Global Daily News

  • C-level execs with three to five years of experience have median base salary of $139,000 while recruiters are at $45,000

    Median base salary is $45,000 for recruiters with three to five years at US staffing firms; meanwhile for a C-level executive with the same level of experience the median base salary is $139,000, according to the new “Internal Employee Compensation Estimator” launched this week by Staffing Industry Analysts. This is the first time SIA has provided this tool entirely online. Recruiter base salary (Click to enlarge) Looking at recruiters by skill segment served, those at education staffing operations posted the highest median base salary at $58,000. Marketing/creative recruiters had the second-highest at $50,000. However, across all segment, the median base salary was $43,000.For large firms with more than 200 internal employees, the median recruiter base salary was $42,000 nationwide. For staffing firms with 20 or fewer internal employees, the median base salary for a recruiter was $45,000.The online estimator enables users to view estimated compensation data from staffing CEOs to salespeople by years of experience, staffing segment, job title and company size. The idea is to enable staffing firms to compare internal employees’ base salary, bonus/commission/incentive pay and total cash compensation with other firms’.SIA corporate members can access the tool online. […]

  • Uber announces $1 billion investment for self-driving cars; Lyft faces investor lawsuits

    Human cloud, ride-sharing firm Uber Technologies Inc. today announced a $1 billion investment in its “Advanced Technologies Group” which develops self-driving technology for cars. In separate human cloud news this week, Bloomberg reported Lyft (NASD: LYFT) faces two class-action lawsuits claiming its initial public offering was overhyped.Uber investment. In the Uber announcement, the investment comes from Toyota Motor Corp. Denso Corporate and the Softbank Vision Fund with the aim of accelerating the development of automated ridesharing services.The deal calls for Toyota and Denso, an auto components manufacturer, to invest $667 million. Softbank Vision Fund will invest $333 million. The deal will value Uber’s Advanced Technologies Group at $7.35 billion on a post-money basis.Toyota will also contribute up to an additional $300 million in the next three years.Plans call for the deal to close in the third quarter.“The development of automated driving technology will transform transportation as we know it, making our streets safer and our cities more livable,” Uber CEO Dara Khosrowshahi said.Lyft lawsuits: Separately, Bloomberg reported human cloud, ride-sharing firm Lyft, its officers, directors and underwriters face two class action lawsuits filed in San Francisco.Lyft’s pre-open share price was $72, but yesterday its shares closed at $58.36.Lyft has been included in other coverage this week. Business Insider reported one analyst believes Lyft will be profitable eventually, but it could take seven years. […]

  • California announces penalties in incidents of temporary workers’ crushing death, amputation

    California officials announced penalties this week against staffing client companies and staffing firms in two separate incidents: One where a temporary worker was fatally crushed and a separate incident where a temporary worker suffered the amputation of two fingers.Fatality. In one incident, a farm worker at a walnut processing facility in Los Molinos, California, was under an 800-pound bin dumper on Oct. 6, 2018, when it emptied its load of walnuts and automatically lowered to the ground, crushing him, the California Department of Industrial Relations reported. The worker had been instructed to clean the area around the equipment.Workplaces hazards were not evaluated, and the worker did not receive training from either the staffing client, Crain Walnut Shelling, or staffing provider, Cal North Farm Labor Inc. of Fresno, California, before being assigned to clean concrete and machinery, according to the state.Crain Walnut Shelling faces $67,500 in proposed penalties. The state found its walnut bin did not include proper machine guards or lockout/tagout procedures and that it did not provide an extension tool for cleaning the area. Such a tool would have reduced crushing hazards, it said.Cal North Farm Labor faces proposed penalties of $33,750 for no ensuring that workers are properly trained, according to the state.Amputation. Separately, A staffing firm and client company face proposed penalties after a temporary worker lost two fingers while cleaning machinery at a food manufacturing facility in Los Angeles, the California Department of Industrial Relations reported Tuesday.The worker was cleaning a dough rolling machine on Oct. 2, 2018, when his left hand was partially pulled into the machine’s moving rollers. It caused two of his fingers to be amputated.Priority Workforce Inc. was the staffing firm that assigned the employee to JSL Foods Inc., a maker and distributor of noodles, pasta and baked goods.State investigators found the machinery had not been adequately guarded to prevent fingers from entering pinch points or de-energized and locked out while the worker was cleaning it. Neither employer had trained the worker to follow lockout/tagout procedures, according to the state.JSL Foods faces $276,435 in proposed penalties for seven violations, including one willful repeat serious violation and one willful repeat serious accident-related violation. The company was twice cited in 2015 for similar violations, according to the department.Priority Workforce, of Tustin, California, faces $29,250 in proposed penalties for three serious violations, according to the state. […]

  • North Dakota, Vermont post lowest jobless rates in March

    North Dakota and Vermont posted the lowest jobless rates among all states in March at 2.3% each, the US Bureau of Labor Statistics announced today. Alaska had the highest unemployment rate in March at 6.5%.The BLS noted six states had decreases in jobless rates during March from the previous month. The largest were in Colorado, Ohio and Wyoming; the jobless rates fell by 0.2 of a percentage point in all three states.In addition, the jobless rates increased in three states: California, Minnesota and Washington. The unemployment rates rose by 0.1 of a percentage point in each state. The remaining 41 states and the District of Columbia had jobless rates that were not notably different from the previous month. […]

  • Canada adds 13,200 jobs in March; manufacturing posts strongest gains in a year: ADP

    Canadian employment rose by 13,200 jobs in March from February, according to the ADP Canada national employment report released Thursday.The February total of jobs added was revised down from a gain of 36,200 to a loss of 21,200 jobs.“We saw modest gains in the month of March,” said Ahu Yildirmaz, VP and co-head of the ADP Research Institute. “Leading job growth was manufacturing, which posted the strongest gains in a year. Construction and professional services rebounded while natural resources and mining, trade, information and financial services continued to struggle.”In the goods-producing sector, jobs increased in March in manufacturing by 9,300 and in construction by 1,200; however, jobs in natural resources and mining decreased by 1,100.Education and healthcare led gains in the service-providing sector with an increase of 2,700 jobs. Professional/business services was next with an increase of 2,100 jobs.The ADP Research Institute produces the report in close collaboration with Moody’s Analytics Inc. Derived from actual ADP payroll data, the report measures the change in total nonfarm payroll employment each month on a seasonally adjusted basis. […]

  • UK – Agency workers take legal action against Royal Mail and Angard Staffing over unequal treatment

    A group of 50 agency workers filed a claim in the Leeds Employment Tribunal against Angard Staffing Solutions Ltd and Royal Mail over unequal treatment.UK law firm Irwin Mitchell is pursuing the group action campaign on behalf of the agency workers. Irwin Mitchell is also calling on other individuals who have similar complaints about unequal treatment to come forward and join the claim.The Royal Mail first established Angard Staffing in 2011 to fill temporary jobs. Unions criticised the set-up of Royal Mail’s recruitment partner and called it a "devious ploy" to save money and get around agency workers’ rights.Under the Agency Workers Regulations 2010, agency workers have a right to no less favourable treatment compared to employees who are employed by the end user (in this case, Royal Mail).Agency workers also have the right to the same treatment as comparable employees with respect to basic employment and working conditions, once they have completed a qualifying period of 12 weeks in a particular job. This will cover issues such as bonuses, annual leave, rest breaks, night work, paid time off from ante-natal appointments. In addition, agency workers have day one rights to be treated the same as a comparable worker in relation to access to collective facilities and amenities provided by the hirer to direct hires.Employment Partner Shazia Khan of Irwin Mitchell, commented, “Agency workers should have the same employment rights as the end user’s employees, but it is all too often evident that this has not been the case. It is disappointing that many employers do not fulfil their legal duties towards agency workers. Hopefully this case will put the issue firmly back in the spotlight and enable individuals to enforce their employment rights.”When contacted by Staffing Industry Analysts, a Royal Mail spokesperson provided the statement, “This case is currently subject to live litigation; as such it would be inappropriate for us to comment at this time.&rdquo […]

  • UK – Broadcaster wins IR35 case against HMRC

    UK Broadcaster and presenter Kaye Adams has won a tribunal appeal against the HMRC in another high-profile IR35 case.Adams, a presenter on ITV show ‘Loose Women’, successfully appealed a challenge to her self-employed status under the IR35 rules. This covered an engagement with the BBC as presenter of ‘The Kaye Adams Programme’ during the 2015/2016 and 2016/2017 tax years.The HMRC had argued that Adams, who also hosts for BBC Scotland, was an employee for the BBC, and not a freelancer. HMRC was seeking payment of £43,636 in PAYE and £22,744 in NICs (National Insurance Contributions) for the tax year ending 5 April 2016, and £37,514 PAYE and £20,546 NICs for the tax year ending 5 April 2017.However, the First Tier Tribunal found that the terms of Adams’ personal services contract were essential in determining the outcome.The Tribunal stated that the central issue was “whether, if the services supplied by Ms Adams to the BBC had been supplied under a contract directly between Ms Adams and the BBC, Ms Adams would have been regarded for income tax purposes as an employee of the BBC.”However, Adams had several other engagements alongside her work at the BBC which made it clear that she was her own business, and not a BBC employee. Furthermore, there were other key factors that solidified the case in Adam’s favour which showed that she was not an employee. For example, the BBC did not place any restrictions on her ability to work for other broadcasters.Julia Kermode, CEO of the Freelancer & Contractor Services Association, commented, “HMRC pursued the case on the basis of editorial control that was contractually held by the BBC. This case demonstrates that HMRC’s approach, fixating on just one element of IR35, is flawed and that the bigger picture of someone’s employment status must be considered.”The HMRC said it was “disappointed that the First Tier Tribunal has decided that the intermediary rules (also known as IR35) did not apply in this case.”Last month, a tax tribunal ruled in favour of BBC presenter Lorraine Kelly in another IR35 case over her role as a performer on ITV. The HMRC had claimed Kelly was an employee and not a freelancer, however the tribunal ruled that she was a freelancer. […]

  • Russia – Federal Antimonopoly Service opens antitrust case against leading job boards

