Who-am-IOver the past thirty years, flexible working arrangements have become a high priority with some firms.    Employers known as a PEO (Professional Employment Organization) have become popular as well as contract labor, temporary help, and leasing agencies have become fast-growing sectors of the business world.   The employees of these booming industries show up to work and provide services to an employer that does not issue their paycheck or pay them benefits.  From an unemployment perspective, there has been much debate over the years as to who is the employer.

The most popular of service companies is the PEO.  This firm is not a temporary employment agency.  Instead, they contract with other employers to provide human resource services for a fee.   The PEO takes over the hiring, firing, insurance, and many other benefits.    For unemployment tax purposes, the PEO becomes the reporting vehicle.    Some states allow the PEO to report under a single state unemployment account number, thus issuing one rate for all the companies under contract.   Other states force the PEO to report under the client’s state account number.  The PEO becomes the employer as a result of the direction and control they have over the employees.     Volumes of legislation have been written from an unemployment perspective.   A bond is required and registration of the PEO in a given state to do business.

Contract labor is another sector that has seen growth and also much scrutiny.   The IRS issued a 20-Factor Test to determine the definition of an independent contractor.   Each state also defines and audits independent contractors.   The ABC test was also established to help determine if the employee is an independent contractor.    The basics of the ABC test are that the worker is free from direction and control. The services performed must be outside of the usual course of business that is being supplied under the contract.   Also, the worker must be engaged in an independently established trade or occupation or profession.   If any of these guidelines are not met, the independent contractor can become an employee of the firm.   Routine audits are performed by unemployment state agencies to identify workers who are misclassified as independent contractors.   Penalty and interest can be owed if the worker was misclassified.

Staffing companies, temporary agencies, and leasing companies have also seen tremendous growth as well as scrutiny from the unemployment agencies.   The contract between the two companies does not define the employer.    The employer, the organization who has direction and control over the individual, pays the individual supplies the tools of the individual and any training needed.   Any variance to this may result in the client being considered the employer for an unemployment claims.

Each state provides guidelines that define an employer.   Information can be found on each state‘s website regarding the definition of an employer.   If you are having independent contractor issues or have had issues regarding claims that made the client the employer, please contact your CCC Tax Analyst.


Contact CCC to see how we can save your organization time and money.
Contact our Sales Team
(800) 207-6926

Featured Videos

View All Videos

Latest News

Close

Sales

Your Name:*

Title:

Company Name:*

Company Address:

Company City:

Company State:

Company Zip:

Number of Employees:

Your Email:*

Phone Number:*

Fax Number:

Check the boxes below if you wish to receive information on any of the following:

Unemployment Cost ControlTax Credits & Incentives (WOTC)Employment / Wage Verification

Your Message:

Employment & Income Verfication

Your Name:*

Title:

Company Name:*

Company Address:

Company City:

Company State:

Company Zip:

Number of Employees:

Your Email:*

Phone Number:*

Fax Number:

Your Message: