Regardless of size, a company takes a big risk when hiring an employee or contractor without first conducting a background check. While some companies are comprehensively screening every applicant, others are skipping this process as a way of saving money and speeding up the hiring process.

According to the U.S. Department of Labor, in 2005 there were 389,380 companies with at least one instance of workplace violence. Along with this, state registries show more than 500,000 records for sex offenders.

The Bureau of Justice Statistics keeps close tabs on statistics involving workplace violence. Of all violent crime, roughly 18 percent takes place at work.

While the lack of a good background screening plan can lead to workplace violence, there are other issues that can also arise as a direct result.

The U.S. Department of Commerce has released statistics related to the results of not screening employees. Did you know that employee theft is attributed to nearly 30 percent of all small business failures? Additionally, internal theft is 15 times as common as external theft. A pre-employment background check will often turn up information on candidates that have prior theft-related convictions.

The background check process varies based on the company placing the order, the industry, and how much time and money they are willing to spend on this task. Some of the most common services include: county and state criminal searches, federal district court search, national criminal database search, drug screening, employment verification, education verification, sex offender registry check, credit history and driving record search.

Here is one last fact pertaining to the risk of not screening candidates: the Society for Human Resource Management indicates that nearly half of all job applications contain at least one major inaccuracy.

 

Payrolling is a practice in which particular aspects of employment (compensation, taxes, legal) for a contract worker are handled by a staffing agency or payrolling company. Additionally, many companies outsource the payroll process for full-time employees. The payrolling entity becomes the employer of record for these workers.

Companies use third-party payrolling services when they:

1. want to recruit their own people and not hire as their own W-2 employee
2. want to keep a recently retired person working on projects and not make them 1099 contractors
3. want non-core staff workers to have access to benefits, but
4. don’t want to be the employer of record.

One alternative to payrolling is to make the worker a 1099 contractor. However, the IRS is cracking down on 1099s and imposes heavy fines on companies that treat full-time workers as 1099 contractors.

For example, recently a Federal court judge issued a summary judgment stating that FedEx Ground and Home Delivery drivers in Illinois are employees of the company - not independent contractors. According to PRNewswire, the lawsuits “are seeking to have the former and current class members reimbursed all the expenses - including wage and other employment-related taxes - they've been forced to pay as a result of being misclassified, a liability that experts estimate exceeds $1 billion.”

Payrolling allows you to augment your staffing needs.  As your company staffs up for projects, payrolling can reduce costs.  You can payroll retired staff when projects require knowledge and experience only alumni can provide.  When you need to staff up quickly, payrolling, before hiring full-time workers, allows you to avoid the burden of overhead cost until you’re ready to add them to your core staff.

Benefits of Payrolling

1. Cost savings. With payrolling, the hiring company is able to save money on administrative costs and overall employee management. Moreover, if you need to layoff employees periodically, you can minimize your corporate unemployment compensation rate by laying off outsourced payrolled workers – the very workers you planned to layoff during business downturns.

2. With proper planning, you can actually create a no-layoff culture for your core staff thereby increasing morale, loyalty, dedication and a sense of security.

3. Benefits made available to workers. When payrolling is done through a staffing agency, benefits, such as health insurance and retirement accounts, are oftentimes available. This helps to boost the morale of contractors, while improving retention.

4. Less administration and liability. By outsourcing the payroll process, companies are able to reduce costs related to the administration of compensation, taxes, benefits and other similar details. 

With so many advantages, it is easy to see why companies of all sizes are beginning to outsource payrolling.