    Russia’s Federal Antimonopoly Service has filed antitrust cases against job boards HeadHunter, Superjob, and Rabota.ru.The FAS said the terms of use for the three job boards’ services contain clauses banning the use of automated recruitment software when working with the firms. The FAS added that, “at the same time, these resources occupy a dominant position in the job search market on the Internet” and “dominate the market of information exchange between jobseekers, employers, and staffing agencies in the Internet.”The watchdog also found that the firms block users if they use software of third party developers for automated recruitment.FAS opened the case following a complaint from a developer of an automated recruitment tool and then concluded that the actions of the three recruitment firms may restrict access of businesses offering automated recruitment software to the market of information exchange between jobseekers, employers, and staffing agencies via the Internet.According to the FAS, the Law on the Protection of Competition prohibits entities that hold a dominant position from creating obstacles to others entering the market.A spokesperson for HeadHunter said the company will study the claims further before taking a position, but said that the company complies with Russia’s laws, adding that its database of CVs is its own intellectual property.Meanwhile Rabota.ru said it had not yet received any claims from the FAS. Superjob said it was not aware of the filing and said it would provide the FAS with all necessary information upon request. […]

  • Netherlands – Trade sector tops online vacancies in Q1

    No fewer than 728,144 unique job vacancies were posted online in the Netherlands during the first quarter of 2019, according to an analysis by Jobfeed, Textkernel's Big Data tool for vacancies. Among the sectors, Trade remained the sector with the largest market share of online vacancies.Unique job vacancies refer to the number of job vacancies that remain after deduplication. Jobfeed’s data showed that 4,162,645 total job vacancies were posted online in the Netherlands in Q1 2019.The top three sectors were Trade, Healthcare, Industrial & technology, which together added up to 46% of all online job openings.The largest professional class in Q1 2019 was Sales & Trade with a market share of 9.3%.Among the provinces, South Holland had the largest share of job vacancies, despite a 1.1% fall in market share.The gap with number two province, North Holland, had narrowed slightly with the difference in market share from South and North Holland standing at 2.3% in the first quarter of 2018, while in the first quarter of 2019 it decreased to a difference of 1.4%. Taken together, the three largest provinces, South, North Holland and North Brabant, accounted for 54.4% of all online vacancies, this was compared to a combined market share of 56% in Q1 2018.Data from Eurostat showed that the Dutch unemployment rate stood at 3.4% in February 2019. […]

  • Japan – Like Co Ltd revenue up 4.5%, but profits slip

    Japanese staffing firm Like Co Ltd (2462: JP), previously known as J-Com Holdings, reported revenue for the nine months ended 28 February 2019 of JPY 35.18 billion (USD 314.5 million), up 4.5% when compared to last year. (JPY millions) 9 months 2018 9 months 2017 Change 9 months 2018 (USD millions) Revenue 35,180 33,674 4.5% 314.5 Operating Profit 1,475 1,601 -7.9% 13.1 Net Income 651 896 -27.3% 5.8 Like Co Ltd provides general worker dispatching and employment placement services. The company also provides outsourcing staffing, recruitment, and education support services for the mobile phone sales industry in Japan.In the group’s human resources service business, which includes staffing and recruitment, revenue was down 3.7%, when compared to last year.Revenue in the child care support service business was up 14.8% while revenue in the nursing care business was also up 8.7%, when compared to the previous year.  Revenue in the others segment, which includes the group’s multimedia services business, was down 35.2%.The group also forecasted revenue of JPY 51 billion (USD 455.9 million) for the year ended May 2019.In trading last Friday, Like Co Ltd shares traded at JPY 944 (USD 8.44), up 1.94% on the day. Based on its current share price the company has a market value of JPY 20.58 billion (USD 183.9 million). […]

  • Australia – Seasonally adjusted jobless rate falls to 5.0% in March

    The seasonally-adjusted unemployment rate in Australia fell to 5.0% in March 2019, down 0.5% when compared to the same period the previous year, according to data from the Australian Bureau of Statistics.The data from ABS also showed that the number of unemployed persons in Australia in February stood at 680,000, this is down 6.1% compared to the previous year.When compared to February 2019, the unemployment rate increased by 0.1%.Meanwhile, employment increased by 2.4% to 12.79 million in March 2019 when compared to March 2018. At the same time the labour force participation rate increased by 0.1% to 65.6%. […]

  • Hong Kong – Number of jobseekers using government recruitment services declines (South China Morning Post)

    The number of Hong Kong jobseekers signing up for government help finding a job has decreased by 70% in the past ten years, reports South China Morning Post. There were also falls in the number of candidates placed directly by the Labour Department in jobs or referred to potential employers, as well as in the number of visitors to government recruitment centres. The department explained the figures by saying Hong Kong had a robust labour market and a ‘plethora’ of other job search platforms. […]

  • People – Alexander Mann Solutions, HireRight

    Alexander Mann Solutions announced that it has appointed Kensy Sy as its China General Manager in a move to further support its growing APAC business. With over 23 years’ experience in the finance, talent acquisition and talent management fields, Kensy brings with him a wealth of knowledge to his role further developing the firms’ China business. He previously worked as Senior VP of ZH GlobalExec Resources Limited. Prior to that he worked in leadership roles with Aquis Search and Apis Alvi. Neil Jones, Head of Asia Pacific Region at Alexander Mann Solutions, commented, “As we continue to grow our client base in China, having someone with his knowledge and background in the region will be hugely instrumental in supporting both our team on the ground and the employers we partner with. As a result of major new wins in the last year, our China business has gone through a period of strong growth. Kensy’s hire shows our ambition to continue this growth with our China strategy at the forefront of the APAC expansion plan.”On-demand employment background screening firm, HireRight, announced the appointment of Marcellus Solomon to General Manager of India, effective immediately. Solomon has held management positions with Kelly Services, Manpower Services India and TeamLease Services. Prior to HireRight, Solomon worked at Quest Diagnostics. HireRight also announced the appointment of Peter Cleverton as the General Manager for EMEA. Cleverton was previously Director of Sales and Account Management. Prior to HireRight, Cleverton worked with job board Monster. […]

Latest Research

  • US Staffing Industry Forecast: April 2019 Update

    Key Findings We project the US staffing industry will grow 4% in 2019 to reach a record $153.5 billion. This represents the tenth consecutive year of expansion. Industry growth is supported by the cyclical expansion of the economy, accelerating wage inflation, and secular growth drivers in segments such as IT, healthcare, marketing/creative and education staffing. Excluding the place and search sector, the US temporary staffing industry is expected to grow 3% this year to reach a record $132.0 billion. This overall growth rate belies the difference in trends among the various occupational segments, from declines in office/clerical to high single-digit growth in some of the professional segments. On pages 4 to 15, we discuss the growth drivers and market dynamics specific to each occupational segment of temporary staffing as well as for direct hire and retained search. In 2020, we project a slight deceleration to 3% growth for the US staffing industry, due to slowing US GDP growth, a shrinking supply of available candidates, and increasing risk of a cyclical downturn. This growth rate implies a market size of $157.8 billion. One headwind to temporary staffing market growth has been a scarcity of labor supply. Consequently, we are at last starting to see broadly (but not universally) reported signs of bill rate increases. Further bill rate increases could support revenue growth and help offset any declines in volume due to labor scarcity. Based on our analysis of revenue data from a wide range of public and private staffing firms, conversations with industry executives, and other data sources, we have updated our segment growth estimates relative to those published in our last forecast report in September 2018. We increased our 2018 growth estimate for per diem nurse, allied healthcare, finance/accounting, life sciences, and marketing/creative temporary staffing, as well as for direct hire. We decreased our estimate for locum tenens. Regarding our growth rate forecasts for 2019, we raised our forecast for industrial, IT, and per diem nurse temporary staffing, and also direct hire. Our forecast for locum tenens was lowered. Summary tables of our industry market size and growth projections are on pages 16 to 18. To download the complete report, please select the following link:  US Staffing Industry Forecast 20190419 - You do not have permission to view this object. […]

