Contingent Workforce: A contingent workforce is a provisional group of workers who work for an organization on a non-permanent basis, also known as freelancers, independent professionals, temporary contract workers, independent contractors or consultants.
Contingent Workforce Management (CWM): CWM is the tactical and strategic approach to managing an organization's contingent workforce in a way that reduces the company's cost in the management of contingent employees and mitigates the company's risk in engaging them.
Contingent Workforce Outsourcing (CWO): Denotes a provider who facilitates clients' ability to aggregate and track spending, billing, and performance of more than one type of non-W-2 worker. This includes traditional temps and independent contractors and consultants.
Employment Contract: An employment contract is an agreement entered into between an employer and an employee at the commencement of the period of employment and stating the exact nature of their business relationship, specifically what compensation the employee will receive in exchange for specific work performed.
Employee Benefits: Employee benefits and (especially in British English) benefits in kind (also called fringe benefits, perquisites, perqs or perks) are various non-wage compensations provided to employees in addition to their normal wages or salaries. Where an employee exchanges (cash) wages for some other form of benefit, this is generally referred to as a 'salary sacrifice' arrangement. In most countries, most kinds of employee benefits are taxable to at least some degree.
Human Capital: Refers to the stock of productive skills and technical knowledge embodied in labor. Many early economic theories refer to it simply as labor, one of three factors of production, and consider it to be a fungible resource - homogeneous and easily interchangeable. Other conceptions of labor dispense with these assumptions.
Independent Contractor: Is a person, business or corporation which provides goods or services to another entity under terms specified in a contract or within a verbal agreement. Unlike an employee, an independent contractor does not work regularly for an employer but works as and when required. Contractors often work through a limited liability company which they themselves own, or may work through an umbrella company or staffing agency.
In the United States, any company or organization that pays more than $600 to an independent contractor in one year is required to report this to the IRS as well as to the contractor, using form 1099-MISC. Often contractors are referred to as 1099’s. It is important to realize the distinction between an “un-incorporated 1099 contractor” and an adequately incorporated individual or entity.
IRS reclassification: Reclassification occurs when persons claimed as (or claiming to be) independent contractors are re-categorized by the Internal Revenue Service (IRS), or by state tax authorities, as W-2 employees. The reclassification can result in the imposition of fines, penalties, and back-taxes for which the employer is ultimately liable in the event the individual is not. These amounts can cost businesses large sums of money. The U.S. Government Accountability Office (GAO) (formerly known as the General Accounting Office) reports that the IRS claims to lose millions of dollars in uncollected taxes because of misclassification of independent contractors by taxpayers. According to IRS Commissioner Mark W. Everson in a statement made November 3, 2005, IRS audits of small business organized as corporations increased from 7,294 in 2004 to 17,867 in 2005.
MSP, or Managed Service Provider: Manages vendors and measure their effectiveness in recruiting according to the client's standards and requirements. MSPs generally do not recruit directly, but try to find the best suppliers or vendors according to the client's requirements. This, in essence, makes the MSP more neutral than a VOP in finding talent because they themselves do not provide the labor.
Outsourcing: Is subcontracting a process, such as product design or manufacturing, to a third-party company. The decision to outsource is often made in the interest of lowering firm costs, redirecting or conserving energy directed at the competencies of a particular business, or to make more efficient use of labor, capital, technology and resources. Outsourcing became part of the business lexicon during the 1980s.
PEO: A professional employer organization (PEO) provides outsourcing of payroll, workers' compensation, human resources and employee benefits administration. It does this by hiring a client company’s employees, thus becoming their employer of record. It then leases them back under contract to the original employer. This practice is known as co-employment, employee leasing, or staff leasing.
Vendor: Is literally a person or organization that vends or sells contingent labor. Specifically a vendor can be an independent consultant, a consulting company, or staffing company (who can also be called a supplier, because they supply the labor or expertise rather than selling it directly).
Vendor Management System (VMS): Is an Internet-enabled, often Web-based application that acts as a mechanism for business to manage and procure staffing services temporary, and, in some cases, permanent placement services, as well as outside contract or contingent labor. Typical features of a VMS application include order distribution, consolidated billing and significant enhancements in reporting capability that outperforms manual systems and processes.
VOP or Vendor on Premise: Is a vendor that sets up shop on the client's premises. They are concerned with filling the labor needs and requirements of the client. The VOP does this either by sourcing labor directly from themselves, or from other suppliers, whom may be their competitors. Also, the VOP manages and coordinates this labor for the client.
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