Reviving Ethics in Recruiting

In 2004, I developed a discussion group called Ethics in Recruiting. The goal was to have a place where those in the recruiting industry could discuss best practices, consider the ethics involved in those practices, and develop a consensus about ethical practices that could be used on a global basis. That last prong would also require learning about cultural practices from various countries in order to gain an appreciation of whether or not a global standard is even possible.

Nevertheless, it was a venue where those in the industry could talk about practices and look for guidance - or just vent. There were members who came from other industries. Their presence provided us with various barometers and bases for consideration of rules.

It was a lively and popular group that drew a lot of attention. It was a bold move. By 2006, it became a recruiting conference session on its own merit. It was in essence the topic du jour and there was fierce competition for ownership of the group. It was obvious the group needed to move to its own home; the move didn't happen in time. By 2008, the original venue dropped the group.

The idea and need still lives. To satisfy the desire for that type of group, Ethics in Recruiting discussions is being revived as a subgroup of Entrances, the 360 networking group on LinkedIn. It will be available for members by July 1, 2014. Join us.

Look for the LinkedIn logo

Ethics in Recruiting

A Guide to Sarbanes-Oxley, Part One

It was 2002. As a measure to ameliorate the financial industry atrocities that were revealed, the Sarbanes-Oxley Act was adopted. Questions arose regarding its effectiveness, its reach, implementation and adoption. SmartPros dedicated a two-part article to examine the Act and collect opinions and reactions from professionals associated with the industry. Even though 12 years have passed since its implementation and the article has been removed from the SmartPros site, it would serve financial industry newcomers to have a reference point about the "why" of the Act and the early reactions to it.

A Guide to Sarbanes-Oxley, Part One

by
Niquette M. Kelcher
October 2002 -- The groundbreaking Sarbanes-Oxley Act signed into law by President Bush in July 2002 will forever be remembered as the legislation spurred by corporate corruption, crooked CEOs and creative accounting.

In reality, the accounting industry has been heading toward a major reform for many years - it just finally came to a head. Now that it's here, financial executives find themselves at a crossroads, facing the daunting task of implementing major changes in day-to-day operations, while at the same time quickly educating their staff on the sweeping changes brought on by proactive - but also reactive - legislation.

This article provides a concise overview of the many facets of the Sarbanes-Oxley Act (SOA) including:

• How accounting reform caught up with the industry
  
• Major provisions of the Act
  
• Reaction from the trenches
  
• What SOA means to the accounting profession
  
• How managers can implement SOA into the company culture
  
• How to keep staff members educated and informed
  

How Accounting Reform Initiatives Caught Up With the Industry

It's viable to stretch back to the beginning of accounting as an "industry" to address how this recent reform effort came to be, but all we really need to do to understand this phenomenon is step back into the 1990's - a decade that proved to be incredibly tumultuous for the accounting industry overall, a decade that began with an economic slump and ended at the tail-end of a technology boom - to understand why we are here today.

In former Securities and Exchange Commission chairman Arthur Levitt's new book, Take on the Street, published this month, he writes about the politically-charged nature of Wall Street during his tenure as SEC chief in the 90's. Levitt, the 25th chairman and also longest-serving, held the reigns at the watchdog agency for seven years under the Clinton administration. A strong supporter of auditor independence, Levitt, who calls himself "pro-investor," constantly battled with accounting firms and the AICPA over the controversial issue, as firms began to package their auditing services with technology consulting.

But it was an incident involving the Financial Accounting Standards Board that Levitt cites as the biggest mistake he made as SEC chief. In the early part of the 90's, Levitt says he persuaded the FASB to soften its stock-based compensation rules because of political and corporate pressures to do so. (Of course, this same topic is in debate today.)

Levitt states that he learned a valuable lesson from this mistake: "Accounting firms were passive when it came to standing up for investor interests," he writes. "[Auditors] failed to rally to the cause of investors and instead supported the demands of corporate clients. They had become advocates. I would forever look upon the accounting profession differently after this episode."

Hence, Levitt began to tout major accounting reform efforts. At the turn of the millennium he left current SEC chief Harvey Pitt with a lot of reformation left to be done, and until Enron happened, the industry was pretty sure Pitt's "kinder" and "gentler" SEC would stem the talk of accounting reform.

However, Enron helped investors see what Levitt realized many years prior - that the self-regulated industry failed to protect them. Consequently, a weak economy and discontent voters pushed Congress to action. Suddenly Levitt's ideas weren't so radical after all; In fact, many of the reforms proposed by him while he served as SEC chairman have been adopted by the Sarbanes-Oxley Act, legislation that has yet to show its true colors.

