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2013: Time to stop treading water and make it rain

2013: Time to stop treading water and make it rain 620 454 PayReel

The U.S. Congress certainly kept things interesting during the holiday season. They wiggled our toes over the fiscal cliff then pulled us back to terra firma just as our New Year’s Eve champagne bottles ran dry.

Cautiously optimistic, we now pass through the portal of a new year. 2013: The year we come to terms with ObamaCare. The year (we hope) our economy finally, fully recovers. And the year that will take us even farther away from the traditional employment model of our ancestors.

Having avoided the aforementioned fiscal cliff, many if not most of us are forecasting revenue growth. But there’s one thing missing from our ’13 business plan … a bigger budget. Once again, it’s about doing more with less. So, we’ll need those contractors that helped us get through the darkest part of the recession to come back for an encore performance. But instead of treading water, this time they’ll be helping us make rain … if they’ll take our calls.

You see, some of us haven’t exactly been model clients. We’ve been late with payments, vague in our expectations, and rarely offered feedback. Any of which, by the way, are great candidates for your new year’s resolutions.  The trick is to fit these management tasks onto our already full plates. It’s probably time to get serious about a process for managing our contractors, freelancers, consultants, etc.

As we stare down our 2013 opportunities, let’s not forget about the governmental challenges we’ll be facing. Namely, you’ve got to get your head around the Patient Protection and Affordable Care Act. ObamaCare isn’t going away, so if you’ve got more than 50 full-time employees in your company get educated and get ready.

Finally, as you cheer for your favorite sports teams, remember the teamwork that’s occurring between state labor departments and the IRS. They’re sharing data on companies that are known to be misclassifying employees as independent contractors. The number of audits conducted and resultant fines has been climbing steadily since 2010. The risk for those who are non-compliant has never been greater.

Fortunately, all of these challenges can be overcome with the right game plan and the right partners. Here’s wishing you a healthy and prosperous new year. Make it your best one ever!

PayReel’s clients, who are some of the biggest companies in the world, are constantly immersed in the chaos of producing multimedia content or executing live events. PayReel makes sure they have the right contractors at the right time in the right place, and that everyone gets paid properly. And, most importantly, they handle every last detail perfectly while making sure their clients think nothing of it. Relax. We got it.

looking through magnifying glass at money - PayReel

3 Independent Contractors Walk Into a Bar …

3 Independent Contractors Walk Into a Bar … 3872 2592 PayReel

But in the eyes of the Department of Labor, one of them probably isn’t really an independent contractor (what, you were expecting a joke?). Sure, all three freelancers are free to work wherever they choose and they have the flexibility to pick and choose this project or that. But, unless they can check all the right boxes during a DOL audit, things might not be as rosy as they seem.

The point of this post is not to spread doom and gloom over the growing group of freelancers in the workforce and the companies that enlist their valuable services. I’ve done some reading lately, though, and it appears that the increasing number of misclassified independent contractors is on the DOL’s radar. Try these numbers from Colorado on for size*:

  • From 2006 – 2010, the percentage of Colorado workers who were misclassified grew from 7.8% to over 14%.
  • From June 2009 to Dec 2010, over 14% of all Colorado workers were misclassified.
  • During the same time period, the Colorado DOL conducted over 2100 random and targeted audits and found that about 43% of employers were misclassifying workers.

Again, the majority of companies and freelancers out there today would breeze through an audit with flying colors. But if you got a funny feeling while reading this (and you can safely say it wasn’t from the author’s writing style – or lack thereof), it might be in your best interest to check out If that doesn’t make things crystal clear, there are quite a few firms in the marketplace that can help based on your industry and a variety of other factors.

Now, how many freelancers does it take to change a light bulb?


*From the Colorado DOL’s Annual Compliance Report, published May 18, 2011, on House Bill 09-1310, Misclassification of Employees as Independent Contractors

Lucky or just good?