  • North America Legal Update Q1 2019

    In this report, we round up the legal developments affecting the workforce solutions ecosystem across North America in Q1 2019:Canada British Columbia: Employers must register for new Employers Health Tax  Ontario’s Pay Transparency Act delayed Extended leave provisions for federal employers from September 2019 United States DOL issues proposal for joint employer regulation H-1B rule changes effective April 1 for 2020 fiscal year ITServe Alliance seeks court ruling against USCIS policy on H-1B visas Pass-through tax deduction applies to staffing firms Department of Labor publishes proposed rules on overtime exemptions and regular rate of pay NLRB decision revises independent contractor classification standard OSHA Review Commission curtails multi-employer worksite doctrine Court decision leaves Association Health Plans in doubt Court orders reinstatement of EEO-1 pay data reporting Washington state senate passes Privacy Act  Legal Disclaimer: This update is provided solely for the purposes of information and should not be considered legal advice. It is always recommended to seek the advice of qualified legal counsel before taking action.To download a pdf copy of this update, click below: North America Legal Update Q1 20190418 - You do not have permission to view this object. Canada 1.   British Columbia: Employers must register for new Employers Health TaxPursuant to the Employer Health Tax Act, SBC 2018 c.42, employers with B.C. payroll greater than CAD 500,000 (exemption amount) in a calendar year must register for the employer health tax (EHT). This will include employers who pay employees of a permanent establishment in B.C. and employers with employees who report to work at a permanent establishment in B.C.Charities and not-for-profit organizations will benefit from a higher exemption threshold. Associated employers will be treated as sharing the $ 500,000 exemption. The EHT is deductible from business income for income tax purposes.Employers who are taxable will first need to register for an employer health tax account using eTaxBC. Employer with installments due in 2019 must register by May 15, 2019, and the first installment must be paid by June 15, 2019. All other employers must register by December 31, 2019.The EHT is part of the B.C. government’s plan to phase out medical services plans (MSP). Premiums were reduced by 50% on January 1, 2018 and will be completely eliminated by 2020. In 2019, B.C. residents will still be required to make monthly MSP premiums payments, meaning employers who pay MSP premiums for employees and their families will have to pay both the EHT and MSP (at the 50% discount rate) in 2019.Further information is available from gov.bc.ca 2.   Ontario’s Pay Transparency Act delayedOn December 6, 2018, the Ontario Bill 57, Restoring Trust, Transparency and Accountability Act, 2018 received Royal Assent. Among significant amendments to other statutes, Bill 57, postpones the coming into force of the Pay Transparency Act, 2018 (the “Act”) from January 1, 2019, to a day to be named by proclamation of the Lieutenant Governor.The Act prohibits employers from seeking information pertaining to an applicant’s compensation history by any means. However, employers will still be permitted to seek information on the pay range or compensation packages for positions comparable to the positions that the applicant is applying for. An applicant may also voluntarily disclose their compensation history to potential employers.The Act will require employers that publicly advertise job openings to include information about expected compensation, or the range of expected compensation, for the posted position.The Act also requires employers with more than 100 employees (or as prescribed) to provide a pay transparency report to the Ministry of Labour. The Ministry of Labour will then either publish the report or make it available to the public. The contents of such reports have yet to be prescribed by regulations. Reports for employers with 100 or more employees but fewer than 250 employees must submit their first report no later than May 15, 2021. Employers with 250 or more employees must submit their first report no later than May 15, 2020.It is unclear when the Act will come into force but the Ministry of Labour recently published a proposal for the pay transparency reporting requirements in order to seek public feedback by April 5, 2019. For more information on the proposal, visit the Ministry of Labour's website. 3.   Extended leave provisions for federal employers from September 2019Effective September 1, 2019 federally regulated employees will be entitled to extended rights in terms of various types of family and other leave.Employees will be entitled to take up to 17 weeks of Medical Leave as a result of any personal illness or injury or organ or tissue donation or to attend medical appointments from day one of their employment. Employees must provide four weeks’ notice of the intended absence, stating the start date and expected duration of the leave, or provide as much notice as possible.Pregnant or nursing employees will be able to obtain a certificate from a “health care practitioner” rather than a “qualified medical practitioner” to support their entitlement to an unpaid leave during the 24 weeks following the birth of the employee’s child. Also, employees will no longer need to have six months of prior continuous service with the employer in order to qualify for maternity or paternity leave.From September 1, employees will also be entitled to an unpaid leave of absence to attend court or appear as a witness, act as a juror or participate in a jury selection process.Effective September 1, 2019, the length of continuous service required for three weeks’ paid vacation will be reduced from 6 to 5 years. After 5 years of employment, an employee will be entitled to 3 weeks’ vacation and the associated vacation pay will increase to 4 weeks after 10 years of employment.Federally regulated employers including those in businesses such as aviation, uranium mining and processing, banks, radio and television broadcasting, should ensure their employee leave policies reflect the upcoming changes. United States 1.   DOL issues proposal for joint employer regulationOn April 9, 2019 the Department of Labor published a Notice of Proposed Rulemaking to revise and clarify the responsibilities of employers and joint employers under the Fair Labor Standards Act (FLSA) for employees’ wages. The DOL has not revised its joint employer regulation since 1958.The proposed rule would ensure employers and joint employers clearly understand their responsibilities to pay at least the federal minimum wage for all hours worked and overtime for all hours worked over 40 in a workweek.The Department proposes a four-factor test, based on well-established precedent, that would consider whether the potential joint employer actually exercises the power to: Hire or fire the employee; Supervise and control the employee's work schedules or conditions of employment; Determine the employee's rate and method of payment; and Maintain the employee's employment records. The proposal also includes a set of joint employment examples for comment that would further assist in clarifying joint employer status. One example relates to workers supplied by a staffing firm, while other examples cited relate to franchise arrangements, services contracts and membership associations.Interested parties may submit comments on the proposal at www.regulations.gov in the rulemaking docket RIN 1235-AA26 by June 10, 2019. 2.   H-1B rule changes effective April 1 for 2020 fiscal yearEffective April 1, 2019 a new registration process has been introduced for petitioners seeking to file H-1B petitions subject to the regular cap, including those eligible for the advanced degree exemption. Petitioners must first electronically register with U.S. Citizenship and Immigration Services (“USCIS”) during a designated registration period, unless the registration requirement is temporarily suspended. USCIS is suspending the registration requirement for the fiscal year 2020 cap season to complete all requisite user testing of the new H-1B registration system and otherwise ensure the system and process are operable.A final rule published on January 31, 2019 also introduced changes to the process by which USCIS counts H-1B registrations, by first selecting registrations submitted on behalf of all beneficiaries, including those eligible for the advanced degree exemption. USCIS will then select from the remaining registrations a sufficient number projected as needed to reach the advanced degree exemption.H1B visas allow U.S. employers to temporarily employ highly skilled foreign workers for a maximum of six years. But Federal regulations restrict the number allocated to 65,000 annually to meet the H-1B cap with an additional 20,000 visas reserved for those holding a master’s degree or higher from a U.S. institution of higher education (known as the “advanced degree exemption”). Non-profits, including hospitals and research institutions, are exempt from the cap.Currently, when the H-1B cap and the advanced degree exemption are both reached within the first five days of the filing date in early April, the advanced degree exemption is selected prior to the H-1B cap.USCIS expects that shifting to electronic registration will reduce overall costs for petitioners as only those selected will need to complete an application form.On March 15, 2019 the Department of Labor's Wage and Hour Division (WHD) issued a Field Assistance Bulletin (FAB) reiterating employers' responsibilities under the H-1B visa program to notify affected U.S. workers of their intention to hire nonimmigrant workers. The FAB confirms that if an H-1B employer chooses to provide notice through electronic media, the employer must ensure that affected American workers, including those employed by a third-party, have access to, and are aware of, the electronic notification. The guidance describes the conditions under which electronic notice satisfies these requirements and provides examples of different methods of posting. 3.   ITServe Alliance seeks court ruling against USCIS policy on H-1B visasIn February 2019, it was reported that a group called the ITServe Alliance is trying to force a court ruling against a USCIS policy issued in February 2018 which is used to guide determinations by USCIS officers in adjudicating H1B petitions where the beneficiary will be placed at a third-party worksite.The policy memo imposed additional requirements for IT consulting firms or agents seeking to place H1B workers with third-party clients. For such workers the petitioner has to demonstrate that it has specific and non-speculative qualifying assignments in a specialty occupation for the beneficiary, for the entire time requested on the petition.USCIS may require additional corroborating evidence, to substantiate a petitioner’s claim such as contracts, copies of detailed statements of work, work orders or a letter signed by an authorized official of each ultimate end-client company where the beneficiary will actually work. USCIS has used the policy to request a detailed description of the specialized duties, the qualifications required, the duration of the job, salary or wages paid, hours worked, benefits, and a detailed description of who will supervise the beneficiary and the beneficiary’s duties, together with any other related evidence for such applications.According to USCIS’ own data, the failure of petitioners to establish that the H-1B beneficiary, working at a third-party worksite, would be engaged in specific, non-speculative work assignments in a specialty occupation for the requested period of employment is the third most common reason for refusal.Approximately 40 lawsuits have been filed in response to petitions refused on the basis of these additional requirements since the policy was introduced. It is likely the cases will be consolidated in a challenge to the policy, but there is no doubt it has become harder for IT consulting firms and staffing firms to obtain H1B visas for workers placed with their clients. 4.   Pass-through tax deduction applies to staffing firmsAfter much speculation, the Internal Revenue Service published a final rule on January 17, 2019 confirming that the majority of staffing firms that operate as “pass-through” businesses can take advantage of the new tax deduction provided for in the Tax Cuts and Jobs Act of 2017 for tax years ending after Dec. 31, 2017.This means that Individuals operating a business as a sole proprietorship, partnership, trust, or S corporation in which the owners are taxed as individuals can deduct up to 20% from their qualified business income (QBI) before tax. QBI is the net amount of qualified items of income, gain, deduction and loss from any U.S. qualified trade or business. Items such as capital gains and losses, certain dividends and interest income are excluded.There is an exception for certain businesses, and one of the questions over the interpretation of the draft regulations was whether a staffing firm providing employees into these sectors could benefit from the deduction. The final regulations confirm that providing clients with employees who perform these excepted services does not make the staffing firm an excepted business because the staffing firm is not directly providing those services.The actual amount of the tax deduction is complicated and is based upon certain formulas, including the amount of the business’s wages. It will vary greatly from company to company depending upon specific and unique taxpayer circumstances, so it is advisable to take specialist tax advice before applying the deduction. Those staffing firms that offer true consulting services (workforce consulting, for example) should also be wary of some continuing limitations on the ability to claim the tax deduction. 5.   Department of Labor publishes proposed rules on overtime exemptions and regular rate of payOn March 7, 2019 the Department of Labor published its long-awaited Notice of Proposed Rulemaking (NPRM) on the “white collar” overtime exemptions under the Fair Labor Standards Act. The DOL is proposing increases to the salary level for the so-called white-collar exemptions and the exemption for highly compensated employees.The Obama administration attempted to update the overtime rule in 2016 proposing an increase in the minimum salary level for exemption as an executive, administrative or professional employee from USD 455 per week (USD 23,660 annualized) to USD 913 per week (USD 47,476 annualized). The 2016 rule was heavily criticized for more than doubling the salary level even though it had not been increased since 2004. That rule was blocked by a permanent injunction and a subsequent appeal was stayed pending further regulatory action.The proposed notice would increase the salary level for the white-collar exemptions to a more modest USD 679 per week or USD 35,308 per year, on the basis of the methodology established in the 2004 rulemaking. The proposal also increases the total annual compensation requirement for “highly compensated employees” (HCE) from the currently-enforced level of USD 100,000 to USD 147,414 per year.On March 28, 2019, the DOL announced a second proposed rule to amend 29 CFR part 778 to clarify and update regular rate requirements under section 7(e) of the Fair Labor Standards Act (FLSA). The FLSA requires overtime pay of at least one and one-half times the regular rate of pay for hours worked in excess of 40 hours per workweek. Under current rules, employers are discouraged from offering more perks to their employees as it may be unclear whether those perks must be included in the calculation of an employees’ regular rate of pay. The proposed rule focuses primarily on clarifying whether certain kinds of perks, benefits, or other miscellaneous items must be included in the regular rate.The Department proposes clarifications to the regulations to confirm that employers may exclude the following from an employee’s regular rate of pay: the cost of providing wellness programs, onsite specialist treatment, gym access and fitness classes, and employee discounts on retail goods and services; payments for unused paid leave, including paid sick leave; reimbursed expenses, even if not incurred “solely” for the employer’s benefit; reimbursed travel expenses that do not exceed the maximum travel reimbursement permitted under the Federal Travel Regulation System regulations and that satisfy other regulatory requirements; discretionary bonuses; Benefit plans, including accident, unemployment, and legal services; and Tuition programs, such as reimbursement programs or repayment of educational debt. This proposed rule also includes additional clarification about other forms of compensation, including payment for meal periods, “call back” pay, and others.Members of the public can comment on the proposed regulations electronically at www.regulations.gov, regarding overtime exemptions in the rulemaking docket RIN 1235-AA20 before May 21, 2019; and regarding the regular rate of pay for overtime in the rulemaking docket RIN 1235-AA24 by May 28, 2019. 