Terminology Issues About Consultants

Some months ago, a colleague ("Willie") posted that he was looking for a consultant to work on a project. The work would be performed from the consultant's home office. That sounded fine. But the more he talked about what he wanted to do, the more problematic things became. Many attempted to call his attention to the nagging issues but he would not hear any of the objections. Let's look at some of the troublesome matters that started surfacing so that your search for an independent consultant doesn't travel down the same path.

There was the implied statement (considering this was a consulting position) that the person would not be an employee. We hit critical mass when Willie said, "Am I being over the top by giving them 60 seconds to snap a picture of their office and send it to me?"

That's a great way to test whether the person is tech savvy enough to take a photo and then send that photo to someone within 60 seconds. You'd think it's one way to not get some stock, royalty-free photo of a virtual office that's been scraped from the Web.

Some attempted to point out that what Willie received may not be the actual home office of the consultant. It may be the conference room of a vanity office. Or it may be a booth at Starbucks. And then there's that royalty-free stock photo from the Web that the person is holding out as a representation of their home office. Some hinted that the request was a bit invasive.

What Willie started telling the rest of those who joined the conversation was what he was actually seeking. Some of it had tax ramifications. For example, "I just want them to confirm they have the capacity to work remotely. In my world, that would be someone who is organized and with a dedicated space to work." He wanted to know that it is clean, not cluttered, organized, and free of distractions (crying babies, kids running, barking dogs). He wanted some assurance that the consultant had all the tools necessary to complete the project. After all, Willie's brand was at stake. To these issues, he said, "If this was a 2 day project - then I could care less where they do it....but this will be for the entire year and I'll need some degree of reliability."

Someone in the conversation challenged Willie about the job description specifics by feigning an intent to announce the job to their circles and contacts. They raised important issues that were not included in the search criteria.

You're looking for a software developer for some unknown application, website, program. We're not certain of what language will be used to write the program but it needs to be developed, written, tested, legitimized, and delivered within a year. The work will be done remotely. The work CANNOT be done from anywhere except one's home - and a picture of that is required in order to be in the running. The pay is $50 per hour. No extras nor mileage.

Is that the job description? Does the candidate need any certifications or degrees? Do they need to show examples of other projects they've worked on and completed? Will there be any type of in-person interview or will they ever be required to do any travel - even to the home office? If so, how often and will that be covered?

The challenge was rebuffed as going in the wrong direction of interpreting the search. Friends of Willie with strong, confident voices, joined the rebuff. I teased Willie with speculation about other things besides the uploaded photo of their home office space within 60 seconds. And I conjectured that he would begin to add to the requirements of this requisition by demanding proof that it's a computer that belongs to the candidate. And then it will be the style of computer; then the model; then the peripherals it uses. Anything to narrow the player field. Willie's a good-natured guy (although he sometimes tries to sound gruff). He agreed that he would be adding knock-out requirements, such as those tossed out, in order to narrow the field to the

Employee cf. Contractor Conditions

Willie never said whether he would be paying for the tools and equipment that the consultant would be using for the project. Nor did he say whether he controlled when the work was to be done. The more he talked, the more it sounded like Willie was looking for an employee, not an independent consultant or independent contractor. If he actually wanted a consultant, he was heading for a cliff. There are certain conditions that define a consultant as distinguished from an employee.

Let's look at the definition of an employee as defined by Vanderbilt University. "An employee is an individual who performs services that are subject to the will and control of an employer-both what must be done and how it must be done. The employer can allow the employee considerable discretion and freedom of action, so long as the employer has the legal right to control both the method and the result of the services." Now taking that definition into consideration and comparing it to the screening requirements of Willie, it sounds like he's actually looking for an employee who has a rather confusing and vaguely deceptive title of "consultant."

Vanderbilt continues its discussion of employee vs. consultant by then explaining what an independent contractor is. "An independent contractor is an individual over whom the employer has the right to control or direct only the result of the work and not the means and methods of accomplishing the result." Given the various things Willie said about what he wants from his "consultant," it still sounds like he's seeking an employee.

It may be useful to know that the Internal Revenue Service has provided 20 questions to ask in order to parse out how the person should be viewed. (See IRS Revenue Ruling 87-41) If the situation is still cloudy after going through those criteria, it's recommended that the relationship be viewed as one of employer-employee and not that of retaining the services of an independent consultant.