Lucky or just good? 150 150 PayReel

What’s the first thing that comes to mind when you think of Las Vegas? That’s right, gambling. Most visitors come to Vegas to get lucky at the tables or slots. Casinos bank on players’ willingness to take on bad risk – that’s what keeps the acres of marble floors polished and maintains the opulence that is Las Vegas.

During last week’s American Staffing Association Staffing World 2012 conference, the other 1600 attendees and I crossed a casino floor what seemed like every 5 minutes on our way to workshops, meetings and meals. I’m happy to report that I didn’t make the house any richer during my stay. I’m also happy to say that discussions around a different type of risk came up repeatedly during the show. Business risk.

Every business manages (and I use that term loosely) risk differently. Some play the penny slots, hoping to stay in the game as long as possible while others go bust. Others go all-in right away and either hit it big or flame out before the high rollers even arrive. The consensus during last week’s meetings was that a calculated approach balances risk and allows businesspeople to leverage their luck while keeping an eye on the long term prize.

Easier said than done, right? Isn’t luck something that just happens uncontrollably? Jim Collins offered his thoughts on this topic during his keynote address, which in my opinion hit the jackpot. He recommends pausing to embrace luck and use it as a tool to enhance your long term business planning. Instead of chalking up a ‘random’ event to luck, Collins suggests quantifying each ‘luck event’ in terms of how it happened and its impact on your business. Then, evaluate how your long-term plans could be adjusted to incorporate luck and continue doing what you do best.

Bottom line – luck happens. You can welcome it, analyze it and use it to your advantage, or let it pass you by. Now, off to take my own advice at the blackjack tables…

PayReel’s clients, who are some of the biggest companies in the world, are constantly immersed in the chaos of producing multimedia content or executing live events. PayReel makes sure they have the right contractors at the right time in the right place, and that everyone gets paid properly. And, most importantly, they handle every last detail perfectly while making sure their clients think nothing of it. Relax. We got it.

lightbulb - PayReel

The Idea Factory

The Idea Factory 1800 1200 PayReel

In my last post I mentioned the challenge of building a high performing team from the raw material of a multi-generational workforce. One of the hallmarks of a high performance organization is the ability to innovate and adapt. Said another way, they possess the willingness to fail quickly en route to success. These are groups that apply their collective creativity to take intelligent risks.

I believe every member of every team has formulated at least one good idea over the past 12 months. Something that would enable their organization to produce output better, faster, or cheaper. Something that none of their competitors is doing. I also believe these ideas may not apply to the team members’ direct area of responsibility.

So why isn’t every team a veritable idea factory, awash in a sea of innovation? Fear. An emotion that prevents so many of us from achieving individual glory also saps the potential from otherwise stellar teams. The fear I’m talking about comes in three flavors:

  1. Fear of rejection. “Gee, why don’t we ship a live turtle with every product?”
  2. Fear of additional workload. “Great idea! You’ll be responsible for care and feeding of the turtles until they’re shipped.”
  3. Fear of failure. “His career never recovered after The Great Turtle Disaster. Remember that smell?”

Idea factories have figured out ways to overcome these fears, beginning with simply acknowledging they exist. I remember stories coming out of Redmond, Washington many years ago about the great parties Microsoft would throw every time they pulled the plug on a failed project. Supposedly, these were celebrations of the teams’ entrepreneurial spirit and a recognition that not every idea will turn out to be the next Windows Vista. (Cheap shot acknowledged.) True or not, this is a great example for those of us who need to unleash the creative potential of our teams.

A final word on ideas:  Some are just plain dumb. This is where intelligent risk taking becomes vitally important. Even so, quirky ideas can lead you in interesting directions … like the kid who told his mom he was building a personal computer. Her reaction? What on earth would anybody use it for? That turned out to be a very interesting question indeed.

