5 Reasons Applying for a Job Online Does Not Work

Applying for Jobs Online

By: Tracy Levine, President, Advantage Talent Inc.

As a recruiter, I have been approached by numerous people complaining about having to apply for most jobs online.  They want to know if it works for anyone.   Ignoring the tongue in cheek title of this blog, the answer is yes.  Most people will start their job application process with a company by applying for the job online.  This could be directly on a company’s website, a recruiter’s website or a job board.

Job Hunters take actions that assure they will not make it through the computer gatekeeper to even be considered for a job.  The following is a list of the top 5 reasons why applying for a job online does not work for many Job Hunters.

1. Downloaded resume templates with formatting. 

It may make you feel good that your resume looks totally traditional or “pretty” but the computer gatekeeper will not be impressed.  All computer databases utilize plain text.  This means your resume will be converted to the most basic of letters and numbers.   Plain Text does not read pictures or any type of formatting other than indent and return.  Therefore, the computer will interpret the tables and other formatting the best it can.  Your information might not make it into the correct fields.  If you cannot be found, you will not be hired.

2. Submitting Functional Resumes.

Do not even bother to apply online if you use a functional resume.  A functional resume almost assures that you will not come up toward the top of a list or on a list at all.  This is even truer if you post on a large job board.  Functional resumes are not computer gatekeeper friendly.  The computer cannot determine how much experience the candidate has within any particular skill or when the candidate last used the skill.

3.  Applying for jobs that the Candidate is not qualified to fill.

Many job hunters have become spammers.  DO NOT Apply for jobs that do not match your skill set.  Experts have been telling the unemployed to think of different ways their skills can be used.  Good Advice but irrelevant when applying for jobs online.  Computers do not think out of the box.  They find the resume that fits the exact words used in the data base search. Do you fit the job description?

4.  Trying to bypass the online application process.

There are many experts that are erroneously telling candidates to bypass the online job application.  These “experts” believe you are more likely to get the job if you send your resume directly to the recruiter or hiring manager.  In most cases this is not a good idea.

Larger corporations use the HR department for a reason.  In the past, many of these companies have been accused of hiring discrimination and sued.  To prevent any appearance of impropriety these companies make candidates go through the HR department first.  Depending on the company, going directly to the hiring manager automatically gets the candidacy denied.  Trust me on this one; it happens more than most people know.  In most instances the candidate will never know this is the reason they did not get the job.

In today’s market, employers and recruiters are inundated with resumes for each job opening. The employer posts jobs online to keep their e-mail box from getting bombarded with 1000s of resumes not attached to a specific job.  Sending the employer or recruiter an e-mail can backfire.  Do not do it unless you are truly the best or an expert in the field as it relates to the job that has been posted.  I cannot speak to others’ practices but we do read all of the resumes attached to job orders.  Typically, the person in charge of the job will look at all of the resumes for the job at once.  It is easier not to let any candidate slip through the cracks if the job description and the candidate competition are viewed simultaneously.  If the candidate is the right person for the job, they will be found in the group review.

5.  It is a lottery.

Anyone who has a computer can apply for jobs online.  It is easy.  Therefore, the competition is greater.  This should not discourage a candidate from applying.  We have all heard the saying, “The cream will rise to the top.”

Applying for jobs online does work.  If you are not having success it might be because of some of the things listed above.

The Devil Went Down to GA: Goldman Sachs vs. Credit Suisse-Noncompete Agreements

AtlantaBy: Tracy Levine, President, Advantage Talent Inc.

In February of this year, Credit Suisse lured away seven of Goldman Sachs’ top Wealth Managers.  Purportedly some were offered upwards of $10 million to move to Credit Suisse.  According to some of the articles written, Credit Suisse is the devil, and companies like them are the reason Georgia needs to change their view on noncompete and non-solicitation agreements.  It is amazing how much media this situation got in Atlanta that was not just gossipy news but highly politically charged news.  I am sure the defection did hurt Goldman Sach’s business.   However, Goldman Sach’s is hardly the poster child for reform.