Chances are, you're scratching your head and wondering about how to treat other types of relationships. Specifically, you're wondering how to manage situations in which you're trying to define the difference among Employee, Volunteer, Intern, or Independent Contractor. It's easy to find all of those answers in one place by visiting the definitions provided by International Catholic University's reference page.

Loose Use of Terminology

I still have the impression my colleague, Willie, was talking about hiring an employee and not an independent consultant. He contemplated exerting a lot of control over how the work was accomplished. Although not addressed, it appears Willie was very focused on the tax classification of the worker. Although he said he was recruiting for a consultant, it appears that was a misnomer. He took the time to clarify that what he wanted the photo to accomplish was prove that the candidate has a dedicated, organized work space at home. Given how he plans to narrow the field of those to be considered, I have the impression Willie's small requirement is going to get him into some big trouble down the road.

During a conference session this morning, I learned the IRS now has a hybrid of the 20-questions test which is referred to as the "economic realities test". From the consultant's desk, it appears the requirement to show proof of a dedicated work space is the first step of exerting control over the consultant. It appears some clarifying questions and answers need to happen. Then again, maybe Willie didn't tell us that he plans to pay for several benefits and perform withholding on behalf of his "consultant."

Resources:

• Guidelines for Determining Employment Relationships, R.C. Chip Goldsberry, Vanderbilt University Office of Contract and Grant Accounting (February 14, 2008)
  
• Definitions: Employee, Volunteer, Intern, or Independent Contractor, Helene Robertson, International Student and Scholar Services, The Catholic University of America (December 1, 2008)
  
• Who Is an Employee? Determining Independent Contractor Status, Susan N. Houseman, Future of work (August 1999)
  
• Fact Sheet #13: Employment Relationship Under the Fair Labor Standards Act (FLSA), Wage and Hour Division of the Department of Labor (July 2009)
  
• What is an employee?, Charles J. Muhl, Bureau of Labor Statistics (January 2002)
  
• Economic-Realities Test Law & Legal Definition, USLegal.com
  
• Independent Contractors under the FLSA, Lawyers.com
  

Growth

You may have come to the point of anticipating the posts that Charity Rowell was writing as she interned on The Consultant's Desk. Her mission was to share with us the concepts she was learning through her studies. We grew with her as she talked about concepts she gained from her classes in Human Resource Management, protocols that are being taught, interpretations of terminology, and other wisdom coming from the advanced education system.

She did a good job of sharing what she's getting from the classes she attended. We benefited by her generous sharing of the documents she produced as class projects. They can serve as models when you need a starting point for something similar.

Charity was an intern in search of real world experiences and places to share the development of her education. It seems she reached that plateau. She wanted to stretch into unexplored areas. We decided it was time for her to start making her management decisions on her own blog. You can continue to follow the evolution of her development there.

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Succession Planning Papal Style

The danger is real. A certain routine becomes so ingrained that we stop thinking about alternatives. We do no planning nor stretching to reach greater heights of accomplishment. Worse yet, we forget about those who will succeed us when we're gone. The consequence of that is leaving a vacancy, a void that must be filled by another who doesn't have the benefit of our tutelage and mentorship.

Pope Benedict XVI announced last week that he is going to resign on February 28. To say the announcement cause a small stir would be more than understatement. But it brings up a concern that definitely needs to be addressed by all organizations. The papacy is a prime example of the consequences of following an unwise practice to the detriment of the organization.

The Church has gone for more than 600 years without doing any formal succession planning. Of course the stations and protocols and deportment are followed. Etiquette is closely observed. But when it comes to choosing a new pope, little to nothing has been done to groom some logical candidates for the office. The Cardinals must look among their followers (of the cloth) and determine who is the most enlightened to take the reigns after the previous person who held the position died. Then the Cardinals sit in their secret chamber and cast their votes, waiting for the magical moment when they can send up a plume of white smoke that signals they have successfully voted for the right person to lead The Church for the next several decades.

Unfortunately, the successor then needs to rely on more superstition (that he will not die a brief time after being selected by the august body of Cardinals) and embark on what that particular person presumes is the correct direction for The Church and its followers. Has there been time for conversations about policy or change? Maybe but for the most part, those thoughts were sent up in sermons and papers. The reasoning behind the conclusions is vague and not part of a public record.