PayReel’s clients, who are some of the biggest companies in the world, are constantly immersed in the chaos of producing multimedia content or executing live events. PayReel makes sure they have the right contractors at the right time in the right place, and that everyone gets paid properly. And, most importantly, they handle every last detail perfectly while making sure their clients think nothing of it. Relax. We got it.

latte - PayReel

Embracing Our next diversity

Embracing Our next diversity 3504 2336 PayReel

I don’t feel old. Though I admit there are aspects of our popular culture that I find bewildering (e.g. $5 lattés with frilly foam designs, that thing with the pants hanging off the butts, and every texting abbreviation besides “LOL” … not sure why, but that one always makes me laugh).

I also don’t feel obsolete. This could be because I’m suffering from an acute lack of information. But a more optimistic view of my self-proclaimed relevance could be the role I’m playing in today’s labor force. Allow me to elaborate …

For the first time in our nation’s history, four generations of workers are pursuing careers in our labor force. There are the Traditionalists, born 1922 to 1945, who epitomize the “cradle to grave” employment philosophy and consider themselves “The Greatest Generation.”  Then, on the heels of World War II, came the Baby Boomers, born 1946 to 1964. Boomers ushered women and minorities, en masse, into the workforce. Born between 1965 and 1980, we have Generation X (or Gen X’ers). This segment of the labor force made job hopping a winning strategy for advancing one’s career. And that brings us to Generation Y or Millennials as they are often called. Born between 1981 and 1990, these young laborers strive to maintain a work/life balance that workaholic Boomers dare not fathom.

Each generation brings a unique set of attributes to the workplace that, properly interwoven, can create a focused, exuberant, high performing work group. Today’s leaders face the challenge of weaving this multi-generational tapestry. You see, it’s all about keeping a diverse set of folks engaged. Engagement equals performance, and performance equals results.

I remember the first time I saw a young, talented manager sitting in a meeting just texting away on her Blackberry. I recall an almost overwhelming temptation to snatch the device away and growl “Pay attention!” It’s been awhile since that meeting (hence the Blackberry reference) and I’ve learned a lot. One of the biggest lessons I keep with me is this … That young Gen X’er was, in all probability, connecting with her team to solve a problem we had just identified during the meeting. Meanwhile, I was sitting there simultaneously being self-righteous and out-performed.

So, what’s my role in today’s labor force? To tell stories like this one. To help us embrace our next diversity.

PayReel’s clients, who are some of the biggest companies in the world, are constantly immersed in the chaos of producing multimedia content or executing live events. PayReel makes sure they have the right contractors at the right time in the right place, and that everyone gets paid properly. And, most importantly, they handle every last detail perfectly while making sure their clients think nothing of it. Relax. We got it.

people working together on graph - PayReel

Super-star Wars: holding on to your heroes

Super-star Wars: holding on to your heroes 620 412 PayReel

The Great Recession has certainly pushed the battle for workforce talent off the front pages … at least temporarily. But surely we haven’t forgotten that the population of the U.S. is still aging. Fortune 500 companies expect to lose 50% of their senior management within the coming decade. And the pipeline of college graduates with STEM (Science, Technology, Engineering, and Mathematics) degrees is still far short of projected demand.

Recent political advertising notwithstanding, the economy is continuing its snail’s-pace recovery. As the economy, and hopefully hiring, picks up steam your organization’s heroes will become prime targets for would-be suitors. Consider the findings from a study sponsored by The following workers are most likely to leave you:

  • Employees between the ages of 41 and 45
  • IT and Marketing staff
  • Directors, Managers, and Supervisors
  • Employees at firms whose overall performance is average or below relative to industry peers

Any of these apply to your workforce?

During the darkest days of the recession, we all had a small group of employees who thrived on change, who embraced the chaos, who multi-tasked and never lost their focus on client needs. These are our heroes. If today these heroes are feeling under-valued, they are almost certainly looking for their next job or they’re openly receptive to overtures from other firms.

If you believe it’s easier to search out, recruit, and train new heroes you can stop reading here and enjoy the rest of your day. If, however, you’re wondering about the most efficient ways to retain top talent I suggest you:

  • Build a list of your heroes. Sounds obvious, but can you easily lay your hands on such a list?  These are the people with the best opportunity to bolt. You should be able to shine a light on them.
  • Make your heroes aware of their status and future with your company. Even if it’s non-monetary, give them some formal recognition of their contributions and their prospects.
  • Recognize and reward exceptional performance. I’m talking game changing, standard setting performances here.