How shocking, a Wall Street firm stole top talent from another top Wall Street firm.  Wrong.  This is not shocking at all and is business as usual. The top Wall Street Firms have been raiding each other’s top employees for decades.  In this instance, Goldman Sachs filed a lawsuit not against Credit Suisse, but against the seven wealth managers.  It was voluntarily dismissed the next day.  What makes this situation so ironic is that Goldman Sachs is no saint.  This is a situation of what is “good for the goose is good for the gander.”  In 2010, I believe the score is Goldman Sachs 55 and Credit Suisse 7.  Earlier this year, Vestra, a Goldman Sachs backed UK company lured an estimated 55 employees from UBS.  Shocking really shocking…..not.

Full disclosure: Back in the 1990’s, I was an employee who was lured away from Credit Suisse, then Credit Suisse First Boston, by Smith Barney with 3 other employees.  In that point in time very few people had non-solicitation agreements.  Obviously, Credit Suisse has more than thrived since then to have the money to lure people from Goldman Sachs for millions of dollars.  Over the past three decades, it hasn’t been unusual for the very top Directors and other top employees to be lured away from one Wall Street firm to join another and lured back by the original firm in a year or two.    

So why has this business as usual situation in Georgia led to many trumpeting the horn for stricter noncompete and non-solicitation agreements?  Wall Street already has a current master agreement that all Wall Street Firms and Investment Firms are encouraged to sign that says a firm will honor nonsolicit/non-compete employment agreements.  If Goldman Sach thought honoring non-solicitation and noncompete agreements were good for business in the long run, they would have signed it.  Or was it their arrogance of being one of the biggest or strongest bullies on the block that made them feel immune to the ramifications of not playing nice with others?  Credit Suisse is another firm that has up to this point not signed the agreement either; probably for the same reasons as Goldman Sachs.

Noncompete and non-solicitation agreements have been problematic for both employers and employees in Georgia’s current environment.  I agree Georgia needs to review their approach to non-solicitation agreements and noncompete agreements.  However, it needs to be viewed in a real context and not the lens of hyperbole.  Goldman Sachs is not a victim but the recipient of their own practices.  Yes, they might lose millions of dollars.  I am sure UBS probably lost millions of dollars also when Vestra hired their employees.

In the real world, it is not appropriate to leave each contract brought before the court to individual judge’s discretion on whether they are enforceable or not.  The Georgia Courts’ approach with these type of contracts is a little like defining pornography…I know a bad contract when I see one.  On the flipside it is not o.k. to go too far the other way by changing the Georgia Constitution to the point it makes it impossible for an employee to work for up to three years after leaving a company due to corporate downsizing.

In November, the public is going to be asked to vote to make the following changes to the Georgia Constitution in regards to non-solicitation and noncompete agreements.

H.B. 173, codified in relevant part at O.C.G.A. §§ 13-8-2.1 and 13-8-50 to -59, provides for a host of revisions to the current status of Georgia law on restrictive covenants.

  • Georgia courts will be allowed to partially enforce restrictive covenants that are otherwise overbroad, thus reversing Georgia’s strict and longstanding “no blue-penciling” rule;
  • provides that in-term restrictive covenants will not be considered unreasonable because they lack specific limitations on the scope of activity, duration, or territory, as long as the covenants promote or protect the purpose or subject matter of the agreement or deter any potential conflict of interest;
  • establishes a presumption that post-employment noncompete agreements with a duration of two years or less are reasonable;
  • establishes a presumption that post-employment customer and employee non-solicitation agreements with a duration of three years or less are reasonable;
  • permits employers to extend post-employment restrictions on customer solicitation to customers and potential customers with whom an employee did not have actual contact as long as, within two years prior to the date of termination, the employee supervised the employer’s dealings with the customer, obtained confidential information about the customer, or earned compensation, commissions, or other earnings as a result of the customer’s purchase of the employer’s products or services; and
  • permits employers to enforce post-employment restrictions on employee solicitation that lack an express reference to a geographic area.

See Paul Hastings Client Alert for complete information.