6.   NLRB decision revises independent contractor classification standardIn a recent decision, SuperShuttle DFW, Inc., 367 NLRB No. 75 (2019) (“SuperShuttle”) the National Labor Relations Board reversed its own 2014 decision in FedEx Home Delivery, 361 NLRB No. 55 (Sep. 30, 2014) on the standard used to determine whether a worker is classified as an independent contractor rendering them exempt from coverage under the National Labor Relations Act.In the 2014 ruling, the Board held that the entrepreneurial opportunity available to a unit of FedEx Home Delivery drivers was only one factor to consider in determining whether they were independent contractors. The FedEx Board added a factor to the non-exhaustive list of ten factors in the common law test traditionally used in the independent contractor analysis—whether the evidence tends to show that the putative contractor is, in fact, rendering services as part of an independent business. They stated that only actual, not theoretical, entrepreneurial opportunity should weigh in favor of a finding of independent contractor status, and that the Board should also evaluate whether the company imposes restrictions on an individual’s entrepreneurial opportunities.The Board in the SuperShuttle case held that the 2014 decision had “significantly limited the importance of entrepreneurial opportunity” in the NLRB’s independent contractor test. They said the FedEx Board “fundamentally shifted the independent contractor analysis, for implicit-policy based reasons, to one of economic realities, i.e., a test that greatly diminish[ed] the significance of entrepreneurial opportunity and selectively overemphasize[d] the significance of ‘right to control’ factors relevant to perceived economic dependency.”Instead, the Board explained, entrepreneurial opportunity need not be mechanically applied to every factor in the common-law test except when appropriate given the facts of the case. Reverting to the test used before the 2014 decision, the Board affirmed the Acting Regional Director’s 2010 determination that the SuperShuttle drivers were independent contractors, relying on the following facts that demonstrated that drivers had significant entrepreneurial opportunity and control over their earnings: (1) drivers made a significant initial investment in their business by purchasing or leasing a van and entering into the franchise agreements; (2) drivers had nearly limitless ability to meet or exceed their weekly overhead because they had complete control over their schedule and when and how often to work; (3) drivers kept all of their fares and thus, the amount of money they could make was determined by how much they worked; and (4) drivers had discretion over the bids they chose to accept, meaning they could weigh the cost of a particular trip against the fare received.This decision confirms the more employer-friendly approach adopted by the NLRB and other agencies under the current administration. Employers should find it easier to classify a worker as an independent contractor as a result of the Board reverting to the traditional common law agency test. 7.   OSHA Review Commission curtails multi-employer worksite doctrineSince 1999, the Occupational Safety and Health Administration (OSHA) has used the Multi-Employer Worksite Doctrine (“the doctrine”) to extend liability to multiple employers at the same worksite for the same violations including general contractors, host employers and staffing agencies. In a recent case, the Occupational Safety and Health Review Commission (“the Commission”) has reined in OSHA’s use of the doctrine in Secretary of Labor v. Suncor Energy (U.S.A.) Inc., OSHRC Docket No. 13-0900.Suncor Energy (U.S.A.) Inc. operates a refinery in Commerce City, Colorado. OSHA inspected the refinery in response to a complaint that an employee had fallen and was seriously injured. As a result of the inspection, OSHA issued Suncor a citation alleging two serious violations and one other-than-serious violation of various provisions of the general industry permit-required confined spaces standard, with a total proposed penalty of $12,000. The Secretary of Labor subsequently amended Item 2 of the serious citation (addressing the provision of personal protective equipment) to allege in the alternative a violation of a construction standard requiring fall protection on scaffolds over 10 feet high, with a proposed penalty of $7,000.The violations related to work, carried out by contractors, replacing the tubes in a heater known as “H-401,”. None of Suncor’s employees performed any of the work associated with the replacement project. The Secretary asserted that Suncor was a controlling employer at the refinery because it had general supervisory authority over its contractors and controlled their access to the inside of H-401 through its permit system. Suncor argued, and the Commission agreed, that the Secretary failed to establish that Suncor had constructive knowledge of the violative condition as a controlling employer on a multi-employer worksite.To establish constructive knowledge, the Secretary must prove that the employer, with the exercise of reasonable diligence, should have known of the hazardous condition. On a multi-employer worksite, a controlling employer is liable for a contractor’s violations if the Secretary can show that it has not taken reasonable measures to “prevent or detect and abate the violations due to its supervisory authority and control over the worksite.”The evidence showed that Suncor: (1) made a serious effort to hire only contractors with a good safety record; (2) disciplined contractors who had failed to use fall protection; (3) conducted hundreds of audits to assess safety compliance, including the use of fall protection; and (4) provided extensive training to its contractors’ employees. Suncor also expected its contractors to follow OSHA standards, including those related to fall protection, and that expectation was set forth in the contractor orientation and in contractor policies and procedures.The Commission criticized the Secretary’s “over-zealous” approach of “automatically citing every potential employer—including controlling employers who have no employees of their own exposed to cited conditions—without regard to the particular circumstances of the employer’s role and involvement in the work at the multi-employer worksite”. The Commission observed that Suncor was cited by OSHA despite overwhelming evidence that it had a rigorous safety program in place for this project and in disregard of Commission precedent—and the Secretary’s own directive—which clearly state that a controlling employer in Suncor’s shoes is not required to inspect the worksite as intensively as an employer whose own employees are exposed.While acknowledging that the Secretary has an obligation under the Act to enforce compliance with OSHA regulations, and the purpose of the doctrine was to enhance workplace safety standards, they said that “using it to in effect hold controlling employers strictly liable for the safety shortcomings of their contractors is both unfair and counter-productive”.According to Seyfarth Shaw, the Commission’s message in this case is pointed and important — host employers who maintain a rigorous safety and health program will not be held to the same duty of care and inquiry as their specialty subcontractors. Host employers (and general contractors) will not be required to independently assess and supervise all third-party contractor work. However, employers should take an active approach to safety and ensure that contract terms with subcontractors or independent contractors minimize their OSHA and tort liabilities. On January 15, 2019, OSHA announced that it plans to increase the maximum penalty an employer can be issued for serious and other than serious citations to USD 13,260, and the highest amount that can be issued for repeat and willful violations to USD 132,598. 8.   Court decision leaves Association Health Plans in doubtIn State of New York et. al. v. United States Department of Labor, on March 28, 2019, the U.S. District Court for the District of Columbia determined that the Department of Labor (DOL) exceeded its regulatory authority in its final rule on association health plans (AHPs) published in the Federal Register on June 21, 2018 (83 Fed. Reg. 28912). The court found that the final rule constituted an "end-run around the [Affordable Care Act]" with the purpose of "avoid[ing] the most stringent requirements of the [Affordable Care Act]."Section 3(5) of the Employee Retirement Income Security Act of 1974 (ERISA) defines “employer” to mean “any person acting directly as an employer, or indirectly in the interest of an employer, in relation to an employee benefit plan; and includes a group or association of employers acting for an employer in such capacity”. Under DOL guidance that existed prior to the final rule, the DOL considered an AHP to be a collection of single-employer plans, separately sponsored by each participating employer. In order to be a "bona fide association" of employers, the group had to have been formed for some business purpose unrelated to the offering of health coverage. As many employers that participate in AHPs have fewer than 50 employees, the DOL’s guidance resulted in any coverage obtained through an AHP being treated as “small group coverage,” subject to less favorable small group coverage underwriting and regulatory rules, making it more expensive.The DOL’s final rule broadened the definition of “employer” by enabling a group or association of employers, including certain self-employed individuals, to be deemed to be a single “employer” under ERISA Section 3(5) allowing a "bona fide association" to be formed solely for the purpose of offering an AHP, as long as the association also has at least one other legitimate business purpose. In July 2018, 11 states (California, Delaware, Kentucky, Maryland, Massachusetts, New Jersey, New York, Oregon, Pennsylvania, Virginia, and Washington) and the District of Columbia sued the DOL claiming that the final rule exceeded the DOL's authority and violated the Affordable Care Act and ERISA.Judge Bates concluded that these aspects of the final rule would result in groups of employers that lacked any real commonality of interests being treated as a single employer under ERISA and that the final rule therefore failed to set "meaningful limits on the types of associations that may qualify to sponsor an ERISA plan." He also rejected the inclusion of self-employed individuals without employees in the definition of “employer”. As such, the court determined that these portions of the DOL's final rule are unreasonable interpretations of ERISA and must be vacated.The final rule contained a severability provision that expressly provides that any provision found to be invalid will not affect the remainder of the law. As a result of this ruling the DOL must determine whether the remainder of the rule’s provisions could survive the court's decision.The DOL has responded by issuing frequently asked questions in light of the D.C. Circuit’s decision reaffirming state oversight of AHPs and reiterating that AHPs have an obligation to provide the benefits promised to participants, notwithstanding the outcome of the case. While it disagrees with the court's ruling, the DOL has not yet decided whether to appeal the decision, stating that it "is considering all available options in consultation with the Department of Justice." 9.   Court orders reinstatement of EEO-1 pay data reportingOn March 4, 2019 the federal district court in the District of Columbia lifted a stay implemented by the White House Office of Management and Budget (“OMB”) regarding the pay data collection component of the EEO-1 report, holding that the OMB failed to demonstrate good cause for the stay (National Women’s Law Center et al. v. Office of Management and Budget et al., No. 17-2458).The EEO-1 is an annual federally mandated survey. It requires all private employers with 100 or more employees and federal contractors with 50 or more employees to report data on race/ethnicity and gender across 10 job categories in their annual EEO-1 filings. In 2016, the U.S. Equal Employment Opportunity Commission (“EEOC”) changed the data reporting requirements under the EEO-1 report, requiring employers with 100 or more employees to annually report employees’ IRS Form W-2 compensation information and hours worked.  However, in 2017, following President Trump’s election, the OMB indefinitely stayed the deadline for employers to comply with the Obama-era revisions to the EEO-1 form, pending review of the potential burdens of such data collection under the Paperwork Reduction Act.In lifting the stay, the court reasoned that the OMB failed to prove either that relevant circumstances regarding the data collection had changed, or that the original burden estimates were materially in error.  Further, the court held that the stay was arbitrary and capricious. The EEOC informed the court on April 5, 2019 of its intention to adjust the collection deadline for 2018 pay data (component 2) to September 30, 2019 being the earliest date it could collect such data. However, the EEOC website states currently that the deadline to submit EEO-1 data on race, ethnicity, and gender data has been extended until May 31, 2019.It is unclear whether this decision will be the subject of an appeal before the EEOC commences collecting pay data. Affected employers should visit the EEO-1 website for up to date information about the 2018 EEO-1 survey in light of this case. 10.  Washington state senate passes Privacy ActOn April 6, 2018 Washington state senators approved a bill that requires companies to reveal the data they possess on state citizens, as well as allow data subjects to make requests for any inaccurate data to be corrected. SB 5376 also has provisions to restrict the use of facial-recognition technology by companies and law enforcement.If enacted, Washington would be the second state to adopt a comprehensive privacy law similar to the European General Data Protection Regulation (GDPR). The Washington Privacy Act (“WPA”) bears similarities to California’s Consumer Privacy Act ("CCPA") which is scheduled to go into effect on January 1, 2020."Personal Data" is defined under the WPA as "any information relating to an identified or identifiable natural person. Personal data does not include deidentified data." It requires businesses to inform consumers about what categories and specific types of personal data they collect from/about consumers, and how that information will be used. It also grants consumers rights in terms of accessing, and obtaining copies of, the personal information that businesses process.The WPA places restrictions on businesses making decisions based on profiling a consumer's economic situation, health or other specific factors unless: (1) the consumer consents to such profiling in advance; (2) the profiling decision is necessary for the performance of a given contract with the consumer; or (3) the profiling is otherwise expressly permitted by State or federal law.Both the WPA and CCPA require that businesses adopt organization-wide security protocols that are appropriate to safeguard collected consumer data. However, the WPA places additional restrictions and requirements on businesses to safeguard "sensitive data" which is defined as "personal data revealing racial or ethnic origin, religious or philosophical beliefs, and the processing of genetic data, biometric data for the purpose of uniquely identifying a natural person, data concerning a minor, data concerning health, or data concerning a natural person's sex life or sexual orientation".The WPA and CCPA also grant consumers the right to have all copies of the consumer's personal information deleted from a business' database, and the databases of third parties with which they have shared such information (other than where such businesses are required by law, or the applicable contractual relationship with the consumer, to maintain copies of same).The Washington State Attorney General is responsible for enforcing the WPA, with no private right of action available to consumers. Businesses that violate the WPA can be fined USD 2,500.00 for each violation, and up to USD 7,500.00 for each intentional violation.While the WPA has yet to be signed into law, given the prevailing consumer data privacy law trends, employers should take steps to ensure that their businesses will be ready to comply with the Bill’s legal requirements once it is passed. Businesses that are already compliant with the CCPA's requirements should take advice on the additional requirements of the WPA.Legal Disclaimer: This update is provided solely for the purposes of information and should not be considered legal advice. It is always recommended to seek the advice of qualified legal counsel before taking action. […]

