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Bay Area Human Resources Services

Scarce Talent Drives Innovation in Sourcing and AI is Improving Hiring

Bio-tech has become a red-hot field in the Bay Area.  Drug maker, Exelixis. has found itself scrambling for talent in the wake of a successful launch of a new cancer fighter drug called Cabozantinib.  In addition to the usual online job postings, the company employed a retro technique: posting help wanted signs in BART stations.

Exelixis moved to Alameda within the past year and is seeking to make Alameda a bio-technology hub.  The Alameda location has some advantages over the former South SF location in attracting staff, but the talent pool is shallow throughout the Bay Area.

In addition to its BART postings, the company has sponsored billboards on I-80, I-580 and I-880 advertising for talent.

By contrast, San Francisco tech firm Entelo, turned to a new breed of recruiting firms known as “robo” recruitment firms.  These new robo firms use automated tools to recruit, screen and interview job applicants.  These new “robo” recruiting firms like, HireVue, Mya, Sonru and Spark Hire have found success with GEICO Insurance, Mercedes Benz and even Tiffany & Co. over the past year.

Once applicants reach the interview stage in the system, these robo firms conduct remote video interviews, sometimes with a robot and sometimes with a live interviewer.  The video is then analyzed using a “video bot” to examine not only what an interviewee says, but also the mannerisms of the applicant, the voice intonation, facial expressions and other non-verbal ques which can be combined to compose a profile of the applicant.  The hiring statistics presented by these robo firms are quite impressive and they are building, through AI, a large library of mannerisms and intonations statistically correlated with workplace behaviors. One long-term goal is to correlate interview behaviors with job performance data.  HireView’s Chief Technology Officer, Loren Larsen, reports that HireVue’s AI platform can read up to 25,000 speech and behavior variables presented in an interview, including such mannerisms as vocal pitch related to certain questions, and more subtle factors such as smile frequency.

Research shows that hiring managers tend, often unconsciously, to hire people like themselves.  Conscious or not, this behavior works against an organization’s diversity goals. Moreover, the traditional face-to-face interview process has long been criticized as subjective and an inaccurate predictor of future job performance. While these new techniques are still in their infancy, the growing database of digital mannerisms and behaviors promise to make the interview process much more data driven and scientific.

Significance

Despite the difficulty and lengths that an employer must go to in order to attract talent in the current market, it has never been more important to carefully screen, profile, interview, and test applicants so that the best hire can be made for the organization (and for the applicant).  We see an increasing trend among employers to seek data and metrics in the hiring and onboarding process.  These automated objective measures should improve work success, reduce turnover and promote diversity and inclusion.

Paul Finkle, CMC, SPHR – Executive Vice President

Disclaimer: Some information contained herein has been abridged from numerous sources and may be protected by various copyright laws. Such information should not be construed as consulting or legal advice. Please contact our office for specific advice and/or referrals.

Bay Area Human Resources Services

Important California Independent Contractor Update

On October 22nd, 2018, a California appellate court ruled in Garcia v Border Transportation Group, LLC that the restrictive “ABC” contractor test adopted in April 2018 by the California Supreme Court does not control in all situations.  The appellate court ruled that employers can continue to rely on the more traditional (and employer-friendly) Borello standard for non-wage order claims.

As most California employers know, the Dynamex case caused great concern since April 2018 because of the restrictive “ABC” test outlined in the decision as follows:

A) The worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact.

B) The worker performs work that is outside the usual course of the hiring entity’s business.

C) The worker is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed for the hiring entity.

Garcia Case

In a somewhat narrow decision, the appellate court ruled in Garcia that it was logical to apply the above ABC test to wage orders in California because they define employment broadly and “regulate very basic working conditions for covered California employees”.

