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Introduction to the Working Model and Worker's Classification in U.S.A

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Introduction to the Working Model and Worker's Classification in U.S.A

In the United States, the dynamics of employment—including the nature of work, the locations of work, the composition of work teams, the motivations for work, and the technologies employed—are subject to ongoing transformation. Many of these shifts began before the onset of the pandemic, were expedited by it, and have since become enduring features of the workplace environment. Human Resources and Talent management leaders are required to modify their processes and systems to meet these evolving expectations. This article will provide a concise overview of hybrid work models and the classification of workers.

  1. Hybrid Work Model

    Because many workers shifted to a hybrid model or even a full-time work at home (or work from anywhere) model during the pandemic, organizations quickly learned how to drive productivity and serve customers remotely, and this change was welcomed by the workforce over-all. Employees view this freedom to work from anywhere as an important benefit of their job. A 2022 survey reported that 83 percent of workers prefer a hybrid work model, and that 63 percent of high-growth companies have already adopted a “'productivity anywhere" workforce model, so employees can choose between remote or on-site work.

    (1)
    Different Types of Hybrid Work

    The concept of a hybrid office represents a flexible approach to the organization of the workplace, offering a variety of design options. The hybrid model can be adapted to suit a number of different contexts, as illustrated by the following examples:

    (a) Partially remote: A partially remote work arrangement entails a combination of remote and on-site workforces. This configuration is frequently observed in organizations where certain operational procedures cannot be readily transitioned to remote work due to security or hardware constraints, or because of the intrinsic nature of the work itself.

    (b) Flexible remote: Employees are afforded the opportunity to manage their workflows and engage in work activities outside of the traditional office setting, with the flexibility to determine the specific days or hours during which they will work remotely.

    (c) Coworking: A coworking-like organization of the office is observed where employees do not have a dedicated desk or a fixed workplace. Instead, they reserve the workspaces in advance of their planned on-site work.

    (2)
    Making the Hybrid Model Work for All Employees

    For both employees and employers, a hybrid work experience is predicated on the ability to demonstrate results regardless of the location or time of work. Consequently, it is of paramount importance for employers to define successful hybrid work policies and work-from-anywhere (WFA) practices. For example, employers are establishing WFA policies that guarantee virtual collaboration, mentoring, and asynchronous communication and brainstorming. These encompass the formation of virtual communities of practice for remote workers and the assurance that all remote employees possess the requisite collaboration tools, including online whiteboards. The following is a list of some of the most commonly utilized collaboration tools and applications:

    (a) Asana: The software is beneficial for project management, communication, monitoring of progress, and management of workloads.

    (b) Slack: This platform is conducive to the establishment of shared channels for the purposes of messaging, voice and video communication, and document management.

    (c) Trello: This software is conducive to digital whiteboarding, team collaboration, and task management.

    Given that HR leaders are primarily concerned with the employee experience and fostering connections between team members, they frequently spearhead the promotion of collaboration tools within their organizations. Most of these tools are relatively inexpensive, and the employer will typically invest in them to facilitate team and employee success. These tools are straightforward to administer and utilize across the organization. An organizational administrator would be responsible for assigning access and setting team members up to use these tools.

  2. Worker Classification

    From a legal standpoint, the relationship between the company in need of their services and the workers in question is of paramount importance. The following sections will discuss the three basic types of worker relationships: employee, contingent worker, and independent contractor (IC). It should be noted that, when considering duration and schedule, workers in all three relationship categories may be full-time, part-time, short-term, or long-term.

    (1)
    Employees

    It is the responsibility of companies hiring employees to pay the requisite payroll taxes as defined by law, in addition to withholding applicable state, federal, and local taxes. An employee may be either full-time or part-time, and they may be hired either on a short-term basis or on an ongoing, indefinite basis. Regular part-time employees are entitled to the same benefits as full-time employees, with the exception of those that are prorated, and are afforded the same federal and state protections as full-time employees.

    (2)
    Contingent workers

    Contingent workers are employees of a staffing firm, which, for a fee, assigns them to client companies with the objective of either augmenting the client's existing workforce or providing skills and knowledge that are not available internally to the client. This category encompasses both temporary and full-time staffing, apart from independent contractors (ICs). It is the responsibility of staffing firms that employ contingent workers to ensure that the requisite payroll taxes are paid in accordance with the relevant legislation. Furthermore, these firms are obliged to withhold the applicable state, federal, and local taxes. As with the three categories of worker relationships, contingent workers may be employed on either a full-time or part-time basis, and for either a short-term or long-term period.

    In the contemporary gig economy, which is defined by the prevalence of short-term contracts or freelance work in lieu of permanent employment, contingent workers constitute a substantial proportion of the workforce. Indeed, on occasion, a contingent engagement may evolve into a full-time employment opportunity. This category includes working parents seeking to dedicate more time to their children, team members serving as caregivers for elderly parents, and individuals at retirement age who wish to remain active but may not require a full-time commitment. For these and numerous other individuals, contingent work provides an optimal solution.

    (3)
    Independent contractors

    A strict definition of an IC, also referred to as a freelancer, is that they control the methods and means of performing their tasks and are responsible to the organization they are working with only for the results. The organization engaging the IC has no tax liability and almost no other administrative responsibility other than paying the invoice and reporting payments on 1099 forms.

    When engaging with independent contractors (ICs), it is imperative to exercise caution due to the substantial risk that the Internal Revenue Service (IRS) may contest your classification of an IC or contingent worker, potentially determining that the individual should be classified as an employee. Furthermore, the individual in question may assert that they should not have been classified as an IC, but rather as an employee, thereby claiming entitlement to the various financial and other benefits associated with an employer-employee relationship. It is essential to comprehend the specific distinctions between ICs and employees. Therefore, it is advisable to seek guidance from a knowledgeable and experienced legal professional in this sensitive area.

Reference:
[1] Andrea Butcher. Human Resources Kit. John Wiley & Sons, Inc., 2023.

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