Major Provisions of the Sarbanes-Oxley Act

Specifically, the new law, as explained in a SmartPros Financial Management Network segment:

1. Establishes an independent auditing oversight board under the SEC;
   
2. Beefs up penalties for corporate wrongdoers;
   
3. Requires faster and more extensive financial disclosure; and
   
4. Creates avenues of recourse for aggrieved shareholders.
   

One of the most fundamental changes for the accounting profession is the creation of the independent Public Company Accounting Oversight Board, a non-profit corporation funded by public companies and subject to SEC supervision. At this time the Board has yet to be formed, but it is expected to wield significant power. [See $435,000 Oversight Positions Prove Tough to Fill]

Here are links to in-depth texts on the Act:

• Summary at the AICPA Web site
  
• Overview at the Financial Executives International Web site
  
• Full text (PDF) and SOA timeline at CCBN Regulation FD Center
  

Other articles worth reading:

• Four Significant Accounting Changes of the Sarbanes-Oxley Act
  
• Audit Committee and Management Disclosure Requirements of the Sarbanes-Oxley Act
  
• Lawmakers Reach Accord on Corporate Reform Bill
  

Reaction from the Trenches

So far, the reaction from accounting and finance professionals in the field has been mixed. Many say it's about time such legislation passed, while others matter-of-factly state that all the legal ramifications in the world won't stop corporate crooks from lying, cheating and stealing.

In a recent survey conducted by CFO magazine, most financial officers voiced opposition to specific reforms. Some 52 percent, in fact, did not believe audit firms should be banned from providing consulting services to clients; 65 percent did not think auditors should be barred from going to work for clients for a specified period; and 52 percent did not think it wise to rotate auditors on a regular basis.

"For CFOs," says Julia Homer, editor-in-chief of CFO magazine, "all of these proposals are just going to make their jobs more time-consuming and expensive."

Gary Wyatt, CPA, a benefits and compensation specialist with Texas-based Travis Wolff Advisors & Accountants, says those accounting firms with a large number of public clients will be dramatically impacted.

"It will change the way they do business," Wyatt explains. "No longer can the financial statement audit be used as a 'loss leader' in hopes of selling more lucrative tax and consulting services. The largest accounting firms will likely lose many tax-consulting clients to each other. Also, high-quality regional and specialty 'boutique' accounting firms may pick up significant new tax and consulting engagements."

Wyatt also believes private companies will feel the effects of SOA: "Even though the Act is generally applicable only to public companies, the principles may eventually spread into 'best practices' affecting auditors of private companies."

William Maslo, an experienced speaker on financial topics with his own CPA practice in Reading, Pennsylvania, agrees. He speaks for the "non-SEC practitioner" who "is fearful that the concepts of the Sarbanes-Oxley Act could be adopted by state legislatures to affect non-public companies. The larger firms manage to spin off divisions and operate in a way that, at the end of the day, all is well. But for smaller firms this could spell disaster," explains Maslo.

Rebecca Wallace, a Colorado-based attorney and CPA, says the "Act is most significant for accountants because it takes away accountants ability to regulate themselves . . .. While increased oversight of the accounting firms should help to keep the audits in check, too much SEC control over the process is not necessarily a good idea. The creation of layer upon layer of bureaucracy could lead to inevitable inefficiencies in the end sought by the Act."

Bruce W. Marcus, a consultant in marketing and strategic planning for professional firms and the editor of The Marcus Letter on Professional Services Marketing, says the ramifications of the sweeping SOA "may be more damaging than the conditions they mean to correct."

In a recent article, What Sarbanes-Oxley Will Mean to the Accounting Profession, Marcus highlights the inherent challenges accountants - and accounting firms in particular - now face with the implementation of SOA, including the separation of auditing and consulting services. "Many services are relevant to improving the audit," he argues. To meet the needs of its clients, firms will need to find a way to implement consulting services that improve the audit, such as technology services that improve the flow of financial data, without the "consulting services that flagrantly taint the attest function."

Additionally, Marcus recommends the accounting profession re-examine its partnership structure by "reworking the governance structures for better management, and to allow the outside world to see more clearly how each firm is serving the clients and protecting their shareholders."

Likewise, the profession and those who regulate it should remember it does not operate in isolation to the markets it serves. "The time has come for all professionals to recognize that they exist only in their ability to meet the needs of their clients and the public – and not themselves," says Marcus.

