If you’re looking for a cost-effective solution to your staffing needs in the United States, hiring contingent labor may be perfect. Contingent workers are an excellent way of addressing growing talent demand and filling big strategic projects due to their fast response time and flexible nature. They can also help with adding new skills or expertise and accelerating growth within your company, which is always beneficial when businesses grow exponentially. However, before deciding whether this route would work best for you, you must understand what these types of employees entail in the specific US market. XML International shares here an overview, so your future decisions become more manageable.
Transformation of the US gig economy’s legislative landscape
- In 2021, as more and more companies seek to hire outside talent for their operations in various geographies abroad, they must consider some upcoming changes when hiring independent contractors for work within America’s borders. These changes include following stricter labor laws and employment regulations to not end up on shaky ground legally or otherwise risk being sued due to negligence regarding this issue.
- The election of Joe Biden has brought new proposals for federal labor laws. Currently, the gig economy is unregulated, and employers can classify their employees as contractors to avoid paying them benefits like overtime pay or healthcare coverage. The new administration wants changes in these regulations, which could have significant implications on how people are employed in the future. Companies will no longer be able to take advantage of this loophole, and they will need to comply with highly rigorous employment standards.
The question of the minimum wage in the US is a hot topic
- One thing we’re likely to see under President Biden’s leadership is a rise — or at least an increase — in minimum wage all across America because it would finally catch up after stagnating over many years during his predecessor’s presidency. Although the Biden administration has proposed some changes to the minimum wage, they are unlikely to reach $15 an hour. This would leave many people stuck in poverty and unable to get by financially. Experts agree that this is not a viable solution, but there will be some increase regardless; just how much remains uncertain at this point.
The question of sick leave for non-federal staff is at stake
- A quarter of American workers — excluding federal employees — have no access to paid sick leave. That’s 33.6 million people in the United States who can’t afford to get sick while the pandemic rages. They’re not eligible for benefits under a Biden administration because he recently vetoed legislation that would provide up to 7 days off unpaid leave if someone was ill or exposed by an infectious person like Ebola patient Thomas E. Duncan from Dallas, Texas.
- Sickness laws are passed at the local level, but there is great confusion about compliance with certain worker rights due to the patchwork of state-level policies on which leaves qualify. Those seeking comp time instead may be out of luck as well since it’s unclear whether this benefit will remain intact during Biden’s tenure.The hope is that a federal health insurance law will make it easier for companies with contingent workers across the country to comply. This means they won’t have to worry about complying with an individual state’s legislation and their own company rules and regulations on top of that compliance.
The consequences of the Biden administration’s labor reforms
The issue with the IC classification
- The changes proposed by the Biden administration could help contingent workers but may also have adverse effects. The labor movement has been gaining traction with a law called PRO, which would make it easier for unionization and more difficult to be classified as an independent contractor, both beneficial to temporary employees like those from staffing companies or on customer sites.
- For example, if someone is using temp services from a staffing company, they can expect that their work contract reflects employer safety standards since everyone involved now falls under one entity instead of two separate agreements between different entities. One of the most exciting aspects of independent contracting is that it offers workers independence and flexibility. With this new federal classification, those who enjoy their rights may soon see them curtailed because they will be classified as employees, limiting their freedoms in many ways.
Compliance will become more complex
- The management of contingent workers and intra-company employment of record (EOR) will result in higher costs due to legislative changes. As legislation shifts from the state — or more local level — to the federal level, compliance will become more complex for employers. It might ultimately lead to higher operational costs if not handled correctly.
- For example, California is one state where local county law requirements are layered on top of statewide mandates such as paid sick leave benefits. In contrast, Los Angeles County has passed its own mandatory ordinance requiring all companies operating within their jurisdiction to provide employees with up to twelve days’ worth of annual earned time off and three days’ worth carryover per year without stipulating what they have to use those hours for — but you get them nonetheless.
- The proliferation of independent contractors in different industries also changes how legislation has to be written and enforced. In addition, the rise of freelancers poses a new challenge for lawmakers at every level, as they have to figure out how best to prosecute these workers without losing their autonomy or infringing on their rights. The first step to preparing for and complying with cost increases is staying up-to-date on policy changes when new laws are enacted.
Change is coming in the US: hire an employment specialist!
- The Biden administration is looking to make some drastic changes. One of these plans is a federal wage hike guaranteeing income equality and banning the use of contingent labor, which would put smaller businesses at risk. It remains unclear how Biden’s new policies will play out for small-scale companies with inescapable reliance on temp workers. Clearly, change is coming — but what kind?
- Contingent labor management in the United States is like a weathervane, constantly changing and spinning to fill whatever need arises. You can handle your contingent workforce in America and comply with the new regulations when you need it, as long as you work hand in hand with an employment professional like XML International. Just one more way for us to prove how flexible and trustworthy we are!
Looking to hire a contingent workforce in the US? Talk to XML International
- If you expand your business operations in the United States, we can help you with our integrated employer of record services and contingent workforce solutions. We ensure compliance with labor laws and handle all aspects related to payroll management outsourcing. Our EOR services cover a wide range of essentials that can be customized to meet the needs of any size company or organization looking for global workforce solutions.
- Let us take the stress out of expanding your business operations in the United States. A top employer of record for North America, we offer a wide range of services that cover all aspects of remote staff employment, including payroll management and compliance with US labor laws, tax filings, and immigration formalities. With our truly global approach combined with local knowledge, we ensure you’re getting exactly what you need from day one!
- We work on your behalf, offering a flexible option to reduce financial risks in any market around the world. Our agile methodology helps you test markets and exit quickly if business or working conditions change at all. If successful, we adapt swiftly for new opportunities that come along while retaining a dedicated workforce abroad.
- Flexibility in hiring and handling personnel anywhere in the world
- Financial, legal, and administrative risks mitigation worldwide
- Simplicity in payroll and benefits management across geographies
- Compliance with local employment regulations in any jurisdiction
- Real-time adjustment to labor laws and taxes in different countries
- Improved employee experience for remote working and mobilization
XML can provide you with cost-effective yet flexible, personalized, and scalable solutions.