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Hiring Independent Contractors vs. Employees: What You Should Know

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Independent contractors and employees both work for the company that hired them. Sometimes, they may even do the same job, in a different way. However, there are actually several differences between the two that may affect how background checks work.

Here we look at those differences so you may know how to approach the two different types of workers of your company, and how you should conduct background checks before hiring them.

Control

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The most evident difference between the two is that although they both work for the same company; the employer possesses different levels of control on them.

The employer can control how, when, where, and what an employee can do within the company. However, independent contractors can do what they do best, as long as the result satisfies the employer.

That’s why during background checks, employees should be assessed of their productivity, creativity, and things like that, while contractors only need to be checked whether their services are top-notch.

Payments and Taxes

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Employees are paid depending on the hours they worked for the company. However, independent contractors are paid for every task they finish.

In addition, employment taxes are paid by employers while contractors pay for self-employment taxes themselves.

So, you’d better make sure employees have a great history with other companies so employment taxes and benefits will be worth it.

Loyalty

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Employees usually work for only one employer, unless they have time to juggle more than one job. In the case of independent contractors, they can work for as many companies as they want.

This is the reason why you should check the history of independent contractors with completing multiple jobs at the same time because that’s going to be the case most of the time.

Work Hours

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Employees are required to work in fixed hours set by the employer. Independent contractors work their own hours.

If you want to achieve optimum results for contractors, make sure you check first their agency if their typical work hours suit the needs of your company.

Different problemsrequire different solutions. Companies are no exception. Before conducting background checks on an applicant or an agency, make sure first if they really are what you currently need in your company.

Why You Should Consider Looking for Permatemps for Your Company

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A permatemp is an employee that temporarily works for a staffing agency, which will then be handed out to companies looking for seasonal employees. The difference between temporary workers and permatemps is that permatemps work for an extended time.

As someone involved with a company, you should already know that there are disadvantages in hiring temporary workers. However, those can now be avoided through precautions and countermeasures such as background checks.

Now, rather than looking at the negatives, you should look at the benefits of temporary staffing. Here we look at the benefits of hiring permatemps and why you should start doing so, too.

Less stress for employers

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Companies sometimes experience fluctuations in their productivity and workforce. That’s why it’s important to have an emergency plan for when this happens.

Permatemps are great because they can help companies in these times, and they can stop doing so when the company no longer have problems with their staffing.

Uncertainty with companies

One problem that companies face nowadays is that when they hire someone and make them commit to their organization, they sometimes struggle with keeping their word.

When things go south, they may have doubts about letting employees go. With permatemps, the employees know very well that they may be let go anytime.

It helps customers

Not only will it help the hiring companies, but it will also benefit their customers. If the company becomes understaffed, products and services may not be as great as it was originally.

Permatemps are able to fix this since the company won’t have to face seasonal rush periods without enough workforce.

Permatemps benefit, too

Permatemps proven reliable by background checks will also benefit from their own work. It’s not all about their salary, though. It also helps them work easier because they won’t have any problem adjusting to the seasonal rush period, so they won’t be overworking.

There’s no denying that permatemps play an important role in businesses, especially in seasonal rush periods. It allows for a more flexible workforce and increased productivity for companies.

Just make sure that you’ve prepared plans in case something bad comes out of temporary staffing.

How an Employer Should Do Background Checks on Temporary Employees

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Whenever a season rush period occurs, companies are driven to hire temporary workers so they may have enough manpower. However, as much as it is beneficial for them, the Human Resources Executives are struggling whenever this occurs in their company.

Not only is it because they’re going to be busy hiring people, but they also have to worry about workers that have malicious intents to the company. An example of this is stealing a customer’s identity.

So how should you conduct background checks specially designed to filter such workers when hiring temporary employees?

Many gaps leave the company exposed

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Before anything else, remember that although background checks can be helpful with ensuring the protection of the company, there are still gaps that may leave the company exposed.

Why cooperation is a must

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Fortunately, there’s a fix to this, but you’ll have to seek help from staffing agencies. What they basically do is they hire workers looking for temporary positions.

Now what you have to do is opt for these agencies. While they’re the ones paying your temp workers, you’re indirectly paying for their salaries through the staffing agency.

This is great because they focus on identity verification, a task that you won’t be able to do if you don’t have experience.

So, there’s no way a temporary employee with evil intents can be accepted since they conduct many processes to ensure the identity of the workers in the staffing agency.

Don’t forget about background checks

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While it’s likely that employees won’t threaten your company, you should remember that staffing agencies aren’t perfect.

That said, make sure you don’t forget that you can do background checks on your own. Also, ensure that the staffing agency is informed that they should conduct background checks on each and every temporary employee entering your company.

So, you don’t have to spend much time in picking who you should hire as a temporary employee. Now your only problem is finding out how to select a staffing agency.

Just like how you hire an employee, you should also conduct background checks on these agencies, focusing on things such as their reputation, reviews, and history from other companies.

Employment Laws You Didn’t Know Affect Independent Contractors

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Independent contractors are mostly agencies that handle a specific task in a company. It may work for a company, but when in contract, they’re still able to work for others. In short, they are not employeesand they are independent.

At first glance, it’s natural that your reaction may be that you should steer away from such services because they won’t be loyal. An example of this is a cleaning service. They can work for you, but they may also work for others.

However, as far as benefits are concerned, you’ll actually be better off hiring an independent contractor. But of course, even if they’re no employee, you still have to follow the laws regarding employment.

Here we look at the employment laws that will affect these independent contractors, and in turn, affect how you should approach the background checks of such services.

Exemption to Tax and Benefits

The hiring company may spend additional taxes on behalf of employees, such as unemployment and social security taxes, or employment benefits.

However, since it’s written in the paper that this only applies to employees, independent contractors will be a special case.

Since they aren’t employees of your company, you won’t have to spend such expenses on their services.

So, the next time you run a background check on them, make sure you focus on their reputation and management history, rather than their unemployment history or social security since it won’t be necessary.

Compliance to IRS Screening Process

The IRS, or Internal Revenue Service, uses information gathered from an employee or a self-employed group to calculate the income tax to be received.

This needs the cooperation of both the employer and the independent contractor. This is because you have to prove that the group really is an independent contractor.

They’d have to provide valid IDs, pay for the self-employment taxes, and more.

Thus, it’s important that you conduct background checks on the reviews of other companies they’ve worked for. That way, you can figure out if they did what they were required to do.

Department of Labor (DOL) Regulations

In addition to taking care of the IRS screening process, you’ll also have to comply with the regulations of the Department of Labor.

This is the most detailed regulations you’ll find, next to the IRS. So, we suggest you check the DOL Regulations in more detail.

Either way, this is the same with IRS because they’d also have to prove that the agency you hired is an independent contractor.

State Regulations

Lastly, you’ll find each state in the US has different regulations regarding independent contractors. Plus, if you can’t comply with them properly, there will be fines and other kinds of penalties.

This is actually quite simpler than the others. Firstly, make sure the agency is free from any hiring entity. What your business does should also be unrelated to the agency.

This is why background checks are essential. In addition to not paying a fine for being unable to comply with regulations, you can keep your company’s reputation untarnished.

Employment Law: Do You Know Your Rights?

From Visually.