Go on to Part Two and learn:

• How managers can implement SOA into the company culture
  
• How to keep staff members educated and informed

Sponsored Links:

• Governance, Risk Management, and Compliance: It Can't Happen to Us--Avoiding Corporate Disaster While Driving Success
  
• Building a Career In Compliance and Ethics
  

What's Your Emphasis

LinkedIn has a poll that asks which of four qualities is most important in running your business:

• Learning from mistakes
• Embracing change
  
• Taking calculated risks
  
• Focusing on the future
  

One of the things an Organizational Development person does is encourage change where it's necessary. And change is part of the evolution of things. Another term for change is "progress."
Being in business for yourself means you take calculated risks much of the time. Even making the decision to start a business shows the tendency to embrace risk because there are no guarantees of success except for what you put into the effort. Even then, the guarantees of success are not there because many other factors come into play and impact the plans that were initially formulated.

The failure to learn from one's past and from the mistakes that put you where you are today means, like Sisyphus, you are in a constant state of striving to get "there" instead of moving forward. The lessons aren't being learned. Your business is doomed before the birth is complete.

Thus, the major watchword is "focus" and staying focused. The objective is to achieve the goal while stamping out the distractions. Staying focused also means recognizing the trivia that can become a distraction and does nothing for aiding in projecting your plans and goals compared with the distractions that are major issues that merit attention and dispatch in resolution. So in many instances, the most important quality is focusing on the future. Another way of saying this is to say focus on achieving the goal.

One of the ways to put order into ones business endeavors and plateaus is to know how to prioritize as well as how to balance the various aspects of the business. And the next important issue in creating balance is to know how to create a healthy work/life balance so that running your business isn't a matter of running to your grave.

Resources:

• How to Learn From Your Mistakes
  
• A Strategy for Learning From Mistakes
  
• Learning From Mistakes
  
• Small Business Planning: Developing a Business Plan
  
• Developing a Marketing Plan
  
• Keys to Prudence: Setting Priorities, Goals and Objectives
  
• How to Set Goals
  
• Setting Objectives & Planning: A Key Managerial Task
  
• 7 Ways to Improve Your Work-Life Balance
  
• Forecasting for Growth
  
• Using Technology to Stay Competitive
  

Sponsored Link:
Off Balance: Getting Beyond the Work-Life Balance Myth to Personal and Professional Satisfaction

Development Opportunities

The original title for this post was "Standards, Boundaries, Guidelines." It didn't work because it just didn't. The subject intended for consideration is how to handle a situation in which you have a problem and then find yourself, as did Paula Deen) needing to turn it into a teachable moment.

Paula caused quite a stir circa June 25 with regard to what she did or did not say, how she manages the workers in her kitchens, and just general protocol. She proclaimed innocence on all counts except for one instance when she used a racially questionable term. She wailed about the distress that her "young people" caused her when she would hear the names they would call one another. But she didn't talk about what she did to counter that behavior.

Good Georgia girl of the '60s, she claims that she only used the racially repugnant term one time in her life. Yet there are lawyers who have come up with quite a number of other instances. For someone of her vintage, she should have an appreciation of what the term connotes as well as other matters of which she is accused (her "pet" name for one of her chefs, the wedding dinner, oh dearie me). She's a grandparent. She's at a stage where she's been teaching etiquette and appropriate behavior to her offspring. The dynamic doesn't change when it pertains to employees, associates, and just people in general. Still, none of these situations caused her to stop and consider that she should put forth some measure that would stop these things from happening and curb the stain to her brand. Even worse, it appears none of her HR personnel approached her with suggestions or recommendations.

Establish a Zero Tolerance Policy

The concept of zero tolerance has been around for a while. It could be argued that Paula's kitchens could have put a zero tolerance section into the Personnel Handbook with regard to a lot of behaviors. The section could cover language, acts, attire, and other matters that cause one to bristle. But before jumping on that concept and saying that is the solution, the first thing that needs to be investigated is how effective zero tolerance is in any environment, whether it be at work, or at school, or anywhere else.

An initial cursory look at the string "effectiveness of zero tolerance policies" produced a lot of results that pertained to children in schools and bullying. One after another, the headnotes talked about how ineffective a zero tolerance policy is with regard to discouraging negative behavior.

But the investigation of the effectiveness of zero tolerance related to the workplace. So the string was modified to "effectiveness of workplace zero tolerance policy" which also proved to have no positive things to say about the policy. In fact, the findings still dodged the bullet by examining matters such as substance abuse, sexual harassment, and workplace bullying. It went the range of zero tolerance as it relates to a military environment to the university and all environs in-between. The reverse was discussed - how ineffective that policy is. Why is this so? According to Wikipedia, "Zero-tolerance policies forbid persons in positions of authority from exercising discretion or changing punishments to fit the circumstances subjectively; they are required to impose a pre-determined punishment regardless of individual culpability, extenuating circumstances, or history." In other words, there's little wiggle room.