It is about time that Georgia did away with the non-blue penciling law that made it hard for employers to have any kind of meaningful protection.  The rub for the employee is that Georgia is an “at will” state.  A company can end your employment at anytime.  This wouldn’t be such an issue if noncompete and non-solicit agreements were only being signed by the very top level executives.  Up until recently, they were the only employees asked to sign such agreements.  Now many companies make all employees sign a non-solicit or noncompete agreement whether they are a top level executive or integral to the overall big picture or not.  It is hard to discern what the appropriate balance is for protecting the employer, the employee and the public’s intrinsic right to have free competition and the right to do business with whomever they want.

I would like to hear your thoughts on the amendments to the Georgia Constitution.  Is it not enough of a change? Does it go too far? Or do the changes strike the right balance? Why do you believe that some of the Wall Street firms don’t see the advantage of agreeing to honor nonsolicitation/noncompete agreements and completely ignore employment agreements?

Tweet Your Resume on Twitter?

By: Tracy Levine, President, Advantage Talent Inc.

Recently many blogs have popped up about how to post your resume on Twitter so recruiters can find you.  Purportedly, droves of recruiters and hiring managers are using Twitter to find their next employee.  I do not know if this is true or not, but it never hurts to go ahead and get your name out there. You never know where your next job will come from.   With that being said, it is important to understand who uses Twitter so you can understand the audience and set realistic expectations.  There are no concrete numbers on how many people actually use Twitter versus those who have opened an account and subsequently abandoned it. The number of Twitter Accounts are growing with an estimated 18 million people who visit Twitter at least once a month accounting for approximately 3 ½ to 4% of adult internet users. On the flipside, almost 60% of the people who sign up for Twitter abandon their accounts.  The median age of a Twitter user is 31.  Most of these statistics can be found at Pew Internet & American Life Project website. (http://pewinternet.org/Reports/2009/Twitter-and-status-updating.aspx)

As an Executive Recruiter who has talked to other Executive Level Recruiters, my impression is not only would they not look for resumes on Twitter many just don’t get Twitter.  My personal experience with Twitter is new.  I use Twitter to tweet jobs because it drives people to Advantage Talent, Inc.’s website to submit resumes directly.  I have no statistics on whether this is helpful or not.  My followers are not huge but since I started tweeting, Advantage Talent, Inc.’s jobs have been showing up on numerous job boards run by private individuals and bloggers.  In a roundabout way I am looking for resumes for specific jobs on Twitter and garnering some success. This is not the same activity as searching for posted resumes on Twitter.  So if someone asked if I looked for resumes on Twitter the answer would be yes and no.

Yes. Tweet your Resume.

The main reason you should Tweet your resume has nothing to do with Recruiters or Hiring Managers.  It is hard to find a job if no one knows you are looking. Tweeting is another form of networking. If you are currently using Twitter, let your contacts know what type of job you are looking for and guide them toward your resume.  The following is an example of how to notify people you are looking for a job in the 140 character limit and direct people to your resume.  In this example, the link goes to my Linkedin Profile.

RT #Tracy Levine seeks a CMO Job Atlanta #Resume #CV http://tinyurl.com/29pdyzo

  • RT is shorthand for retweet.  When you send the original tweet this encourages people to retweet to their followers.
  • # is the symbol used for hashtags which are terms people search when looking for posts.  For example Resume and CV have hashtags.
  • At the end is the URL address back to my LinkedIn profile. You will notice that the URL is shortened.  You do this by going to http://tinyurl.com  and pasting your LinkedIn Profile address into the space provided. You will be provided with a shorter URL.

Follow me on Twitter @TLevineATI.

Happy Tweeting!

LinkedIn Recommendations For Your Job Hunt: Do They Help?

LinkedIn Recommendations For Your Job Hunt: Do They Help?

By: Tracy Levine, President, Advantage Talent, Inc.

Recently, I was forwarded an article about how Executives could get a job through LinkedIn.  One of the suggestions was to solicit recommendations for the hiring manager to read.  The observation was made that in the normal job situation you only get to provide a few recommendations but now with LinkedIn you can give the hiring manager even more positive recommendations to read.  The declaration made me laugh out loud.  Published studies show that the average hiring manager only looks at a resume for 10-15 seconds.  It flies in the face of logic to think that the hiring manager who only takes seconds to read a candidate’s resume is going to take even one second to read recommendations on LinkedIn.   Professional Executive Recruiters and HR Directors are tasked with asking specific questions that relate to the job at hand when calling a reference.  A short recommendation on LinkedIn isn’t even in the same league as a real recommendation and cannot be compared.