The resignation of Benedict raises some additional issues that most corporations and businesses include in their officers and directors plans - in the bylaws. Provisions for an annuity, a retirement fund, protocols for how to treat the outgoing Pope compared with the inductee. As a person who has retired, does the former Pope still follow the strictures that normally apply to a priest or does this person become a lay person? Now that he is no longer part of the inner circle, someone must determine whether he can continue to be associated with it and to what degree. What types of things will the outgoing pope be allowed to do is another matter that needs to be considered.

Corporate bylaws provide that should a director or officer reach a point wherein they are no longer able to fulfill the duties of their office, they may take a leave of absence until the condition is brought under control. In the alternative, they may step down from office permanently, providing the body with a date when the resignation will take effect, and request that the Board select a successor. Informally, the Board will consult with the outgoing officer to review potential candidates for the seat. Among the candidates will be those who were put into the succession pool. If none of them prove adequate for the directions in which the organization needs to go, a Selection Committee (like the College of Cardinals) will be created and a search will begin for a successor.

The point is, there are "i"s to be dotted and "t"s to be crossed. There are people who have been in the pipeline who were being groomed for taking the reigns at the right time. But The Church hasn't been functioning in that way. Perhaps because it got into a rut and started doing things according to the old adage of "but that's the way we've always done it" instead of looking at retirement, and not death in office, as another policy matter that's handled in a business manner.

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Do Your Employees Really Need Training?

During the economic recession, companies cut back on employee training. Now that the economy is recovering, many companies are renewing their training programs. In some cases this renewed commitment to employee training and development is needed to increase employee engagement. However, some companies view training as a "one size fits all" solution to decreased employee engagement.

Before you jump on the training band wagon, you might want to consider performing a training needs assessment (TNA). A TNA is an activity that helps to determine if training is needed. 

Why should you perform a TNA? First, a TNA will prevent you from implementing training for performance issues when those issues are not related to the employees' lack of knowledge, skills, and/or abilities (KSAs). Second, a TNA will ensure that your training program has the correct objectives, content, and methods. Third, a TNA will help you to determine if your employees have the basic skills to understand the training material(s). Fourth, a TNA that involves upper and middle management as well as experienced employees will help you gain the support you need to implement an effective training program.

A TNA has five parts:

1. The reason(s) for the training. Examples of the reasons for training include new laws/regulations, poor employee performance, new products or technology, customer satisfaction, and so on.
2. An organization analysis determines organizational goals, if the organization has the resources (personnel, equipment, or money) to perform the training, and if poor employee performance is caused by a gap in KSAs or a lack of motivation.
3. A task analysis identifies the tasks that employees perform to do their jobs. The task analysis includes how frequently the task is performed, it's importance in performing the job well, and if the task requires previous experience or training in order to be performed well (difficulty). Also, the task analysis should include the KSAs that employees need in order to perform the task.
4. A person analysis determines if employees have the basic skills needed to understand the training material and if employees understand the training's relevance to their job duties.
5. The desired outcomes are basically what you expect employees to learn from the training.

There are many methods you can use to obtain the data necessary to perform these analyses: annual reports, questionnaires and surveys, employee performance appraisals, subject matter expert panels, interviews, market research, existing job and/or task analyses, or manuals and handbooks. 

The bottom line is this: by not performing a TNA, you run the risk of wasting the company's money and time on a training program that is irrelevant, unnecessary, or incomprehensible to employees. 

At Will Employment: A Case Study

In the previous post we defined what at-will employment is and examined some of the exceptions to at-will employment. At this point you might be saying, "Charity, discussing at-will employment is like beating a dead horse." I disagree. The term "at-will employment" is one that has been used so often that everyone assumes that we understand its implications, and we do not.

What happened to pique this interest in the "at-will" verbiage and disclaimers?  My partner, who I will call "Rufus" for the sake of his privacy, was injured at work. His employer sent him to an occupational health doctor who diagnosed the injury as knee strain. The doctor gave Rufus some pain relieving balm, told him to rest the knee, and sent him back to work. Two days later, Rufus’s knee had worsened and his employer sent him back to the same doctor. The doctor diagnosed the injury as "arthritis," advised Rufus to take ibuprofen for the swelling, and sent him back to work. 

Three days later, Rufus's condition was still worsening and his employer refused to send him back to the doctor because of the doctor's previous diagnosis. Rufus advised his supervisor that he was unable to perform his duties safely and effectively due to the knee injury, stated that he would seek medical attention for his knee, and left work early. 