  • Guide to Implementing IR35 Off-Payroll Working Rules

    Key Findings On 5 March 2019, the UK government announced a public consultation on proposals to reform the IR35 Off-payroll Working Rules which currently apply to public authorities; and to extend these revised Rules to medium and large businesses in the private sector from 6 April 2020. The revised Rules and all associated obligations will apply in full to public authorities that were previously exempt, as well as affected private sector organisations. Responses to the consultation are likely to result in a revised Chapter 10 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) Part 2 which will form part of the Finance Bill to be introduced to Parliament later in 2019. However, organisations should start preparing now to comply with the proposed changes to the IR35 OPW Rules from April 2020. This report looks at the proposals outlined by the UK Government for revising the IR35 Off-Payroll Working Rules; and gives contingent workforce buyers guidance on what they need to do to prepare for compliance with the revised Rules from April 2020. To download the full report, click below: Implementing IR35 OffPayroll Rules - Buyers Guide_20190417 - You do not have permission to view this object. […]

  • Financial Results of Staffing Companies

    Key Findings: In the latest fiscal quarter, roughly corresponding to 4Q18, median revenue growth among publicly traded staffing companies doing business in North America was 3.8% y/y, compared to 4.2% y/y in the previous quarter. Although this represents the slowest growth for the group since 2Q17, it also exhibits stabilization following the sharpest deceleration in nearly seven years in 3Q18. Deceleration in revenue growth was more pronounced when adjusting for acquisitions, divestitures, currency exchange, and in some cases a difference in billing days between quarters. Median adjusted revenue growth was just 0.7% y/y, down from 2.0% in 3Q18 and well below the 4.4% average of the prior four quarters. Average adjusted revenue growth among the five companies with more than $1 billion of revenue in 4Q18 was 1.6% y/y (Adecco, Randstad, ManpowerGroup, Kelly Services and Robert Half), compared to 3.8% for the remaining firms. The relative underperformance of the largest firms is partly attributed to lower growth rates in certain European markets. Several companies noted higher wage inflation in the back half of 2018. Gross margins frequently benefit during these periods. However, at the median, gross margin for the quarter contracted by 20 basis points y/y. Median net income increased 1.0% y/y, representing a sharp deceleration from 31.4% y/y in the previous quarter. Slower earnings growth was not isolated to the staffing industry, however. S&P 500 reported earnings, for example, decelerated from 28% y/y in 3Q18 to 7% in 4Q18. The full report can be downloaded by clicking the link below: Financial Results of Staffing Companies NA 4Q18 20190415 - You do not have permission to view this object. […]

  • How To Build Trust With Internal Staff

    Key Findings: Internal staff respondents were asked two open-ended questions: “How do effective leaders within your organization build trust with employees?” and “If you were a senior leader, what would you do to build trust with employees?” Over 600 staffing firm internal staff answered at least one of these questions. Results from a randomized subset of these responses were analyzed to identify patterns, revealing seven broad recommendations: Be transparent and open/communicate often--this was respondents’ top recommendation; a large part of establishing trust is simply being candid Make a personal connection with employees--trust is ultimately personal; know who employees are and what they want on an individual basis Be caring and mentoring--guiding and mentoring, caring about employees, and having their back when the chips are down helps to establish a bond Trust your staff/give them independence--staff won’t trust you if you don’t trust them; make the first move by giving them the latitude to show what they can do Be fair, just, honest, and discreet--this was largely a list of “don’ts,” as in “don’t play favorites,” based on bad employee experiences; if employees think you aren’t treating them fairly, they’re not going to trust you Create a good working environment--part of being worthy of trust is simply being competent and respectable as a manager, resolving problems quickly, offering recognition and praise, and supporting team spirit Lead by example/be visible--exemplifying what it is you want them to be, i.e., “walking the walk,” demonstrates integrity, which makes you worthy of trust On the pages following are sample quotes from internal staff detailing their thoughts on these suggestions. Responses were edited for clarity and brevity. To access the complete report, please select the link below: UK Internal Staff Survey 2019 Internal staff ideas on how to build trust 20190419 - You do not have permission to view this object. […]

  • Guide to Implementing IR35 Off-Payroll Working Rules

    Key Findings On 5 March 2019, the UK government announced a public consultation on proposals to reform the IR35 Off-payroll Working Rules which currently apply to public authorities; and to extend these revised Rules to medium and large businesses in the private sector from 6 April 2020. The revised Rules and all associated obligations will apply in full to public authorities that were previously exempt, as well as affected private sector organisations. Responses to the consultation are likely to result in a revised Chapter 10 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) Part 2 which will form part of the Finance Bill to be introduced to Parliament later in 2019. However, organisations should start preparing now to comply with the proposed changes to the IR35 OPW Rules from April 2020. This report looks at the proposals outlined by the UK Government for revising the IR35 Off-Payroll Working Rules; and gives contingent workforce buyers guidance on what they need to do to prepare for compliance with the revised Rules from April 2020. To download the full report, click below:  Implementing IR35 OffPayroll Rules - Buyers Guide_20190417 - You do not have permission to view this object. […]

