From all reports, it is clear that the concrete industry is beginning to recover from recent economic woes. It is equally clear that hiring is increasing in the industry. This creates the potential for future problems if contractors are not careful about hiring. Stable headcounts, whether high or low, make for simpler administration. When headcount numbers are in transition, however, labor and employment problems tend to arise. To hedge against problems, some contractors elect to classify workers incorrectly as independent contractors. Still others make the mistake of rushing to hire warm (presumably live) bodies and inadvertently bring problems into their workforce.
Like most significant changes to your business, increasing the size of your workforce needs to be undertaken carefully and intelligently. This may mean that you have to spend more time in the hiring process, but more likely, you will delegate much of this responsibility to human resources. You definitely need to ensure that the right hiring practices are being followed no matter how quickly you grow. Also, gradual increases in your workforce can expose you to legislative or regulatory requirements.
Misclassification remains a huge problem in the construction industry at large. This is because contractors find it too easy to use itinerant or casual labor for short-term or project work that is relatively low skilled and fluctuating frequently. Because these workers come and go so often, many contractors treat them as independent workers rather than payroll employees. This is quite dangerous.
The recent economic problems faced by many state and local government agencies have resulted in a renewed push to collect employment taxes. Similarly, at the federal level, misclassification is viewed as a taxation, labor, and sometimes immigration problem. Increasingly, the usually distinct and disparate state and federal agencies are cooperating, sharing information and investigative leads. This means that a contractor who incorrectly classifies a worker as independent may face penalties imposed by Internal Revenue Service, the Department of Labor’s Wage and Hour Division, Homeland Security, as well as state or local tax, worker compensation, insurance, or other agencies.
What should a contractor do?
First, it is important to know and understand the principle test used to analyze a misclassification problem. Although many agencies adopt different elements to the tests, the underlying principle is whether or not you are “controlling” the worker. If you are telling the worker how to do the work, when to do it, what tools to use, or what clothing to wear, you are more than likely controlling that worker. When you exercise the right to control, you have an employee. Note: the right to control test looks at numerous factors, and these are but a few of them.
Relying on a third party
Instead of classifying workers incorrectly, some contractors rely on third parties. You should know that the results of a contingent workforce acquired through a staffing company are dependent entirely upon the quality of the staffing company. Best advice—check references carefully before selecting a staffing company.
Watch out for LUZIRS
Whether you hire workers directly or transition contingent workers from temporary to permanent status, by all means avoid hiring LUZIRS -- Lazy Undisciplined Zero-Interest Irresponsible Rude Slackers. The best way to avoid these bad hires is to consistently apply sound hiring practices. For example, make certain you are looking in the right place for your future workers. Use a well-designed application and do not rely upon a worker’s resumé. Interview carefully, asking open ended questions that require the applicant to do most of the talking. Check references always. Finally, use an effective orientation process to make the new hire part of your team.
As you grow, be aware of your exposure under federal or state laws and regulations. Note that these may vary depending upon the topic or the coverage of the law in question. For example, you become covered by Title VII discrimination prohibitions at 15 employees, age discrimination regulation at 20 employees, Family and Medical Leave Act requirements at 50 employees (within a 75 mile radius), and the Affordable Care Act at 100 employees in 2015. These are all federal statutes, and state or local laws and regulations may have different thresholds.
Everyone hopes that business will continue to improve. Avoiding these common mistakes will help ensure that you remain successful.