Independent contractor compliance issue heating up

A recent news report said FedEx Corp. was rolling out new regulations for its independent contractors. Separately, a new federal bill would add more regulations.  But it is in the Midwest where the rubber is really hitting the road. 

The Kansas Court of Appeals ruled that a Topeka KS-based gentleman's club could not classify its dancers as independent contractors, according to an article in The Wichita Eagle newspaper. This isn't the first time such dancers have sued over employment classification, but in this case a court ruled they were employees.

Of course, more famously, FedEx's practice of using independent contractors has been the subject of much litigation. However, in a report last week on Dow Jones Newswires by Bob Sechler, FedEx was said to be bringing in new business standards for its 12,000 independent contractors. Those standards include being incorporated under state law rather than organized as partnerships or sole proprietorships.

Meanwhile, the federal government is also weighing in again on the subject. The latest issue of the Legs & Reg Advisor, produced by labor law firm Little Mendelson and Staffing Industry Analysts, reported on a federal bill that would require new record-keeping procedures and add stricter fines for misclassification.

Does all this suggest that independent contractor payrolling/compliance services are a good opportunity for staffing firms? We think so. According to our buyer survey data, 37% of buyers were using such services already in 2009, and another 34% were considering using such services over the next two years...that could imply as much as a doubling of this revenue stream by 2011.

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