Not All Negative

However, one writer, Samuel Greengard, pointed out several elements that contribute toward making an effective policy, one that discourages the types of behaviors that should be kept out while maintaining a healthy environment. Management buy-in is essential. Knowing the array of legal issues and laws is also important. And having appropriate forms of punishment help the zero tolerance policy work. Stepping outside of Greengard's citations of effectiveness policies, some authorities point out that the policy should be exacted on an equilateral basis. That is, it applies equally to all personnel, no matter what the position.

The Bottom Line Is

So this brings us to a takeaway on this matter. You have employees who are bandying insulting epithets at one another. You have managers (and even owners) doing and saying socially repugnant things that cause one to question the health of the environment. This doesn't require neurosurgeon skills. Simply do not tolerate or allow (even in jest) what could be construed as objectionable, harassing, or racist behavior. Even if the language is used among those of the same racial group and some of them (but not all) contend that it's the vernacular of the community or culture, do not tolerate it. (Unless, of course, you want to send the message to your customers that your business cannot rise to serving people with courtesy and allowing them to feel they have dignity.) Even if it's part of your culture and practice in your home, it isn't appropriate for those you serve and shouldn't be imposed on them. It isn't appropriate for those who are in your employ and they should not be subjected to it. This is the time to lead by example.

Resources:

• Everything Paula Deen Did Wrong, and What She Can Do Right, Howard Bragman (June 23, 2013)
  
• Paula Deen didn't exactly deny those allegations of race discrimination, Eric Meyer (June 20, 2013)
  
• Guidelines for Preventing Workplace Violence for Health Care & Social Service Workers, Occupational Safety and Health Administration (2004)
  
• Chapter 7: The Workplace Violence Prevention Program, AFSCME
  
• Zero Tolerance Making It Work, Samuel Greengard, Workforce Magazine (May 1, 1999; September 11, 2011)
  
• Zero Tolerance for Workplace Violence, Nonprofit Risk Management Center
  
• Zero Tolerance, Wikipedia
  

Nine Tips for Diversity Leaders

This morning, a discussion on LinkedIn finally grabbed my attention. An editor wanted to know (paraphrasing) what tips the group members have for future diversity leaders in terms of necessary skills and expertise. It was the type of question that a nurturing personality has difficulty letting get overlooked. So I responded.

Skills:

• Ability to listen carefully, process the information, and respond with an appropriate response. Most would call all of that "good communication skills" but communication involves more than just talking at people or reciting anecdotes about 'this happened to me.'
  
• Ability to operate as a professional without projecting an air of pride or smugness. Become a beacon and role model but first, and most importantly, be human.
  
• Use your maturity. It's important to have the maturity to deal with human nature and various age demographics in order to learn from them as well as convey useful information to them.
  
• Communication is critical. If your message isn't getting through, take some time to review what you're saying and how you're saying it. Then modify your strategy so that the vocabulary and voice are not only understandable but also heard. Also consider aligning yourself with someone who more closely identifies with your target demographic so that they are speaking the language. Then the message more easily reaches its destination and becomes effective.
  

Expertise:

• Choose a specialty area and learn as much about it as possible. The learning should not be solely classroom- and textbook-centric. Those are clinical settings based on what others are telling you. In many instances, the best experience is to be out in the field interacting with the people and situations that constitute your specialty area. In order to gain that experience while still learning your specialty, it would be good to do volunteer work at a nonprofit that specializes in your calling or intern for them.
  
• There are many ways to gain an appreciation of the needs and wants of your audience. Some people have walked and lived among their specialty constituency (sometimes not on a willing basis). That can be extremely dangerous if it's done with no safety tether (others outside of the situation who can help you get out of harm fast). However, that type of immersion provides real life awareness and the ability to develop meaningful strategies to address issues.
  
• Having a real appreciation of the constituency needs leads to engendering trust from the members. That is extremely important to being effective as well as developing respect.
• A leader needs to have the sophistication to appreciate when transparency is mandatory.
  
• Recognize that privacy and confidentiality are imperative.
  
• It's important to do proper screening, usually couched in casual conversation that makes the person comfortable enough to share their philosophies that wouldn't ordinarily be verbalized (or demonstrated) in an employment interview setting. That will make proper selection of the most effective personnel possible.
  

Someone recently asked whether it's possible for a White person to be a leader of a Black organization. The ancillary query related to whether a woman could be an effective leader of that same group. As that conversation evolved, we looked at the NAACP as an example. It was founded by mutually concerned individuals from all ethnicities and walks of life. Among the founders were abolitionists, Jews, Gentiles, Blacks, Whites, men and women. One of the most pivotal of the founders was Mary White Ovington. The first "president" of the organization (who served in that capacity for ten years) was a White man, Joel Spingarn.

