-time injections of cash for the business. While they have their place, payroll is an ongoing expense for a staffing agency. A one-time cash injection is like slapping a bandage over a larger cash flow issue.

Funding designed for payroll recognizes this reality. That’s why it’s also flexible, meaning the amount given can increase or decrease alongside your needs. A growing business will need more, while a business facing a slowdown will need less. Payroll funding acknowledges your changing needs.

Banks Back Loans with Hard Assets

When you go to take out a loan at the bank, you’ll likely be asked to provide collateral. If you’re using the money to buy a house or a car, you can provide this with relative ease.

When it comes to getting ongoing financial help with your payroll activities, though, you may not have the assets the bank wants to see. Without collateral, the bank may not give you a favourable interest rate or may reduce the amount of the loan. Some banks may refuse to offer a loan at all.

Banks Don’t Understand Your Needs

This points to a fundamental problem with using a bank loan to fund your payroll activities. The bank just doesn’t understand your staffing agency’s needs.

Bank loans are rigid, one-time use financing options, unlike flexible payroll funding options. Worse, the bank will ask for hard assets to back the loan, which you may not be able to provide.

Finally, the bank is likely to offer you funds and funds alone. They can’t offer you the expert advice a back office service provider offering payroll funding can offer.

If you’re in need of new financing options for your staffing firm’s payroll activities, consider working with a back office provider that offers payroll funding. You may have just found the best solution for your payroll needs.


What’s in Store for the Staffing Industry in 2019?

Posted by Karen McMullen


Mar 20, 2019 9:00:00 AM

Whats in Store for the Staffing Industry in 2019With two months of the new year now behind you, you may already be seeing some trends forming in your agency. What you encounter could be part of larger, industry-wide trends for 2019.

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What are experts predicting for the staffing industry during the remainder of 2019? If the first two months are anything to go by, it’s going to be an interesting year.

Continued Staffing Industry Growth

The staffing industry has been growing at an exceptional rate for several years now, and the trend is predicted to continue. The key difference is there could be a slowdown in the rate of growth.

Why is the industry going to keep growing? The trend towards temporary and contract employment is projected to continue apace. The gig economy is in full swing in the United States and Canada, and most experts don’t see this changing any time soon.

Changes in the market could also contribute to staffing agency growth. There are some concerns about an economic slowdown, which could translate to higher unemployment rates. Temporary and contract staffing is likely to expand in this scenario, which could mean more clients for staffing agencies.

Low Unemployment Introduces New Challenges

For the moment, however, unemployment is relatively low in Canada and the United States. This creates a more challenging environment for staffing agencies. Employers may still be on the hunt for new employees, but there are fewer job seekers.

This generates more difficulties for recruiters to successfully locate and place qualified candidates.

Two things could change this narrative for 2019. An economic slowdown could increase the number of people looking for jobs. This would make more candidates available.

A number of people aren’t counted in unemployment statistics because they’ve stopped looking for work. These people may now re-enter the market on account of low unemployment. This would create an influx of candidates, again making the recruiter’s job easier.

Investments in Technology

Another growing trend for 2019 is the increasing investment in technology. Many industry leaders believe technology has now become make-or-break for staffing agencies seeking optimal operations. Those who adopt new technologies will become leaders, while those who don’t will get left behind.

It’s probably the reason many experts suggest those in the staffing industry should increase their budgets for technology. Adopting new technology, such as chatbots and AI, could be the difference between growing your business and losing out to your competition.

A Shift to Service Orientation

One interesting trend to watch in 2019 is the shift to a service orientation within the staffing industry. Already, industry leaders are talking about the need to focus more on both the client and candidate experience.

Sustained growth over the last several years in the industry has increased the number of staffing firms. Competition is fiercer than ever, which means agencies like yours need a way to differentiate themselves and compete.

The experience you offer your clients and candidates is one way to offer something different. Candidates who have a good experience are likely to return for more assignments. They’ll also be more likely to recommend your agency to others. Clients who have a good experience are likely to continue working with you and even increase the services they purchase from you.

Rising Concerns for Compliance

Another industry trend to keep an eye on will be the increasing concern about compliance, especially in the Canadian market. In the last two or three years, a number of provinces have introduced new rules and regulations aimed at tightening the staffing industry.

New employment laws, like increased minimum wages and more paid and unpaid leave for employees, also affect your compliance efforts.

The staffing industry will continue to evolve through 2019. Although the road ahead isn’t without its challenges, there are also many positive trends to look forward to.