Some people have taken to attaching their LinkedIn recommendations to their resume. Most Executive Recruiters and hiring managers I have spoken with say they take recommendations on LinkedIn with a grain of salt.  Recommendations that are from people who have actually worked with the person or used a person’s services are the closest to real recommendations.  The problem with LinkedIn recommendations is that many people solicit recommendations from people who know them from social situations and networking but cannot speak to the person’s work experience.  Another problem is the “you give me a recommendation” and “I will give you a recommendation” situation.  Typically, these exchanges are not conducive to real or to meaningful recommendations.

Getting recommendations are great if you stick to only getting and giving recommendations to people you have personally worked with in a meaningful capacity.  However, no amount of recommendations can erase a checkered history.  It is the job of the Professional Recruiter or HR Director to do a thorough background check.

10 Rules of LinkedIn Group Etiquette

10 Rules of LinkedIn Group Etiquette

By: Tracy Levine, President, Advantage Talent, Inc.

1. Do not ask to join groups you are not qualified to join.  For example, if you do not qualify for the XYZ professional organization in the ‘real world’ then you don’t qualify in the LinkedIn world either.  Asking to join groups you are not qualified to join makes you appear to be a spammer.

2. Do not post job orders in the discussion section of the LinkedIn Group.  There is a job posting section…..Use it.  It may seem like everyone is looking for a job these days but many are not.

3.  Make sure to be relevant with your postings.  Don’t post just to post or to have your name everywhere. Make sure that the topics you chose are relevant to the group’s interests.   For example, if you are part of a LinkedIn wine group don’t post about your car collection. 

4.  Do not post inflammatory comments.  Most users of LinkedIn are established professionals.  They did not join the group to argue with you.  Also, posting inflammatory comments is a quick way to burn bridges in the professional community.

5.  Do not sell to members.  People do not join LinkedIn Groups just so you can have access to spam them with personal e-mails through LinkedIn.

6.  Do not, not, not post sale pitches for products in the Discussion Thread of a LinkedIn Group.  This is the quickest way to achieve negative brand recognition.

7. Do be a mentor.  Sharing your expertise with others and helping them reach their goals is appreciated by all.

8.  If you are the administrator of a group, check the requests to join often and frequently.

9.  Do not write anything that you do not want out in the public.  It may be a LinkedIn Group but it is not a confidential group.

10. DO NOT use the LinkedIn Groups as your personal blog.  This is my personal pet peeve and seems to be a growing trend in a couple of the LinkedIn Groups that I am a member.  Get your own blog, it’s cheap and it is free. (WordPress.com).  If members of a group find you interesting they can sign up to follow your blog.

Marketing Begins in the Past

We have all heard the following sayings.  “It’s a small world” and “Reputations take years to build and minutes to destroy.”  These truisms are particularly relevant for professionals working as independent contractors.  Today’s job will be tomorrow’s past job.   With these thoughts in mind, contractors increase their marketability by following a few simple rules.

 Make smooth transitions:  If you are offered a permanent job with another company, it is professional courtesy to give your current employer two weeks notice.

Keep the firm your are working through informed of any changes in the scope of the engagement or any changes in the political environment.  This is for your benefit so that the staffing firm you are working for can help you achieve your personal career goals and help mitigate any possible challenges in a changing environment. 

Document your current assignment duties and successes.  These are the heart of your resume.

Remember you were hired for your expertise.  Each day assess what problems you can solve to make the process smoother.

Be respectful of your immediate managers and peers.  Do not insert yourself into company politics.  You are a neutral party that has more to lose in the long by choosing sides.  No matter what the fight, it is not yours.  The people on both sides of a political issue are your references for your next career step.

 Avoid the appearance of handling personal business on company time.  No checking personal e-mails or excessive cell phone use.  The company is paying you by the hour and expects your full attention to the task at hand.