Whether recognition comes in the form of monetary gifts or company-wide recognition, your top performers are more likely to stay put when their hard work gets noticed and appreciated.

PayReel’s clients, who are some of the biggest companies in the world, are constantly immersed in the chaos of producing multimedia content or executing live events. PayReel makes sure they have the right contractors at the right time in the right place, and that everyone gets paid properly. And, most importantly, they handle every last detail perfectly while making sure their clients think nothing of it. Relax. We got it.

stethoscope and globe - PayReel

The Affordable Care Act: Will it put your business in the penalty box?

The Affordable Care Act: Will it put your business in the penalty box? 187 280 PayReel

If you haven’t heard about the Supreme Court’s 5-4 decision to uphold the individual mandate provision of “ObamaCare”, you’ll likely be pleased to know that “Gone with the Wind” won the Oscar for best picture.

Volumes are being written about how this law will affect individuals, yet those of us who depend on the flexibility of contract workers may not have a clear picture of how the PPACA (Patient Protection and Affordable Care Act) might affect our businesses. The degree to which we’ll get pulled into the “Play or Pay” decision hinges on whether our contract workers if they’re classified as W-2 employees, are deemed full or part-time.

You see, beginning in 2014, employers having more than 50 full-time employees must offer them health coverage or pay a $2,000/employee penalty. Play or Pay. So what constitutes a full-time employee? That’s a key question. The language used in the PPACA states that an employee who works 30 hours or more per week is considered full-time. But what if this employee is part of your variable workforce and doesn’t work for your company every week? Does it still make sense to consider them full-time? In its current form, PPACA’s answer to that question would be “yes.” Those of us running businesses on ever-thinning margins might wish to disagree. But there is a proposed solution out there …

Here’s Looking Back At You, Kid:

The American Staffing Association has been lobbying the Feds to add a 12-month “look back” regulation to the law. This would exempt (at least temporarily) employers from paying the penalty until they are able to calculate a 12-month average of hours worked per week for the employee. If it’s under 30, the employee is deemed part-time and no penalty is assessed. (This is a hugely simplified explanation, but I’m sure I’d lose you if I went into any more detail.)

How about we forget all this complicated look-back averaging, et cetera, et cetera? Let’s just repeal the law! Well, don’t hold your breath on that happening. To repeal PPACA you’d need a Republican president and 60% GOP control of both houses of Congress. You never know, but I think that’s a long shot in the short term.

Instead, let’s focus our attention on regulating this law to ensure it works for the burgeoning contingent workforce upon which our economy now depends.


If you are looking for employer payroll solutions for freelancers, contact PayReel today! Managing your contingent workforce is a full-time job. You need an independent contractor pay solution you can count on. Stay focused on your core business and let PayReel manage the administration of your qualified contractors.


dice and money - PayReel

Safe Bet: Workers’ Compensation Rates on the Rise

Safe Bet: Workers’ Compensation Rates on the Rise 2580 1932 PayReel

I never imagined I could actually feel sorry for any insurance company. By that I mean, feel sorry for its corporate balance sheet. I’ve got close friends working for behemoths in the industry and I could never feel ambivalent about their misfortune. But since learning about the underlying causes behind the trend in workers’ comp insurance rates, I’ve actually experienced a few moments of sympathy for these businesses.

Most Workers’ Comp carriers are faced with significantly declining profits related to escalating claims costs and operating expenses. Industry data shows the “combined ratio” for 2010 at 128%; meaning for every dollar a carrier takes in, they are spending $1.28 in claims and expenses. Ouch!

And since these guys’ investment portfolios aren’t doing any better than mine, it is not surprising to see rates on the rise. Many employers have already experienced increases in their workers’ compensation rates as high as 20% and in some instances, much higher. If your business happens to be located in California, you already know what I mean.