A few words about being a leader, no matter what the cause or organization, is having foresight and vision. Those skills will allow the leader to see most of the pitfalls before they arise. That will then enable them to develop strategies to avert the difficulties, use them to the organization's advantage, or overcome them with as much ease as is reasonable. In order to garner the support to execute the plans and goals of the organization, a leader must have excellent communication skills or a trusted adviser and speaker who can communicate the rallying cry on their behalf.

Finally, it's extremely important that the leader be able to understand the psychology of their opposition. Doing so will empower them to gain the ear of those who resist. Sometimes resistance is nothing more than fear dressed as aggression or hate. The ability to allay those fears by showing the benefits of becoming aligned takes significant skill and ability while yielding results useful for more than the constituent group.

Sponsored Link:

HBR's 10 Must Reads on Communication (with featured article "The Necessary Art of Persuasion," by Jay A. Conger)

What October 1 Means

An email from one of the officers of the Los Angeles chapter of California Staffing Professionals reached me today. The subject line read "What does October 1 mean to you?" I had an immediate visceral reaction to the heading. I began reading it; my next reaction was not as acute but still strong. The message related to the deadlines approaching on October 1 in which employers need to provide various notifications to their employees.

In case you aren't aware, my first path was law. After being in support positions for many years, I was able to appreciate that work and realize I needed more challenge and more knowledge. Those introductory years were useful for making the decision to sit for the LSAT and apply to law schools. After more than a year and a half of attending law school, disruptions happened that caused me to have to leave. The evaluation period before making the applications was useful for focusing on a specialty and why. But there were detours that needed to happen in order to enrich the future and make a more insightful practitioner and counselor.

Law is like breathing for me; it gives me life. It propels me where little else (except music) does. Law loves me and seduces me to return to it. Where I initially planned to be a either a transactional law or tax lawyer and engage in public interest law as a social mandate in my private life, it appears the reverse is actually my path. If only I could slice through the jungle of barriers that would make re-entry possible.

But back to October 1 and what it means to me.

What October 1 means to me is the beginning of Domestic Violence Awareness Month. No matter where we are, we're in a workplace where the need to be aware and sensitive to the issues of violence and safety are paramount. No matter where we are, we're in a workplace where bullying and harassment can become issues. And when it comes to background checks and something bizarre comes up in our reports, be mindful of the fact that some survivors do not feel compelled to reveal that they have that status. What's paramount to them is that they need to get a job in order to pay bills and rent and buy food in order to continue to survive.

There are at least five types of abuse. It's critical to be aware of the dynamics of each of them. Psychological abuse is aimed at shattering a person's self confidence. It leaves no physical scars nor visible maiming but it nevertheless leaves a profound impact on the survivor that makes them question their validity at nearly every turn. Isolation can come from exacting defamatory impressions about the target that discourage others from associating with them. The defamation will lead to failed attempts at gaining meaningful employment as well as social relationships.

Economic and financial abuse will leave the target's financial history tarnished at best. They will find their credit records in shambles. They will be accused of stealing or other financially objectionable behavior. Their assets - and everything they have slaved to earn and amass for their own future - are now in then hands of their abuser. And the abuser (who has access to all of the target's personal identifying information) has managed to take possession of the target's property of every type.

Fear is another tool used by the abuser. They use it with such expert precision. It's useful for trying to avoid more painful situations or just plain pain. Fear of loss of valued things or associations can be a source of instilling a need to avoid pain and suffering.

Pain and suffering goes along with physical abuse. We've all seen images of the black, puffy eyes or the crumpled and twisted nose. We've heard about the objects shoved into human flesh. Some of us have even heard the thumps and bumps on walls and heard the arguments accompanied by screams of pain.

But what about the temporary restraining orders that were quashed by the non-comprehending judge pro tem? That act then left the survivor exposed to any type of harm the abuser decided to exact upon their target. The well-meaning soul who wanted to reconnect the two individuals because the abuser talked about how they regret their past acts. Little do these well-meaning samaritans realize the grief and regret expressed by the abuser is feigned in order to induce betrayal of their target's whereabouts. Therefore, the harm will resume.

Domestic Violence Awareness Month is very important. I wish more people would take it more seriously and not make condescendingly sympathetic sounds that are meaningless. It would be good if people were truly able to relate to how important it is to all of the workers in the work environment, whatever it is.

Sponsored Link:

Reflections of a Domestic Violence Prosecutor: Suggestions for Reform

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