For other claims however, that are not brought specifically under the wage orders (the California wage orders are set by industry), the appellate court stated the trial courts should continue to rely on the more flexible multi-standard test adopted by the California Supreme Court in S.G. Borello & Sons v Dept. of Industrial Relations.  Importantly, the appellate court ruled that there “is no reason to apply the ABC test categorically to every working relationship.”  The Borello standard, which has historically been California law for many years, weighs multiple factors such as the worker’s investment in the business, the method of payment, the longevity or degree of permanence of the relationship, and other indicia of independent arms-length status between the worker and the engaging entity.

Significance

The area of independent contractor relationships is a major issue for many companies in California.  On the one hand, there are many “gig economy” start-ups where an independent contractor (casual) relationship, is not only common, but serves as the mainstay of the business model.  Many workers and companies prefer this on-call, project-based arrangement, and, if all the costs associated with employment were added, it would destroy the model.

The Dynamex case represented (and continues to do so) a huge problem for California entities, as it is one of the most restrictive independent contractor standards in the United States.  What should a California organization do?

While Garcia provides an argument and ray of light for a defensible contractor relationship in California, the bottom line is that these cases should signal a wake-up call for all California employers to revisit and examine their contractor relationships.  Of particular concern are situations where the work is basically full- time, there is limited investment in the business, and the work is an integral part or even related to the primary work of the enterprise. Bear in mind that when an audit occurs, the IRS or state interviews the worker as well as the engaging entity. In our experience, many “independent contractors” have difficulty articulating, let alone proving, their independent business status. If an organization seeks to preserve its independent contractor relationships, we highly recommend a review of those relationships to determine whether or not they would be defensible if a misclassification challenge was made.

Paul Finkle, CMC, SPHR – Executive Vice President

Disclaimer: Some information contained herein has been abridged from numerous sources and may be protected by various copyright laws. Such information should not be construed as consulting or legal advice. Please contact our office for specific advice and/or referrals.

Bay Area Human Resources Services

Blog

SharedHR’s blog addresses important HR topics. We cover everything from compliance to workplace advice.

When is it Time to Leave a PEO?

Author: Saul Macias, MBA, PHR

When you were smaller, partnering with a professional employer organization (PEO) made sense. It shifted some tasks and liabilities off your shoulders and allowed you to afford to offer good health benefits to your employees. Most of all, outsourcing your human resources, benefits, and payroll gave you space to concentrate on growing your business.

Though co-employment had a role in the growth of your organization, many employers arrive at a point where it is appropriate to exit. Here are some key considerations as you decide whether to initiate that transition away from your PEO:

Benefits: Lots has changed in the world of benefits in the past couple of years. Offering benefits in-house would give you the autonomy to design, choose and manage your health and retirement benefits. The desire for greater flexibility in employee benefits can be a key driver to part ways from a PEO. (A lack of knowledge in this area, however, can often delay a PEO exit).

Service: As you grow, your business and your employees’ needs become more complex. In the midst of that complexity, you may find that your PEO lacks the expertise to drive and support your HR, benefits and payroll to meet your unique and evolving needs. Furthermore, a lack of onsite support or expertise to help you cover a multi-state or international expansion can be most challenging under a PEO model.

Cost /Scale: The average employer in a PEO has 15 employees. According to the Society of Human Resources Management (SHRM), the average HR professional supervises approximately 70 employees. Somewhere between 70 and 100 employees the economics may merit managing your benefits, payroll and HR in-house. But what will it take to build a team that can handle this role?

Co-employment: Under a PEO, one key area of managing your employees is done by a different company whose culture and identity could be very different from yours.

Once you have decided to exit, how do you make it happen?

PEO Transition:  Working with an experienced partner like ABD can help you analyze and manage the critical transition away from your PEO. Our team of multi-disciplined experts can help you plan, select the best technology platform, build the required work flows, and transition into your new program while keeping daily operations running smoothly. We can also help you hire an internal team or uncover new options that offer more flexibility than a PEO, but still allow you to outsource some or all of your human resources function. Contact us today to explore the possibilities.

Disclaimer: Some information contained herein has been abridged from numerous sources and may be protected by various copyright laws. Such information should not be construed as consulting or legal advice. Please contact our office for specific advice and/or referrals.

Bay Area Human Resources Services