Actually, my heart stopped bleeding for our own carrier when I found out how much our Workers’ Comp premiums have increased in 2012. Let’s just say that managing this part of our business now has my full attention. So what strings can you pull to get your carrier’s size twelve back on the floor where it belongs?

  1. Safety … safety … safety. The best W/C claim is the one that never happens. And that means maintaining a work environment where doing jobs safely becomes second nature. Think regular safety meetings, on-going education, even performance metrics for managers.
  2. Tighten up your claims management process. Make sure that reserves are accurate and your adjuster knows you’re engaged and motivated to get a speedy resolution.
  3. Finally, implement a return to work program for injured workers who have been cleared for modified duty. I’ve seen how remarkably effective this tool can be.


stethoscope - PayReel

Physician, Heal Thyself: PayReel Gets Audited

Physician, Heal Thyself: PayReel Gets Audited 1280 1024 PayReel

For years, PayReel has been helping clients avoid going through what has been known to be a painful and expensive ordeal. Being audited by the IRS or Department of Labor is not, in itself, a sign of any wrongdoing. But an audit often uncovers illegal practices that have embarrassed and even toppled otherwise healthy businesses.

So, a little over a month ago we were quietly holding our collective noses to the grindstone when the mail arrived with an envelope bearing the seal of the Colorado Department of Labor. Inside was a concisely worded letter informing us that PayReel had been chosen, at random, for an audit of our employment records. How poetic is that? The authors of numerous whitepapers, newsletters, and e-blasts on the subject must now don the government equivalent of a hospital gown and walk down the hall with our arms full of files and our backsides open to inspection.

Were we worried? Well, maybe a little. Our clients depend on us to avoid worker misclassification and keep accurate records. You just never know what could have been missed. But we were also feeling pretty smug about being right all this time regarding the odds of being audited.

The day of the audit arrived. The auditor couldn’t have been nicer or more professional. It took her two full days to go through our Colorado files. At the end of day one, we were golden. We had the swagger of a blacksmith who’d just been asked for a hammer. “So what size handle do ya’ need?” The auditor was almost as impressed with us as we were with ourselves.

Day two started off well enough, and we grew more confident with each document that was reviewed. That was the last feeling I remember having before my boss walked into my office. In the scheme of things, it was a small error. Easily corrected. But there went our no-hitter. No bogey-free round. No triple-double for PayReel.

Alas, dear reader, humility has come to Golden, Colorado. And it’s sitting right here in my office.


Bold As ICE: Non-compliance Gets Riskier

Bold As ICE: Non-compliance Gets Riskier 150 150 PayReel

It’s old news that the Obama administration increased funding to the Department of Homeland Security’s ICE division (Immigration and Customs Enforcement).  It’s also been widely reported how this increased funding is being spent.  Like the Employer Compliance Inspection Center which houses a team that expressly targets I-9 audits of large businesses.  With all the press, it’s hard for me to understand why ICE is saying it believes that 99% of all employers have erroneous I-9’s in their files; that it finds an average of five errors per audited I-9.  Actually, it’s not that hard to understand.  The federal Form I-9 is a one-page document that comes with 68 pages of instructions.

Complexity aside, ICE is on a mission.  In 2010, they doubled their number of audits conducted.  Compared with 2008, fines levied have increased 10-fold.  Just ask the folks over at Abercrombie and Fitch.  They just paid a $1M fine for a third-party’s improper electronic storage of their I-9’s.   Bold as ICE.

Ever heard of E-Verify?  If not, you will, soon.  This ICE program initially gave employers voluntary access to an internet database to verify a worker’s employment status in the U.S.  As of today, E-Verify is now mandatory for some or all businesses in the following states:  AL, AZ, CA, CO, GA, ID, IL, IN, LA, MI, MN, MO, MS, NE, NC, OK, PA, RI, SC, TN, UT, and VA.

There may have been a time when the risk of non-compliance was, shall we say, manageable.  I think those days are over.