Even if you hate the assignment and cannot image working another day at the company, it is still important to give two weeks notice.  Contractors who just decide to not come in the next day create an image of irresponsibility and are not likely to be placed as quickly as the contractor who conducts business as a professional.  Always contact the staffing firm you are working through when difficulties arise.  They may be able to extricate you out of the situation sooner without burning bridges or may be able to help resolve the problem that is the cause of concern.

Please feel free to contact Tracy Levine, President, Advantage Talent, Inc. if you have further thoughts or questions.

What Candidates can learn from the Bachelorette!

If anyone has looked at internet trending topics, they will see that reality shows, such as, the Bachelorette rank toward the top.  Out of morbid curiosity, on Monday night, I watched the premiere of the Bachelorette with growing horror along with pure amazement.  WOW! People truly do not know what TMI (too much information) is.  While a certain amount of outrageousness is to be expected on an entertainment reality show, somehow this ease of sharing inappropriate information with total strangers and with the world has crossed the line into everyday life.  For those who have not watched any of the comedians or spoofs of the Bachelorette, one of the Bachelors explains how he received the name “Shooter”.  I will not go into it in this blog but a search of the Bachelorette and the word “Shooter” will bring up this truly amazing and unbelievable revelation.  This Bachelor did not receive a rose and will probably never go on another date….ever.

Unfortunately, over the years I have seen professional candidates, like this Bachelor, who did not know what is appropriate or funny when dealing with their job search and employment.  For example, I placed a candidate in a management job with a major company.  An offer was extended and accepted.  In the end, the job offer was rescinded.  Why?  When filling out the requisite company application paperwork after the question, Sex, the candidate wrote, “As often as possible!”  When I received the call from the Client explaining why the candidate was no longer welcome at the company, I could not believe what I was hearing. 

Recruiters help candidates with their resumes and prep them for interviews.  However, it should be obvious that any references to topics, such as, sex, politics and religion have no place in the job hunting and employment process.  Nothing seems to be off-limits on Reality T.V. anymore, but that does not translate to everyday life and career moves.  If you want the rose, job offer, DO NOT share inappropriate information or discuss inappropriate topics.

By: Tracy Levine, President, Advantage Talent, Inc.

Did “Fat Finger” Syndrome contribute to Thursday’s market plunge?

By: Tracy Levine, President, Advantage Talent, Inc.

Thursday the stock market dropped 347.8 points by closing.  During the day, the stock market had plunged even lower, almost 1,000 points.  The world news alone does not explain this huge plunge.  Yes, there looks like there might be a hung parliament in the U.K. with no decisive winner and Greece’s economy has crashed.  All of this is old news.  Back in December political watchers were predicting that there would be no clear victory in the Parliamentary elections.  The news about Greece’s economy came out last week.  It is to be expected that the stock market would be affected by these events but not to the degree it was on Thursday.

Wall Street Veterans are blaming it on “Fat Finger” Syndrome.   “Fat Finger” Syndrome is when a trader makes an error in keying in a quantity or presses the wrong button. According to CNBC, the spotlight has been focused on a Citigroup trader who has been accused of having “Fat Finger” Syndrome and keying in the wrong number.  Over the years sophisticated computer trading systems running algorithms which trigger trades under preset conditions have become the norm at many Brokerage Firms.  Many believe that the Citigroup Trader’s supposed “fat finger” mistake contributed to Thursday’s huge market plunge and triggered automated trading by these algorithm programs.  Purportedly, the trader meant to key in a $16 million futures contract but instead typed in $16 Billion.  Citigroup has denied that a trader at their firm had made an error while keying in a trade.

It is surprising that something like this has not happened sooner.  In reality computer trading over the past twenty years has affected the markets.  Thursday’s supposed “fat finger” mistake only served to magnify the impact of automated trades on the stock market.   As Washington looks at financial regulation reform, it will be interesting to see if anyone will address the impact that one human error can have on the market in this age of fast, market responsive computer generated trading.

Post Update: May 07, 2010 est.—The following new articles contain more information and speculation about what happened on Thursday.  There is a debate over whether this was human error or a swing caused independently by computer trading.  Either way it caused investors to take notice yesterday.  The debate will continue as the incident is investigated further.