Rufus didn't have insurance and decided to go to an urgent care facility the next day because it was cheaper than going to the emergency room. The next day Rufus called his supervisor and the site's HR manager 3 hours before his shift started to inform them that he was going to urgent care to have a doctor examine his knee and would be absent for the day. The urgent care doctor examined Rufus's knee and advised him that the knee was sprained.  The doctor advised Rufus that he could not stand for long periods of time and placed Rufus on work restriction for three weeks.

Immediately after the doctor's visit Rufus called the site’s HR manager to advise him of the work restriction. The HR manager advised Rufus that his employment was terminated due to "attendance" and refused to consider the circumstances surrounding Rufus's absences. Rufus had not been counseled or disciplined for absenteeism, he passed the post-accident drug screen administered by his employer, and Rufus had been clear that his absences were caused by his work-related injury. We then consulted with a lawyer who advised us that we had no case against the employer.

Why did the lawyer say that we had no case? After all, what the employer did should be illegal since it violated state laws regarding worker's compensation thus Rufus's case should be covered by the public policy exception. Unfortunately, Rufus needed to prove the employer's intent and was unable to do so. Rufus was fired due to excessive absenteeism and the reason for Rufus's absences was not documented. Simply put, Rufus could not prove that the employer fired him because of his work-related injury.

You might be asking, "What about the disciplinary procedures in the employee handbook? Wouldn't that pertain to Rufus's situation?" No, because Rufus lives in a state that does not recognize implied contracts. Lastly, it may seem that Rufus's situation was not handled in "good faith." While that assessment may be true, it does not apply to Rufus because he lives in a state that does not recognize the covenant of good faith exception.

What I hope you will understand is the fact that as an employee (or HR student), you need to be aware that the ability to leave one's job at any time comes at a price. It is up to you as an employee to understand what that price is and what your rights are before you agree to those terms. It is up to HR associates to explain the benefits and consequences of at-will employment to applicants and employees in plain language.

If you are interested in learning what your rights are, you can Google "[state name] labor department." Also, the U.S. Department of Labor offers a webpage, DOL Services by Location, which provides links to your state's labor department.

Thank you for reading, and best wishes.

The Value of Undercover Boss

It's important for the boss to get a hands-on sense of how the business is operating and who's responsible for keeping the ship afloat. Some bosses simply don't have a sense of what the business is about until they (quite literally in some instances) get their hands dirty with the typical grind. That's why "Undercover Boss is so important to business executives.

There are far too many instances of executives who run a business by top-down orders and who don't try to find out what's actually happening on the floor or in the field that makes those orders unrealistic.

More importantly, those in the job market have an opportunity to do business and company research about opportunities either in that company or else in that industry. People have the ability to see more than the typical job out there waiting to be filled.

At-Will Employment Simplified

In the previous post we discussed my struggle with creating an at-will employment disclaimer for the staffing manual. It was mentioned that many applicants may not understand the potential benefits and consequences of at will employment and we will pursue this train of thought in this post.

Before we go any further in this discussion, it is important to understand what at-will employment is. In short, at-will employment means that your employer can fire you or ask you to resign at any time, for any reason or no reason, and with or without notice. Conversely as an employee, you can leave your employer at any time for any reason or no reason and with or without notice. You might be thinking, "There's an exception to every rule." If so, then you are correct. There are a few exceptions to at-will employment.

The first exception is called the "public policy exception" which means that an employer cannot fire you if the reason violates state law, or if you refuse to violate state law.

The second exception, "implied contract," means that any policies and written or oral promises that are made by your employer may constitute an employment contract (some call this a "gentleman's contract" or "handshake agreement"). However, many states support disclaimers that are used to invalidate the policies and promises made that guarantee the terms of employment. Also, some states do not automatically assume that the presence of a disclaimer cancels an implied contract and a few states do not recognize implied contracts (with or without a disclaimer). In short, even if your employer has outlined a disciplinary process in its employee handbook or promised you employment for a specific period of time, your employer may not have to follow that process or wait before firing you.

Finally, the "covenant of good faith exception" states that an employer cannot fire an employee in "bad faith." Simply put, this means that your employer cannot fire you for dishonest reasons such as to avoid paying for retirement or severance benefits. However, most states do not recognize this exception.

Hopefully this has helped to better your understanding of the at-will disclaimers that you see on employment applications or in your employee handbook. The next post will demonstrate the importance of understanding these disclaimers before you sign an application or an employee handbook.

Thank you for reading, and warm regards.