  • Europe Legal Update Q1 2019

    In this report, we round up the legal developments affecting the workforce solutions ecosystem across Europe in Q1 2019:European UnionAG opinion: Employers should record all daily working hoursBulgariaEmployers are obliged to employ people with disabilitiesFrance New rules on posted workers from 2020 New binding measures on gender wage gap Uber driver found to be an employee GermanyEmployers must advise employees of vacation entitlement IrelandAct protecting casual employees’ rights comes into forceItaly Mandatory electronic invoicing introduced Gig economy riders considered workers SlovakiaEmployers face penalties for failing to report job vacanciesSpain Employees right to disconnect under the Data Protection Act  Employers obliged to record working time and wages Gender equality plans to be extended to small employers from 2020 UK All workers have a right to an itemised pay slip HMRC consultation on extension of IR35 off-payroll working rules Working time: Guidance on calculating holiday pay and compensatory rest  Government consultation on the use of non-disclosure agreements Legal Disclaimer: This update is provided solely for the purposes of information and should not be considered legal advice. It is always recommended to seek the advice of qualified legal counsel before taking action.To download a pdf copy of this update, click below: Europe Legal Update_Q1_20190416 - You do not have permission to view this object. European Union AG opinion: Employers should record all daily working hoursIn a case referred to the European Court of Justice (ECJ) involving a Spanish trade union and Deutsche Bank (Federación de Servicios de Comisiones Obreras v Deutsche Bank SAE C‑55/18), the Advocate General (AG) has given an opinion that employers should record all daily working hours of their employees regardless of whether they have agreed to work overtime or not.Deutsche Bank only recorded holiday and sick leave absences so, the trade union Federación de Servicios de Comisiones Obreras (CCOO) brought a group action, arguing that the bank was under an obligation to set up a system to record the actual number of hours worked each day by its employees. In his opinion, the AG acknowledged that the Working Time Directive does not expressly provide for such an obligation but noted that the absence of a system for measuring the number of hours worked meant that there could be no guarantee that the time limits laid down by the Directive would actually be observed. In addition, workers would not know whether limits on working hours had been exceeded and whether they could exercise their rights.It was the AG’s opinion that the ECJ should rule that European law requires employers to record the actual number of daily hours worked for full-time workers who have not expressly agreed, individually or collectively, to work overtime. Member States would be free to choose the method of recording the number of hours worked.The AG's opinion is not binding on the ECJ so they may disagree with this interpretation. In the UK the Working Time Regulations 1998 (WTR) require employers to keep "adequate records" to show compliance of weekly working time and night work limits but do not require that all hours of work should be recorded. Bulgaria Employers are obliged to employ people with disabilitiesBulgarian companies with staff exceeding 50 employees are obliged to open workplaces for people with disabilities, as per the new Disability Act which came into force as of 1st January 2019.To ensure the employment of people with permanent disabilities in the normal working environment, employers with 50 to 99 employees are required to provide work for at least one person with permanent disabilities. Employers with 100 or more employees and workers are required to provide work to people with permanent disabilities in a number equal to two per cent of their current headcount (e.g. a company employing 100 employees must provide work to at least two employees with permanent disabilities). Work positions established under Art. 315 of the Labor Code (jobs designated for occupational rehabilitation of employees with reduced working ability) are not taken into account when calculating the quota.Under the law, persons with permanent disabilities are defined to include “persons with permanent physical, mental, intellectual and sensory impairment which may impede their full and effective participation in public life and to whom medical expertise has established a degree of disability of 50 per cent or greater.”Non-compliance with the obligation will result in an employer being liable to pay a monthly compensation contribution of 30% of the minimum wage for each vacancy for a person with a permanent disability which has not been filled.Employers with over 50 employees should review their recruitment practices and consider roles within the organization either existing or potential which could be filled by a person with a disability to comply with the law. France 1.   New rules on posted workers from 2020The French government has transposed into national law the European directive of 28 June 2018 on posted workers by an order published on 20 February 2019. The French Labor Code provides for rules that must be applied to seconded employees and to “local” employees. A "posted worker" is an employee who is sent by his employer to carry out a service in another EU Member State on a temporary basis.The order reinforces this set of mandatory rules by providing that the employer of an employee posted to France must guarantee him equal treatment with employees employed by companies in the same branch of activity established in France. In respect of "pay" this includes base salary and all other benefits, and not just "minimum wage". It will be necessary to pay the posted employee all the elements of remuneration which an employer in France is obliged to pay according to the legal provisions and the agreements of the relevant sector. This also applies to professional expenses such as transport, meals and accommodation.After 12 months of secondment of an employee in France, i.e. from the 13th month, the employer will be subject to a wider application of the Labor Code. New information rules on temporary work are also planned.The provisions of the ordinance will come into force on 30 July 2020. 2.   New binding measures on gender wage gapIn September 2018, France introduced legislation requiring employers of at least 50 employees to publish information on their gender pay gaps and the actions taken to address them. A decree dated 8 January 2019 set out detailed rules on how gender pay gaps will be measured for these purposes.There is a detailed methodology for calculating the gender pay gap with a number of “indicators” weighted to result in an overall score out of 100. The annual score must be published on the company’s website and the employer must provide a detailed breakdown and explanation of the results to its works council, and to the labour authorities. If the company scores below 75 points for three consecutive years, a financial penalty of up to 1% of the company’s annual payroll bill can apply.Companies with at least 1,000 employees were required to publish their first gender pay score by 1 March 2019 (in respect of calendar year 2018, or another 12-month period if the company so decides).  Companies with fewer than 1,000 employees have until 1 September 2019 (or 1 March 2020 for companies with 50 to 250 employees).Seyfarth Shaw provides further information on France’s law and other gender pay gap reporting rules across Europe. 3.   Uber driver found to be an employeeIn a judgment delivered on 10 January 2019, the Paris Court of Appeal found that the relationship between the Uber online booking platform and one of its’ former drivers was a contract of employment.The driver had sued in June 2017 because Uber had "deactivated his account, depriving him of the possibility to receive new booking requests". The industrial tribunal was declared incompetent to hear the case, because of the absence of a contract of employment, so the case had been referred to the court of appeal.The court found sufficient evidence of a “bond of subordination” between the driver and Uber despite Uber insisting that drivers were free to choose whether to connect and to work for competing companies.In its judgment, the Court of Appeal argued that "an essential condition of the independent individual enterprise is the free choice that the individual makes of creating it" but also " the mastery of the organization of its tasks, its search for customers and suppliers." By prohibiting him from contacting his passengers, Uber removes one of the attributes of the self-employed, namely the possibility of developing his clientele. The Court of Appeal also noted that the plaintiff could not " freely set his rates or the conditions for the performance of his transport service".The judgement only relates to the driver who brought the claim, but it does leave the door open to other drivers to claim employment status based on similar facts. Uber has indicated its intention to appeal this judgment.In our Europe Legal Update Q4 2018 we reported that the Cour de Cassation, France’s highest civil court had ruled in November (Cass. soc. 28 November 2018 n°17-20.079) that a delivery rider using the services of an online platform ("Take Eat Easy"or TEE) could be considered an employee despite being labelled self-employed. That case was referred back to the Paris Court of Appeal to re-examine the factual elements of the case and consider whether or not the courier was permanently legally subordinate to TEE. That case and the Uber decision indicate the courts’ willingness to look beyond the label placed on a relationship and the significance of elements of control exercised by the business over the individual while performing the work. Germany Employers must advise employees of vacation entitlementThe German Federal Employment Court (Bundesarbeitsgericht) ruled on 19 February 2019 (Reference number 9 AZR 541/15) that annual vacation entitlement can only be forfeited at the end of a calendar year if the employer previously advised the employee of his/her accrued entitlement and of the deadline by which untaken vacation would be forfeited. This ruling implemented the judgement of the European Court of Justice in Case C‑684/16, Max-Planck-Gesellschaft zur Förderung der Wissenschaften e.V.Employers in Germany are advised to inform employees in writing of their accrued entitlements and of the deadline for expiry of the entitlement. Copies of such notices should also be retained. Ireland Act protecting casual employees’ rights comes into forceOn 1 March 2019, the Employment (Miscellaneous Provisions) Act 2018 came into force. The Act restricts the use of zero hours contracts and introduces the concept of entitlement to banded hours for workers whose hours stated in their contract do not reflect reality.Zero Hours contracts require an employee to be available for work but do not guarantee any hours of work in return. Effectively the employee is ‘on call’ while the employer has complete discretion when it comes to the employee’s working hours and is free to decline to take up an employee’s services if it wishes to. Under the Act such contracts will be prohibited except in cases where the employee is performing genuine casual work, providing emergency cover or covering short-term absence of another employee.If an employee is called to work but not actually provided with the expected hours, that employee will be entitled to a new minimum floor payment of three times the national minimum wage.In addition, the Act gives workers’ rights in relation to “banded hours”. If an employee believes that the hours specified in their contract do not reflect the hours actually worked each week, the employee is entitled to be placed in a band of weekly working hours in line with the following table: An employee may complain to the Workplace Relations Commission if an employer refuses to place them in a band to which they believe they are entitled.In addition, all employers will have to provide information to employees in writing within five days of commencing employment stating the expected duration of the contract, the manner in which wages will be calculated and the expected working hours. The Act also contains provisions prohibiting employers from penalising workers who make a complaint under the Act and imposes significant fines and penalties for non-compliance. Italy 1.   Mandatory electronic invoicing introducedAs of 1 January 2019, Italy introduced mandatory electronic invoicing (e-invoicing) for all VAT-registered businesses in B2B and B2C transactions. The obligation applies to all transactions performed by businesses resident or established in Italy, with the sole exceptions of those eligible for a special scheme for small enterprises.Transactions involving businesses not established in Italy are not covered by the e-invoicing regulation. They should instead report to the tax office using the Cross-borders Transaction Report. This should be transmitted in the month following the invoice date (for the sender) and the reception date (for the receiver).VAT-registered businesses established in Italy must submit and receive their invoices through the SDI (interchange system). The SDI reports to the tax office or Revenue Agency (Agenzia delle Entrate), all relevant fiscal invoice information through a directly-linked platform.This requirement comes from the EU's "VAT Directive" (2006/112/EC), as amended by Directive 2010/45/EU (the "Invoicing Directive), which lays down conditions and rules on invoicing in Member States.Compliance with the e-invoicing regulation is mandatory. Non-compliance by businesses will result in penalties ranging from 90% to 180% of the VAT, with a minimum of EUR 500 (USD 563) or between EUR 250 (USD 280) and EUR 2,000 (USD 2,253) where the violation does not refer to taxable transactions.Where a document doesn't meet e-invoice requirements, recipients have four months from the operation date to regularize the transaction by self-issuing an invoice through the SDI system. If the transaction is not regularized, penalties equal to 100% of the undocumented VAT will apply.Failure to submit e-invoices or incorrect cross-border operations reports will result in a penalty of EUR 2 (USD 2.25) per invoice, with a maximum of EUR 1,000 (USD 1,126) per quarter. The quarterly sanction is reduced by 50%, to a maximum of €500 whether corrections or delayed reports are filed within 15 days of the deadline. 2.   