Did a Citibank Traders Error Worsen the Market Collapse? By Sam Guston http://www.dailyfinance.com/story/investing/did-a-citigroup-traders-error-add-to-market-collapse/19467905/

NYSE & Nasdaq’s 60% Cancellation Mystery: http://www.cnbc.com/id/37019184

Trading System May Have Dangerous Flaw: http://www.cnbc.com/id/37016611

The Blame Game: NYSE vs. Nasdaq:  http://www.cnbc.com/id/37017292

2010 Proxy Season Voting Rule Changes and impact to the CFO

By: Tracy Levine, President, Advantage Talent, Inc.

The big news this proxy season is the SEC’s vote to prohibit brokers from discretionary voting of stock the firm holds for their clients, in Board Elections.  Shareholder Advocates see this as a hard won victory that has been in the works since 2006.  Corporations worry that the new rule will be disruptive to the functioning of Corporate Boards and the Proxy Process.  For many years there has been a fight brewing with large activist shareholders and corporations.  Corporations have been mostly successful in keeping shareholder activists’ candidates out of the Proxy and off of the Director Slate.  Campaigns to change the rules have mostly been unsuccessful.  With the SEC approving the amendment to NYSE Rule 452, the activist groups may have achieved their goal in a roundabout way. 

A.) What does this new rule mean to a CFO?  In most companies the CFO is ultimately responsible for all SEC filings, including making sure that the proxy is mailed out to shareholders on time for the Annual Board Meeting.  This process has been getting easier with the advent of e-Proxy Voting.  In the past, the proxy votes were tallied to see if there was a quorum to elect the typically unopposed slate of Directors.  With the success of blocking non-management nominees from the slate, the activist shareholders were left with two choices: (1) Wage an expensive legal battle or (2) Vote no or withhold votes for the proposed slate.  Voting No or withholding votes most of the time did not effectuate change.  Brokers typically cast their clients’ votes with management.  It was not their job to be activists.  Therefore, the corporation was able to fairly easily reach a quorum for their chosen slate.

With the amendment of NYSE Rule 452, corporations may not be able to get a quorum as easily as before when activist shareholders choose to vote no or withhold votes.  Corporations can no longer depend on the Brokers to be the deciding vote and the votes used to reach a majority quorum.  CFOs may have to start to budget more money to send out more notices to garner shareholder votes in order to reach a quorum.  It could be a very expensive exercise.  Complicating this issue is the new access to E-Proxy voting.  It is cheaper for the company but so far shareholder voting has not gone up but instead has gone down with the transition to E-Proxy Voting.

 B.) What does this new rule mean to a CFO?   Numbers, Numbers, Numbers.  Now all shareholders will be holding management more accountable on a quarter to quarter basis.  Management may be in the untenable situation of being afraid to carryout good long term strategic plans because in the short term the plan does not produce immediate results or has a temporary negative impact due to implementation costs.

C.) What does this new rule mean to a CFO?   On the positive side, CFOs who have been in the position of having to tell the CEO and Board of Directors….NO, now have a powerful ally in the shareholders.

For a good summary of how the Amendment to NYSE Rule 452 may affect your corporation read:  Willkie, Farr, & Gallagher, LLP: Discretionary Voting by Brokers Prohibited in Director Elections

Read the SEC Announcement at http://edgar.sec.gov/rules/sro/nyseamex/2010/34-61292.pdf

20 Questions for determining whether a Contractor is a W-2 vs. 1099 Independent Contractor

By: Tracy Levine, President, Advantage Talent, Inc.

Becoming an Independent Contractor is a great way for Executives in transition to earn money in this tight economy. For Corporations that have downsized and need help, Executive Consultants can be the answer. However, it is important that Companies engage these Consultants correctly. The IRS and DOJ are cracking down on employers who claim contractors as 1099 contractors when they are not. There is much more to a contract than negotiating the hourly rate. When negotiating a contract, it is important to consult the appropriate professionals, such as, an attorney and/or a tax accountant or go through a Executive Staffing firm. In fact, under the IRS Code most Financial Executive Consultants do not qualify as 1099 Contractors!

