Designed to increase tax compliance and provide past payroll tax relief to employers, the Internal Revenue Service (IRS) has launched a new Voluntary Classification Settlement Program (VCSP) that will enable employers to resolve past worker classification issues and achieve certainty under the tax law at a low cost by voluntarily reclassifying their workers, according to a news release from the IRS website.
By Les Rosen, Employment Screening Resources
2010 Trends in Screeningâ€“Trend Three:
Employment Screening Resources (ESR), a leading national online employment screening background firm, is releasing the ESR â€œThird Annual Top Ten Trends in the Pre-Employment Background Screening Industryâ€ for 2010.Â Â Â This is the THIRD of the ten trends ESR will be tracking in 2010.Â The ten trends will be released over the next three weeks:
3. Focus on privacy and data protection
Heating up even further in 2010 will be issues surrounding data protection and privacy.Â The issues are moving beyond network securityÂ and there is beginning to be an examination about where the data is actually going for processing.Â
Â The two top issues â€” sending data offshore or to home workers.Â A groupÂ called ConcernedCRA now has more than 120 screening firms that have signed on to a standard that opposes sending Personally Identifiable Information (PII) offshore beyond U.S. privacy laws to be processed.Â See http://www.concernedcras.com/ Â A bill was introduced into Congress in June Â 2009 that would limit the offshoring of data without notice in the financial sector.Â A shocking undercover investigation by the BBC in 2009 showed just how easy it was to purchase PII from a call center in India.Â
Of course, identity theft can occur in the U.S., but once data physically goes beyond U.S. privacy laws, consumers have less resources and recourses.Â Equally of concern to applicants is the use of home workers, where a consumerâ€™s PII may be spread across kitchen tables and dorms rooms throughout America and be visible to who knows who.Â Because of concerns over identity theft and data protection, employers will start to be more concerned with where applicant data is physically located. Part of this trend will be continued state efforts to remove or protect private information.Â An example in 2009:Â There was a new law in Utah that prohibits PII from being required too early in the hiring process.
Some screening firms use home based operators to perform employment and education verifications.Â That of course represents a big financial advantage for the screening firm.Â Â They get cheap labor, and may even classify them as independent contractors in order to get even additional savings by not paying workers’ compensation, benefits or other costs associated with employees.Â Â Â However, it does very little to help employers.Â Below are the top 10 reasons NOT to utilize a background firm that sends your applicants’ personal data toÂ home operators working fromÂ kitchen tables and dorm rooms across America.
- Privacy: A screening firm would be directly responsible for making private information viewable and printable on peopleâ€™s home computers.
- Professionalism: A screening firm would have difficulty accurately claiming that at-home researchers are â€œprofessionalsâ€ when they are unsupervised, unregulated and acting as cheap substitutes for what is supposed to be a professional service. Ask yourself how the sound of barking dogs, crying babies and television sets in the background may strike those asked to provide verifications.
- FCRA Defensibility: A screening firm wouldÂ have difficulty defending theÂ practice of using at-home researchers against a claim under FCRA section 607(b) concerning reasonable procedures for accuracy.
- IC Classification: A screening firm cannot classify someone as an Independent Contractor (IC) when they work only for you, when you tell them exactly how to do their job, and when they are providing the same core services provided by your in-house staff.
- Training/QC: A screening firm cannot trainÂ and discuss production issues in real time. It is also difficult for at-home researchers to learn from each other when everyone is working in isolation. Furthermore, since everyone works alone it is harder to enforce quality rules across the entire organization.
- Supervision: Unsupervised at-home researchers are very difficult to supervise. In addition, since they are paid by the completed verification, they may be more tempted to fake orders since there is no one supervising them in real-time.
- Reliability: A screening firm wouldÂ be dependent entirely on the researcherâ€™s priorities, which may not be your own. They may put a hair appointment ahead of your forty new verifications that have to be called today. You want load balancing to be under your control and not secondary to at-home researcherâ€™s personal schedules.
- Hidden Costs: There are hidden costs to managing and maintaining multiple remote researchers as opposed to a central pool of talent. Take, for instance, the time lost to the unreliable performance of at-home researcherâ€™s internet connections, home computers and printers.
- Due Diligence: A screening firm and employer could face significant legal exposure if the Â at-home researcherâ€™s performance falls below a professional standard of care due to lack of training and supervision.
- Disclosure: Would you want to disclose to your applicants that the sensitive, personal data and professional service theyâ€™ve entrusted you with was being performed by unsupervised home workers?
ESR does not utilize any home based or offshore operators in order toÂ provide you with critical employment and education verifications.Â All work is done in a professionally supervised call center dedicated to the highest level of customer service, privacy, accuracy and speedy turnaround time.
This is the first of a ten part series designed to alert employers of potential danger and hidden liabilities in their background checking processes. Each month ESR will examine a different area that can potentially put unsuspecting employers in hot water.
Some employers have assumed that all background firms are the same, so you may as well just select the cheapest. That is the same thing as saying you should pick a lawyer or any other provider of professional service just based upon price. The reality is that background screening is a knowledge-based professional service, and what your background firm does not know can cost an employer dearly in legal exposure and financial costs down the road if the employer makes a bad hiring decision.
There are ways for background firms to cut costs that leave employers vulnerable. For example, some firms use “at-home” operator networks to perform employment and education verifications. The advantages to the screening firm are numerous. The screening firm gets cheaper labor on-demand, without having to hire workers, provide office space or computers, or pay benefits, vacation time, or workersâ€™ compensation. Since the cost of labor is one of a screening firmâ€™s biggest costs, some firms see this as a way to lower their costs and to increase profits.
Unfortunately, this practice puts the employer at risk. Employers should very carefully consider the dangers of using a screening firm that utilizes a home-operator network for domestic verifications. Do you want your job applicant’s personal and private information spread out in living rooms, kitchen tables, and dorms across America? What about the lack of quality control and standards? In addition, there is an issue as to how at-home operators are trained and monitored for quality control. Employers are strongly advised to avoid the use of screening firms who are willing to sacrifice quality and privacy just to increase their profits at your expense.
Another area of concern is whether such home workers are properly classified. As a general rule, an employer cannot classify someone as an independent contractor when, in fact, they are essentially an employee. Many of the arrangements that involve home-based operator networks can raise significant issues if the home workers are improperly classified as independent contractors, while in fact they are providing a core service of the screening firm, working under the control and direction of the firm, and are not, in reality, an independent business. In addition, failure to ensure a safe working environment or to pay into a stateâ€™s workersâ€™ compensation fund can further compound a difficult situation.
Employers should inquire of any screening firm whether they use a home operator network, or if all calls are conducted in the United States in a controlled call center environment.