Gig economy riders considered workersIn the first appeal decision on the employment status of gig economy workers, the Turin Court of Appeal recently examined the classification of Foodora delivery riders (Decision 26/2019) and concluded they were neither employees nor fully self-employed. The Turin Court of Appeal confirmed the first-instance judgment to the extent that it found that Foodora's riders were not employees and rejected their claims for employment rights including reinstatement, wage differences and compensation for damages.In reaching this conclusion they considered: the will of the contracting parties (which had mutually agreed to self-employment contracts); the lack of obligation on riders to be available to work and accept deliveries; Foodora's lack of effective authority or disciplinary powers over riders' work schedules; and Foodora's directives for, instructions to and control over riders' work, which were found to be necessary due to the kind of service provided (i.e., the need to coordinate the time of delivery and the service's operative aspects.) However, the court held that the riders could not be considered fully self-employed either. Through its interpretation of Article 2 of Legislative Decree 81/2015 (which provides that where the organisation of work is unilaterally decided by a principal, subordinate employment rules apply), the court stated that Foodora riders belong to a third type of relationship between self-employment and subordinated employment. This means they are entitled to the same rights provided typically to employees in the “Logistics, Freight Transport” sector as set out in the National Collective Agreement pertaining to that sector.The concept of a third category of worker or “dependent contractor” which lies between an employee at one end of the spectrum and a self-employed contractor at the other exists in other countries such as the UK and Canada. Many jurisdictions are struggling to categorise workers employed in the gig economy sector and this case follows judgements in other countries across Europe, Australia and the US where courts are finding such workers do not fit the traditional models of employment or self-employment. Slovakia Employers face penalties for failing to report job vacanciesAmendments to the Labour Code and Employment Services Act imposed new obligations on employers in Slovakia as of January 2019.Employers must now report the number of job vacancies to their local Labour Office, including details of the job position, the required education and work experience, working hours and salary. They can report job vacancies in a number of ways including using a website specifically set up by the Central Labour Office for such reporting: www.istp.sk.There are some exceptions, such as where the position is continuously filled by replacement candidates or where there are suitable internal candidates. Also, if an employer uses a recruitment agency that advertises the job via a selected job portal, it is not the obligation of the employer to also report the vacancy to the Labour Office.Employers that do not report job vacancies can be penalised with a fine of EUR 300 (USD 337) imposed by the central or relevant local Labour Office. However, as the time period during which the employer must report the vacancy is not specified, it is unclear whether they must do so immediately or at any time during which the vacancy exists. Employers also have no obligation to report when the vacancy is no longer available. They simply fulfil their reporting duty by using one of the above-described notification options.According to Kinstellar, in light of these uncertainties, a number of employment agencies have challenged the new obligations, saying that they lack certain details, such as the time limit for reporting job vacancies and their unavailability or effective control mechanisms. Spain 1.   Employees right to disconnect under the Data Protection ActThe new Spanish Data Protection Act 2018 (Ley Orgánica 3/2018, de Protección de Datos Personales y Garantía de los Derechos Digitales) came into force on 7 December 2018 and implements the European General Data Protection Regulation as well as giving new digital privacy rights to employees.Employees have been granted the right to disconnect from digital communications recognizing their rights to rest, leave, and holidays, as well as to personal and family privacy. The rule expressly states that the right to disconnect will apply in the case of remote or home working conditions as regards the use of technology tools. Employers must draw up an internal policy (to be applied to all personnel, including management), indicating how the right to disconnect can be exercised and training and awareness for employees on the reasonable use of technology.The Data Protection Act also recognises the rights of workers to the protection of their privacy in the use of digital devices provided by the company. Companies will be able to access content derived from such use as long as the devices have been provided by the company itself and the purpose of such access is to confirm that the employees are complying with their contractual obligations or to ensure the integrity of the devices themselves. Employees must be informed in advance of the existence of these controls, which must be reasonable, necessary, balanced and objectively justified.Companies must establish criteria for the use of digital devices, complying with minimum privacy standards in accordance with social customs and worker rights. Worker representatives should participate in the drawing up of usage criteria (although there is no need for there to be an agreement), and workers must be informed of their existence. If devices are authorised for personal use, employers’ access to their content requires the prior communication of the authorised use and the establishment of guarantees to preserve worker privacy. The use of video monitoring systems to control work activity is allowed, as long as it protects the dignity of workers, once the workers, and if applicable, their representatives, have been expressly, clearly and concisely informed of the existence of the monitoring. Workplace sound recording is only allowed if it is necessary for the safety of installations, goods and persons, and, in all cases, it must observe the principles of proportionality and minimum intervention, in addition to the guarantees established for video monitoring. The use of sound recording and video monitoring systems is not permitted in areas set aside for worker rest or leisure.The use of data obtained from GPS tracking systems to control work activity is allowed as long as it respects the dignity of workers. Workers, and if applicable, their representatives, must have been expressly, clearly and concisely informed of the existence of the tracking devices and of their rights to access, rectify, restrict processing and eliminate the data.These rights are additional to the rights of individual data subjects under the GDPR, which have also been implemented under this Act into Spanish law. 2.   Employers obliged to record working time and wagesThe Spanish government has recently issued several pieces of legislation imposing important and new duties for employers in Spain.Royal Decree-law 6/2019, of 1 March 2019, establishes the obligation for all companies to keep a register of the average wages, salary supplements and extraordinary supplements, distributed by gender and distributed by occupational groups or jobs. This register shall be accessible to the employees’ legal representatives and to the negotiating committee for equality plans which are being extended to all companies from 2020 (see below). This obligation applies to all companies (regardless of size) and is already in force as of 8 March 2019.Royal Decree-law 8/2019, of 8 March 2019, introduces a new section (9) of Article 34 of the Workers' Statute which requires all companies (without exception) to keep daily records of employees’ working time, including the start and end times of each employee's working day.The legislation provides that a register should be established through collective bargaining negotiation or by an agreement with the employees’ representatives.  In the absence of these mechanisms, the employer can decide on the system, but employees’ representatives should be consulted before the implementation of the time recording system.Companies will have to maintain these records of working time for four years and make them available to employees, their legal representatives, and the Labor and Social Security Inspectorate. Employers should establish a system within 2 months of the start of negotiations. 3.   Gender equality plans to be extended to small employers from 2020Currently, companies with 250 or more employees are obliged to draw up equality plans, which are defined as an ordered set of measures to ensure equal treatment and opportunities and to eliminate any discrimination on the grounds of gender. Royal Decree-law 6/2019, of 1 March 2019, extends the obligation to draw up equality plans to companies with 50 or more employees and introduces additional details on the negotiation and content of these plans.The deadline for approving and registering equality plans varies according to the size of the company: For companies with a workforce between 150 and 250 employees, equality plans must be put in place and registered by 7 March 2020; For companies with a workforce between 100 and 150 employees, by 7 March 2021; and For companies with a workforce between 50 and 100 employees, by 7 March 2022. Failure to draw up or fail to implement the equality plan will constitute a very serious infringement, which may be punished with a fine between EUR 6,251 and EUR 187,515 (USD 7000 to 211,000).Before starting to draw up the equality plan, the employer must undertake an analysis of the issue of equality within their company, in negotiation with the employees’ legal representatives.  This shall include, at least, an analysis of aspects including hiring processes, training and formative processes, working conditions, under-representation of women in the company, remuneration and sexual harassment prevention. UK 1.   All workers have a right to an itemised pay slipFrom 6 April 2019, the statutory right to receive an itemised payslip was extended to all workers and not just employees who already had this right. The new right applies to payslips covering pay periods which begin on or after 6 April.Additional information must also be added to payslips where the pay varies by the amount of time worked, i.e. where workers are paid hourly. The information must include the number of variable hours worked and the rate of pay received in respect of that work. The hours can be shown as a total, broken down for different types of work, or for different rates of pay if necessary. If an hourly paid worker takes unpaid leave or receives statutory sick pay any hours they did work will still need to be included on their payslip.If a worker is salaried, but receives additional pay for working overtime, only information on the additional hours and associated pay must be detailed. The workers salaried hours and associated pay need not be detailed. For salaried workers, there is also no requirement to include information on the payslip to account for variations in pay that result from the worker taking unpaid leave or being in receipt of statutory sick pay.A worker who thinks that they have not received a payslip, or that the payslip they have received lacks the required information, may bring a claim before an Employment Tribunal.The government has published guidance on the legislation in force from 6 April 2019. 2.   HMRC consultation on extension of IR35 off-payroll working rulesOn 5 March 2019, the UK government opened a public consultation on how the off-payroll working rules will work from April 2020. The reform is being extended to all sectors and the government is also taking this opportunity to revise the legislation for the public sector which has had these rules in place since April 2017.The consultation paper sets out the ways in which they propose the legislation should be amended from next year for both public sector bodies and medium and large private sector businesses. The proposals include: Currently, a client must provide its determination on the tax status of a contractor covered by the rules to the party in the supply chain they contract with. It is proposed they should also be required to pass a copy to the off-payroll worker; Requiring each party in the supply chain to pass the determination to the next party until it reaches the fee-payer; Providing both the party contracting with the client and the off-payroll worker with the right to request reasons for the determination in writing within 31 days; Introducing record-keeping requirements for clients using off-payroll workers working through an intermediary; Requiring clients to establish a process for handling disagreements over their determination; and Requiring parties to establish supply chain compliance. Employers wishing to respond to the consultation should do so by 28 May 2019 by emailing offpayrollworking.intheprivatesectorconsultation@hmrc.gsi.gov.uk 3.   Working time: Guidance on calculating holiday pay and compensatory restThe Department for Business, Energy and Industrial Strategy recently issued new holiday pay guidance, which outlines how employers should perform the 12-week average pay calculation for workers without fixed hours or fixed rates of pay and provides guidance about calculating the holiday pay of term-time workers.Calculating pay for workers with no fixed hours or rates of pay, the guidance says: this is based on the 12 paid weeks ending with the last whole week worked before the holiday (for these purposes a week runs Sunday to Saturday unless the worker is paid weekly on another day); employers of monthly paid workers cannot simply use the last three-monthly payslips, because this will not correspond with 12 weeks (it amounts to 13 weeks) and the 12-week reference period may straddle pay months; it may be necessary to extend the 12-week reference period for zero-hours workers and those who have taken a period of unpaid leave because employers need to exclude any ‘unpaid’ weeks and add additional ‘paid’ weeks into the reference period until there are 12 ‘paid’ weeks in the reference period; if a worker has not yet worked 12 weeks, the employer should use the maximum number of weeks the worker has worked. On the question of compensatory rest, the Working Time Regulations state that if an employer is able to rely on a special case exemption to exclude a worker’s normal entitlement to an uninterrupted 20-minute rest break (per six-hour shift or longer), the employer must wherever possible allow an equivalent period of compensatory rest.The Court of Appeal has recently considered the nature of the compensatory rest in a case (Network Rail Infrastructure Ltd v Crawford [2019] EWCA Civ 269) involving a railway signal controller working at single-manned signal boxes. During his eight-hour shifts, he had to monitor his post continuously and could be called upon at any time to carry out his duties. He was able to take short breaks, which amounted to well in excess of 20 minutes over the course of a shift but was unable to take a continuous, uninterrupted 20-minute rest break.The court held that, where the employer is able to rely on a special case exemption to exclude a worker’s normal entitlement to an uninterrupted 20-minute rest break, the compensatory rest provided by the employer need not be an ‘uninterrupted’ 20-minute break. Instead, it can be provided in several shorter rest breaks.Employers should review the method they use to calculate holiday pay for workers without fixed hours or rates of pay to ensure they are calculating holiday entitlement and pay correctly. The Court of Appeal case confirms that compensatory rest can be given in incremental breaks where there is a need for continuous attendance by an employee. 4.   Government consultation on the use of non-disclosure agreementsThe UK Government has published a consultation on proposed measures to prevent the misuse of confidentiality clauses in connection with workplace harassment or discrimination.  The consultation proposes a number of changes to how such clauses are used in employment contracts and settlement agreements in England, Wales and Scotland. The Consultation points out that confidentiality clauses have a legitimate place in employment contracts, for the protection of trade secrets and confidential information, and in settlement agreements which allow parties to an employment dispute to resolve the issue. The purpose of the consultation is to seek views on what reasonable limitations might be put on confidentiality clauses to ensure they are not misused in cases of harassment and discrimination.The government proposes to: clarify in law that confidentiality clauses cannot prevent people from reporting a crime or disclosing information in any criminal proceedings; require a clear, written description of rights before a confidentiality clause in an employment contract or a settlement agreement is signed; and ensure that a worker signing a settlement agreement receives independent advice first. The consultation closes on 29 April 2019. Employers wishing to respond can do so online or by email to ndaconsultation@beis.gov.uk.Legal Disclaimer: This update is provided solely for the purposes of information and should not be considered legal advice. It is always recommended to seek the advice of qualified legal counsel before taking action. […]