Employee status under common law. Generally, a worker who performs services for your Company is your employee if you have the right to control what will be done and how it will be done. This is so, even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed. If an employer-employee relationship exists, it does not matter what it is called. The employee may be called an agent or independent contractor. It also does not matter how payments are measured or paid, what they are called, or if the employee works full or part time. (IRS Publication 15, Circular E, 2008 Pg. 8)” The IRS has provided examples of what is and is not a W-2 Employee vs. a 1099 Independent Contractor.

The corporation that classifies a W-2 employee as a 1099 Contractor faces the following fines:

*A breakdown of back tax penalties(http://tinyurl.com/5u0d):

15.30 % Social Security Tax (on income up to the cap, plus 2.9 % of income above that cap),

20.00 % Federal Income Tax, +6.20 %

Unemployment Insurance, 41.50 % of the contractor’s pay (IRS 3509).

If it is determined to be intentional, there can be jail time involved.

The Federal Government is not the only one cracking down on employers who misclassify W-2 Employees as 1099 Independent Contractors. Many states have become aggressive on preventing what they see as Corporations not paying taxes that are duly owed. In this economy where budgets are short at the Federal and State Levels, the agencies are demanding stricter adherence to employee tax laws.

Some of the red flags for the IRS include a former employee hired back as a 1099 Contractor. A contract-to-hire where the employee starts off as a 1099 employee then converts to a W-2 Employee. If someone is acting as a Contract Interim CEO, CFO or Controller for a company while the company looks for a permanent solution, or while someone is out on sick leave or maternity leave, under the IRS 20 Questions (see below) these situations would probably fail as a 1099 Contract Position.

According to information published by the IRS, around $64 million in taxes and penalties were collected from over 800 companies that misclassified workers in the most recent year reported. These numbers are only going to continue to go up as the IRS has promised to randomly audit several thousand companies. The Federal Government Accountability Office estimated that employee misclassification resulted in the underpayment of an estimated $2.72 billion in Social Security taxes, unemployment insurance taxes and income taxes in 2006, the last year for which figures are available.

It is important for both Companies and Interim Executives to set up the appropriate relationship in the beginning for the protection of everyone involved. In the current environment, now is not the time to be a do-it-yourself contract negotiator and leave out the experts. A full summary can be found at http://www.irs.gov/pub/irs-pdf/p15a.pdf .  If you fill out a Form SS-8  (http://www.irs.gov/pub/irs-pdf/fss8.pdf), the IRS will help you determine whether the contract employee should be classified as  a W-2 Employee or a 1099 Contractor.

For information on how Advantage Talent, Inc. can help you, please contact Michael Levine at Mlevine@AdvantageTalentInc.com.

The following is a list of 20 questions the IRS uses to determine if a worker is an independent contractor or employee. The answer of yes to any one of the questions (except #16) may mean the worker is an employee.

1. Is the worker required to comply with instructions about when, where and how the work is done?
2. Is the worker provided training that would enable him/her to perform a job in a particular method or manner?
3. Are the services provided by the worker an integral part of the business’ operations?
4. Must the services be rendered personally?
5. Does the business hire, supervise, or pay assistants to help the worker on the job?
6. Is there a continuing relationship between the worker and the person for whom the services are performed?
7. Does the recipient of the services set the work schedule?
8. Is the worker required to devote his/her full time to the person he/she performs services for?
9. Is the work performed at the place of business of the company or at specific places set by the company?
10. Does the recipient of the services direct the sequence in which the work must be done?
11. Are regular oral or written reports required to be submitted by the worker?
12. Is the method of payment hourly, weekly, monthly (as opposed to commission or by the job?)
13. Are business and/or traveling expenses reimbursed?
14. Does the company furnish tools and materials used by the worker?
15. Has the worker failed to invest in equipment or facilities used to provide the services?
16. Does the arrangement put the person in a position or realizing either a profit or loss on the work?
17. Does the worker perform services exclusively for the company rather than working for a number of companies at the same time?
18. Does the worker in fact make his/her services regularly available to the general public?
19. Is the worker subject to dismissal for reasons other than non-performance of the contract specifications?
20. Can the worker terminate his/her relationship without incurring a liability for failure to complete the job?

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