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Payrolling Alumni Engineers as an Operational Strategy

Many retired engineers have come face-to-face with the fact that their retirement savings have been hit hard by the economy. While it may not have been their initial intention, a large number of retirees are interested in rejoining the workforce.

Employers often welcome back former full-time workers with open arms. There are many reasons for this:

  1. Due to past work experience with the company, less training is needed to get the employee up to speed.
  2. From skills and expertise to experience and knowledge, you know exactly what you are getting.
  3. Since the worker was previously employed by the company, there is no guesswork as to what their history entails.

All of this sounds great, but there are some potential issues.

Most importantly, you may not want to bring the employee back on a full-time basis. Fortunately, this can be overcome through payrolling.

If you put an employee back on your payroll, you may be responsible for providing benefits, as well as dealing with legal issues that can arise with hiring and firing. If you hire them as a 1099 contractor, you may be subject to misclassification of workers.

Through payrolling, you can pass off the tedious paperwork and risk to a third-party, and simply use the worker as-needed. This is a win-win-win situation for all parties.

Before heading back to work, it is the responsibility of the employee to determine if this will affect their retirement savings. For example, workers with pensions may find their pension subject to penalty if they return to work.

Michael Yim, a labor and employment attorney for Yim & Chuang LLP, recommends workers “check their pension plan documents to make sure there is no forfeiture clause if they decide to go back to work.” He adds, “If you have something like a 401(k) or other plan that is rolled into an individual account, there are no forfeiture requirements for independent contractors.”

That said, from the company’s perspective, payrolling alumni engineers tends to be a no-brainer. The company acquires the most experience with the least risk.

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