  • How To Develop Internal Staff

    Key Findings: Internal staff respondents were asked the open-ended question: “In the past year, what has been the most important part of your professional development or professional growth?” Over 500 internal staff answered this question. Results from a randomized subset of these responses were analyzed to identify patterns, revealing six work experiences that were important to staff professional development: New responsibilities/job challenges Formal training/on the job learning Coaching from management/colleagues Developing management skills/being a good manager Being trusted to succeed/given autonomy Just doing the best in my job and seeing success Additionally, internal staff respondents were asked: “What types of development opportunities would you like to see more of at your organization? Thirty-three internal staff answered this question, highlight two themes: Clearer career paths/opportunities to move up More training Included in the report are sample quotes from internal staff detailing their thoughts on these suggestions. Responses were edited for clarity and brevity. To access the complete report, please select the link below: UK Internal Staff Survey Development Opportunities 20190414 - You do not have permission to view this object. […]

  • Guide to Implementing IR35 Off-Payroll Working Rules

    Key Findings On 5 March 2019, the UK government announced a public consultation on proposals to reform the IR35 Off-payroll Working Rules which currently apply to public authorities; and to extend these revised Rules to medium and large businesses in the private sector from 6 April 2020. The revised Rules and all associated obligations will apply in full to public authorities that were previously exempt, as well as affected private sector organisations. Responses to the consultation are likely to result in a revised Chapter 10 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) Part 2 which will form part of the Finance Bill to be introduced to Parliament later in 2019. However, organisations should start preparing now to comply with the proposed changes to the IR35 OPW Rules from April 2020. This report looks at the proposals outlined by the UK Government for revising the IR35 Off-Payroll Working Rules; and gives contingent workforce buyers guidance on what they need to do to prepare for compliance with the revised Rules from April 2020. To download the full report, click below: Implementing IR35 OffPayroll Rules - Buyers Guide_20190417 - You do not have permission to view this object. […]

  • History of the Staffing Industry

    IntroductionWhile there have been other histories written about the staffing industry, this is the first to address the topic from a comprehensive global perspective and the first to trace developments from its beginnings until the present day. The origins of the modern staffing industry do, in fact, have many international strands and owes its success to a number of pioneering entrepreneurs in North America, Europe and Asia Pacific.Previous histories are also flawed in that they have been written by academics hostile to the staffing industry or by individual companies with, possibly, an inflated view of their own role in the development of the industry.Many ‘histories’, especially those with a business focus, tend to be dominated by men but the history of the staffing industry is notable for the number of heroic and inspirational women who played important roles in creating the industry we know today.There are two flaws with historical overviews. Firstly, they tend to get written by the victors and, secondly, they focus on the trials and tribulations of kings and generals and less on ordinary folk. While our own history rightly pays tribute to a number of key figures who have taken risks and made sacrifices to achieve extra-ordinary success, we should also pay tribute to the many lesser-known figures who played their part in evolving the industry into the sophisticated 21st Century business it is today. The staffing industry in most markets remains highly fragmented and the true history of the industry is the successes of many entrepreneurs running and growing small businesses. So, here’s to all the lesser-known contributors, to those who tried and failed, and those that simply did a good job but didn’t quite make the headlines.Our story is one of innovation and risk taking, but also includes heart-warming personal dramas, war heroics, financial and government scandals, bankruptcies, earthquakes and terrorism.To download the complete report, please select the following link:  History of the Staffing Industry 20180405 - You do not have permission to view this object. […]

  • IT Staffing Growth Assessment

    The worldwide market for temporary IT staffing reached a scale of $66 billion in revenue in 2017, based on SIA estimates, representing 16% of the total global temporary staffing market and 38% of global professional temporary staffing. Forty-five percent of the IT staffing sector is derived from the US, where we forecast 3% revenue growth in 2019, representing the tenth consecutive year of expansion. At the conclusion of 2019 the segment will have more than doubled in size since the nadir of the Great Recession, based on our forecast.Growth is increasingly supported by secular trends, along with some acceleration in bill rates. Although IT staffing has a well established history of cyclicality, we believe secular trends remain constructive for continued expansion even in the face of modestly slower macroeconomic growth.We view the secular growth story as being two-pronged: 1) the contingent model remains in favor driven by buyer demand for flexibility, scalability, and reduced risk. Specifically for IT workers, shorter tech cycles with a more fluid demand environment for specialized skillsets, exacerbated by, in some cases, extreme talent shortages is clearly leading to an intensifying preference for temporary staffing services; and 2) IT spending is increasingly becoming strategic across industries, as perception shifts from a traditional view of IT as a cost center to a full embrace as a vital driver of growth and profitability. Organizations can also ill-afford to cut corners around cybersecurity with today’s connected realities of cloud computing, Internet of Things (IoT) and big data. Further, nontraditional industry entrants (e.g. big tech’s entry into financial services and healthcare) are forcing incumbents to aggressively protect market share by digitally transforming. In some cases, this is the only way companies are able to meet the rapidly evolving user experience demands of the modern consumer. IT staffing stands to benefit from the long-term growth in overall IT employment (projected to exceed all areas of the economy aside from healthcare), particularly as the IT services field was early to embrace the use of contingent labor, its temporary agency penetration rate (2.5%) remains high relative to other occupational segments.Of course, IT staffing firms cannot simply count on these forces to achieve industry growth. The sector itself is evolving at feverish pace. For example, IT occupations are squarely at the core in the emergence of online staffing. We estimate 44% of the global market for online staffing entails IT jobs. This extrapolates to a $2.3 billion online staffing market, for IT alone. While this pales in comparison to the aforementioned $66 billion for temporary IT staffing, online staffing is on a significantly faster growth trajectory. For example, we estimate the online staffing market grew approximately 19% y/y in 2017 and indications suggest the market accelerated more than 20% y/y in 2018. Today, online staffing does not serve as a material headwind on temporary IT staffing growth. However, the question remains whether it will ultimately present a long-term threat or opportunity. The answer may prove to be a little bit of both and will likely become increasingly difficult to quantify due to a budding convergence between the traditional staffing provider and pure online marketplace into a hybrid model, leveraging the unique strengths of both categories.Another example in the evolution of the IT staffing landscape is an increase in demand for the provision of projects and managed services under statement of work (SOW). While these services extend beyond the scope of IT staffing, they are becoming an increasingly prevalent supplemental layer of service offerings within traditional staffing firms, particularly among the larger IT staffing operators. While the same demand drivers mentioned for IT staffing also apply to managed services, this is just the tip of the iceberg of the business case for staffing firms to bulk up their service offerings to include this fast growing category. Such drivers include: 1) an attractive gross margin profile, particularly in an environment where staffing margins have been eroded by VMS and MSP; 2) differentiation from traditional staffing firms; 3) an addressable market significantly larger than IT staffing; 4) inherent competitive advantages staffing firms possess over incumbent consulting firms (e.g. recruiting engine, flexibility and price); 5) benefits of less competition for SOW business can make hiring more attractive for sales talent; 6) IT consulting firms enjoy valuation premiums relative to pure staffing firms due to more predictable revenue (e.g. typically less cyclical model than temporary staffing) and higher margins; and 7) natural synergies between managed services and staffing services stand to benefit both offerings.Demand for IT staffing services has been robust throughout the recovery. In fact, we have detected an acceleration of new orders since early 2018. The primary bottleneck on IT staffing growth lies squarely on the supply shortage of talent with the requisite experience and skillsets. The average US unemployment rate for computer and mathematical occupations further tightened from the already low level of 2.4% in 2017 to 2.1% in 2018. We see the struggle, for example, with buyers increasingly extending or even waiving term limits to maintain as many bodies as possible. This imbalance of supply and demand for IT talent has reached critical levels for a growing list of skillsets, including many related to the rapidly emerging fields of artificial intelligence, machine learning, big data, IoT and blockchain. New computer science graduates (both undergraduate and post-graduate) entering the labor force and graduates of coding bootcamps have not produced sufficient supply of available talent.Although numerous factors can influence an IT staffing firm’s gross margin such as occupational mix, industries served, size of customer base (e.g. direct/indirect mix) and scale, gross margins for the sector have been tightly rangebound since 2012, around 23% to 25%. We note this range may reflect some upward bias as our survey participants tend to outperform the overall sector. At long last, the market is experiencing accelerating bill rate growth, resulting in margin expansion where suppliers have direct contact with clients. Gross margin growth has mostly stalled however, within high volume enterprise MSP/VMS accounts. We believe margins, specifically within MSP/VMS accounts typically lie in the mid-to-upper teens range among larger IT staffing suppliers.IT staffing is a highly fragmented market offering significant mobility for top performers to gain share. Relatively low barriers to entry stress the importance of differentiation and innovation in eluding competitive pricing pressures. Specialization has been a common thread among many of the fastest growers in the space. Large players with a heavy emphasis on STEM skillsets, such as TEKsystems, ASGN and Insight Global have enjoyed consistent above-market growth rates, as have many of the mid-tier specialized firms in our fastest-growing list. Modes of specialization include concentration in industries served, specific occupations/IT skillsets, and technology platforms. Specifically, as it relates to industries served, tech/telecom and banking/financial services/insurance together account for approximately half of the US IT staffing segment.Nearly a decade since the last US recession, the longest the country has ever gone between recessions. Based on the latest estimate from the Bureau of Economic Analysis, US GDP grew 2.9% y/y in 2018, which would represent the fastest annual growth over the entire cycle. However, consensus forecasts project slower GDP growth of about 2.1% in 2019 and for slowing to persist into 2020 with 1.7% growth. Nearly half of economists surveyed by the Wall Street Journal anticipate the next recession to start next year.Due to the cyclicality of the industry, staffing firms should be vigilant in watching for early signs of a possible downturn. Actionable steps IT staffing firms can take to prepare for a slowdown, or possible recession include: 1) have a plan in place with established thresholds for taking action; 2) consider shifting resources from the more cyclical direct hire segment to temporary staffing; 3) be strategic with industry verticals served; 4) specialize in the right mix of occupations; 5) if cost cutting measures are necessary, identify your key people and take measures to retain them; 6) reduce debt ratios to help mitigate risk and provide enough dry powder to afford your firm to be opportunistic with growth initiatives later into a downturn, be it organically or through acquisitions.The 11 sections of this 108 page report further explore dynamics in IT staffing and workforce solutions, to inform industry stakeholders and support their strategic planning initiatives.To download the complete report, please click the link below: IT Staffing Growth Assessment 20190403 - You do not have permission to view this object. 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  • Japan Market Snapshot

    Our Market Snapshots provide an executive summary of the international staffing markets in EMEA and APAC.  They can be used as a barometer to assess the relative business environment within each market and are designed to help you whether you are a buyer or supplier of contingent labour; looking to move into a new market place or need to understand the different national factors you will encounter in managing your workforce internationally. Japan Market Snapshot - You do not have permission to view this object. […]