Why has 2012 been hailed as the year of the independent worker by so many publications? Are companies scaling back full-time employees in favor of project based staff? Though layoffs persist, technology is booming, and with perceptions changing worldwide, things look to be improving for independent workers and the self-employed. A recent report showed 83% of small businesses surveyed plan to hire virtual employees this year. More and more employees are going on their own during a time where information of all types is readily available. Today it's much easier for candidates to find projects and for companies to find candidates. All you have to do is go to the Web.
Consistent developments in technology have created a constant need for companies to train workers. That's an expensive demand and training a staff of 10,000 is no small task. Though corporate spending on training rose last year, many freelancers have been pushed out of their departments from set backs and budget trimming. They've had to become "independent consultants" of sorts. The internet has opened up markets that were originally unavailable and now independent contractors can simply join an online marketplace and upload their details. They can be ready to go in a matter of hours. Online marketplaces like oDesk, Guru and eLance offer employers the ability to hire employees for a wide range of projects -- from specialized engineering to hourly employment. Managers have the ability to review work before ending the contract and can see screen shots of the employees computer. Employers can easily post job notices on these sites and have qualified contractors submit their information.
My company Decca Media has used oDesk for a number of years. At the beginning it was because of the immediate access to talent -- we didn't have to bother with posting a job listing and sifting through potential employees. It has turned out to be a go-to for team building and some complex projects. These services are brilliant for new department formation and creative design projects; I have put teams together complete with animators, extranet developers, and copy editors.
There's no stopping the growth either, eLance just secured $16 million in financing. oDesk, with years of staggering growth in revenues, maybe even gearing up for an IPO sometime in the future. According to TechCrunch, the company expects the overall market for online work to grow to an estimated $1 billion in 2012.
I believe we'll see a large portion of the workforce go at it alone, maybe eventually join co-ops, if they don't already exist. Game changing innovations open the doors to new ideas, and these often lead to new opportunities. These opportunities can create such a market that employees can afford to start working as an independent contractor.
It just so happens that creative, independently minded individuals are some of the best at manipulating new technology. They have to in order to solidify a presence and establish legitimacy. Early adapters stand to gain the most exposure and rewards for climbing aboard and mastering these various systems. Many freelancers are forging alliances of sorts and creating company/agency-like templates and combining those with a loose network of affiliates they routinely work with in order to offer clients more services. Some are even choosing to go back into an office-like setting, comingling with other freelancers, to fight the isolation of working alone.
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Tim Higgins
PhraseSet
Many businesses that rely upon 1099ers to augment or staff their workforce have independent contractor agreements that are outdated at best, and their day-to-day practices are often inconsistent with the structure of the relationship set forth in the IC agreement. The lawyers in Pepper Hamilton’s multi-disciplinary Independent Contractor Compliance practice group (http://www.pepperlaw.com/PracticeArea_preview.aspx?PracticeAreaKey=72) use proprietary tools including its 48 Factors-Plus analysis and its IC Compliance Scale™ during the IC Diagnostics™ process developed and utilized by Pepper. Those tools identify areas of a business model that need enhancement in order to minimize the risk that increased government regulation will determine that a company’s otherwise legitimate IC relationships are being used to evade compliance.
In the face of government agencies that are increasingly seeking to impose tax, labor, and employee benefits costs and penalties upon businesses who have legitimate business models but who may simply be documenting and implementing them in an imperfect manner, IC Diagnostics™ may be an important consideration for end-users of the types of independent workers described in this Huffiington post. Forward-thinking companies should focus not only on how best to utilize these "virtual" human resources, but how to do so in a manner that complies with the current and changing landscape of laws affecting independent contractors and other contingent workers.
Richard Reibstein of Pepper Hamilton LLP (reibsteinr@pepperlaw.com)
Joint federal-state partnerships highlight the need for companies to examine their use of 1099ers and other contingent workers to determine if they have a need to enhance their independent contractor compliance. As the California and federal regulators remarked last week, their agencies are focused upon business models that “are used to evade compliance with the law.” However, they also remarked that “[b]usiness models that . . . change . . . or eliminate the employment relationship are not inherently illegal . . . .” Thus, both agencies acknowledge that businesses can legitimately use independent contractors, provided the use is compliant with legal standards.
Part 1 of 2-part comment by Richard Reibstein (reibsteinr@pepperlaw.com)