Topics: Staffing Industry

3 Wrong Ways to Become an Independent Recruiter

Posted by Mai Dowdie


Mar 18, 2019 9:00:00 AM

3 Wrong Ways to Become an Independent RecruiterBecoming an independent recruiter is a great career move for many professionals in the staffing industry. Perhaps it’s the right move for you. If you’ve gathered experience at an agency, learned about the ins and outs of running a business, and developed a great contact network, it could be the best move you’ll make.

Download the Ultimate Guide for Independent Recruiters Looking to Offer  Contract Staffing Services

That said, there are quite a few stumbling blocks you should watch out for when you want to become an independent recruiter. There are many right ways to go independent, but there are just as many wrong ways. Here are a few of the most common mistakes staffing industry entrepreneurs make.

1. You Try to Convince Clients to Come with You

If you’ve been working at an agency and developed strong relationships with some of the clients there, you may think it’s only natural to ask them to come with you.

Unfortunately, this can land you in legal trouble. Most employment contracts will contain a non-compete clause. If you change jobs, you’re not allowed to entice clients to follow you.

This restriction applies even when you start your own business. If you ask clients to follow you when you leave your current job, you could be in breach of contract.

The good news is that most of these non-compete clauses expire within a few years, but you should always check the terms of your contract. It can be difficult to maintain a relationship with a client you’re no longer working with, but once the non-compete period has expired, that client may be delighted to hear from you.

Be sure you have a pool of clients who aren’t drawn from your current client portfolio, and you’ll be in much better shape.

2. You Think You Have to Do It All

Another common mistake for staffing industry entrepreneurs is taking the “independent” label to heart. You may believe that as an independent recruiter, you have to do everything alone.

You may feel pressure to take care of every task in your new business. Financial concerns are often the reason recruiters take on tasks like payroll, marketing, and bookkeeping.

This can hinder your business’s growth. You may think you’re saving money, but the hours you spend on payroll can cost you more than you realize.

The good news is affordable help is often much closer than it seems. If you need help with marketing, talk to a marketing agency. If payroll or other administrative jobs are holding you back, talk to a back office service provider. They can take over these crucial roles and free up your time to look after your core responsibilities.

3. You Get Pricing Wrong

How much should you charge for your services? It’s a challenging question for anyone in the staffing industry. Even agencies sometimes struggle with balancing costs and their fees.

Many independent recruiters believe they have to undercut large agencies in order to win any clients. This often leads them to underprice their services, which makes it far more difficult to break even and keep the doors open.

Large agencies often achieve their prices using economies of scale. Since they’re large, they buy up more services, which drives down their costs. As an independent recruiter and small business owner, you don’t have this same advantage.

Revisit your pricing on a regular basis. You may need to charge more in order to turn a profit. You shouldn’t worry too much about this. Clients who want your expertise will pay a bit of a premium to work with you.

These are only a few of the common mistakes independent recruiters make when they set out on their journeys. If you avoid them, you’ll be well on your way to success.


Topics: Independent Recruiters

Start 2019 Right with the Help of a Back Office Service Provider

Posted by Corinne Camara


Mar 13, 2019 9:00:00 AM

Start 2019 Right with the Help of a Back Office Service ProviderAlthough 2019 has been around for a couple of months now, it’s not too late to start the new year on the right foot. In fact, many professionals in the staffing industry may feel the year is only just beginning.

Download "Running a Staffing Agency: The Who, What, When, Why, and How" Guide

The winter months can be slow for hiring, which means January and February are often quieter months at a staffing firm. You may also run your fiscal year to coincide with the end of the tax year, which means May 1 is the start of a new year for your business.

Either way, spring often heralds the beginning of a busy year ahead for staffing agencies and their employees. If you want to stay on top this year, consider working with a back office service provider.

What Is a Back Office Service Provider?

The first question you likely have is, “What is a back office service provider?”

This staffing industry partner provides administrative services, such as:

  • Payroll management
  • Bookkeeping
  • Compliance
  • Workers’ Compensation
  • Financing

Most vendors act as consultants as well. You can collaborate with them on policy reviews, HR tasks, and more.

In short, a back office service provider takes the administrative side of running your agency off your hands. With your time freed up from these crucial yet time-intensive tasks, you can focus on your own areas of expertise.

Why You Should Get Help with the Back Office

Many people in the staffing industry see working with a provider as an additional expense. They may feel confident they can handle all their back office tasks themselves.

Stop and ask yourself if this is really the best use of your time. For all the hours you spend administering payroll, what other jobs could you be working on?

This is probably the best reason to work with a back office service provider. As suggested above, the experts can help you get back to your core jobs. In turn, you can focus on growing your business, improving client relationships, and more.

Working with a service provider can save you more than time. It can also save you money. Add up all the time you and your staff spend on payroll and other administrative tasks. How much are these tasks actually costing you?

It may be costing you even more than you think, especially if you need to contend with payroll errors, misclassification penalties, or remittance tax penalties.

Finally, working with a service provider streamlines your back office. You can rest assured tasks will be completed correctly and on time. With the back office running smoothly, you can get back to what matters.

Getting Back Office Support Can Propel Your Success

As mentioned, completing administrative work in house could be costing you more than you think. It may also be stalling the growth of your business.

A service provider uses the latest technology to complete tasks more efficiently. This frees up time and saves money. It also allows the provider to scale quickly when your business enters an expansion phase. Working with a provider lets you take advantage of all those opportunities when they come knocking on your door.

Discover What a Service Provider Can Do for You

If you’re still handling payroll and other similar work in house, it might be time to talk to a back office service provider. If you’re still wondering what these experts can do for you, get in touch with one. A provider can help you find the right service solution for your business.


Topics: Back Office Service Provider

What Is a Worker Classification Program?

Posted by Chelsea Henry


Mar 11, 2019 9:00:00 AM

What_is_a_Worker_Classification_ProgramIf you hire independent contractors or temporary workers for your business, you must have a worker classification program in place.

Download "How Small Firms Can Compete with the Top Staffing Agencies" Whitepaper

You might ask what the purpose is, and you’ll probably ask why you need one. What does this type of program do?

This guide will help you understand what a classification program is designed to accomplish, and why you must implement one.

The Ongoing Issue of Worker Classification

As the gig economy continues to gear up, work is changing. More people are moving away from the traditional employer-employee relationship. In Canada, self-employment is on the rise.

This changes the traditional workplace relationship. Self-employed individuals are commonly identified as independent contractors, and your responsibilities to them will vary. They are not employees, and you must treat the two classes of workers differently.

The same may be true for other types of employment. For example, temporary or seasonal employees may not be entitled to the same protections as permanent employees. Full-time workers may receive different benefits than part-time workers.

You can see why it’s so important for employers to clearly identify the different classes of workers they employ.

Governments Take Aim at Worker Misclassification

As temporary and contract employment arrangements grow in popularity, it’s become easier for employers to misclassify the people they work with. Governments have been increasingly concerned about this. In the United States, the IRS has initiated a worker misclassification program. The IRS will rule on the classification of an individual at the request of the worker or the employer. Some states have introduced their own legislation and penalties for worker misclassification.

The situation is a little different in Canada, but there’s been growing concerns about the misidentification of worker types. Specifically, there’s concern some employers purposefully misclassify employees as independent contractors in order to put tax burdens on the employees.

In some cases, misclassification is completely accidental. You may believe someone is an employee, but they actually meet the definition of an independent contractor. In this case, you may be paying into programs like Employment Insurance incorrectly.

The situation around part-time, full-time, temporary, and contract employees may also be confused, which can lead to mistakes in your payroll taxes.

The Solution to the Issue

A worker classification program is the solution to the problem. If you hire independent contractors, the best thing you can do is develop a strong classification program.

This program will clearly identify the types of workers you hire. It will allow you to differentiate between types of workers, so you can be sure you’re classifying them correctly.

You must ensure you’re complying with local law. For example, in the US, you’ll want to consult with the IRS’s definitions of employee and independent contractor. The IRS makes clear distinctions in the relationships between contractors and employers, and employees and employers.

If you have control over how a worker completes a job, you likely have an employee on your hands. If the worker can make decisions about the materials, equipment, and even timing of the project, then you’re probably dealing with an independent contractor.

What Happens If You Misclassify a Worker?

As mentioned above, some governments have been taking a stance on employee misclassification. Depending on where you operate, you may face stiff penalties for employee misclassification even if it was accidental.

If you misclassify an employee as an independent contractor, you may be responsible for back payments for Employment Insurance, CPP, taxes, and benefits.

This is why it’s so important to have a worker classification program. There’s a far lower chance you’ll misclassify a worker, which helps you avoid penalties. If you’re unsure, ask for help understanding the regulations in your area and what you can do to ensure you comply with the law.


Topics: Worker Classification

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