CLDA Mag : Why is that difference – W2 vs . 1099 status - an important one for your customers ?
Moyer : We use a W2 employee model to minimize the risk of our clients being pulled into a misclassification or co-employment lawsuit . A lot of our customers are not aware that some temp agencies are treating the workers they send to them as ICs . They are paying them as 1099 contractors and while warehouse work can be temporary labor , these people do not qualify as ICs under the ABC or economic test . Also , the IRS has stated that warehouse labor or lumpers do not qualify as 1099 workers .
I ’ ve been surprised at how many Fortune 100 companies have no idea that the temp companies they have been using are classifying the people they send to them as ICs . They are not aware that they are using independent contractors in their warehouses and the risks this could be putting them in . That includes members of the CLDA that are using temp agencies to staff their warehouses . If there was an issue , they could be at risk . They could be named as co-employers and end up as part of a class-action misclassification lawsuit . Not knowing that a temp agency is doing this is not a defense . And successfully defending a misclassification lawsuit could cost the company hundreds of thousands of dollars in legal fees , even if they win .
CLDA Mag : Are you attracting a different kind of worker ?
Moyer : Yes . We are recruiting personnel with a higher work ethic . They are looking for secondary jobs or supplemental income . They are go-getters . Also , with the flexibility and visibility offered by the app , it attracts college students or individuals who want to work a shift or two around their schedules .
We did our first pilot in October , and we clearly saw the difference in these workers . The customer had their own W2s as well as other temporary workers they got through temp agency . Our Pros were added to that workforce , and at the end of the pilot , the customer stated that our model provided better results than other companies they had used .
By the way , when it came to recruiting workers , we were pleasantly surprised . When we started recruiting , everybody was running ads for warehouse workers to meet their peak demands . In our ads , we specifically said we were looking for those interested in secondary incomes . About a third of the people we brought on board were working at a local manufacturing plant . They wanted to supplement their incomes . Others were just looking for flexible schedules or additional income during the holidays . About two and a half weeks into our pilot , we didn ’ t have to recruit anymore . Our Pros were recruiting their co-workers , friends and relatives , and we were able to stop recruiting . I think it was because of our model and the way we treated our people and the flexibility we offered them .
Today ’ s workforce is totally different than it was five years ago . They look for work / life balance and flexibility . They look for a level of respect and how they ’ re treated on the job is so important .
CLDA Mag : Warehouse owners often complain that the workers they get through temp agencies do not fulfill their needs . Talk about that .
Moyer : Yes , there are two issues : 1 ) temp agencies aren ’ t always able to fill all the positions the warehouser needs and 2 ) those they do send often don ’ t stay .
When it comes to the first issue , warehouse owners told us that temp agencies don ’ t send them all the workers they need from the beginning . They told us the normal fill rate is about 70 to 80 %. That means that if they order 10 people for tomorrow , seven will show up . When I was talking to companies , a lot of them would say “ If I need 10 , I order 13 . Because I expect three not to show up and then when all 13 show up it is also problematic .” By contrast , in our pilot , we had a 100 % fill rate .
As for the second complaint , we saw a difference there , too . During our pilot , our Pros stayed on the job . That ’ s not the norm with this kind of work . We heard from warehouse owners how frustrated they were with high turnover . People would show up on the first day and decide it was not what they expected or wanted . So , they would stay for a day , and then they would be gone . Some would even leave mid-shift . With that kind of turnover , warehouse owners ended up getting different people each day from a temp agency . That meant they were constantly having to train and educate new people . By the way , if the company is training ta worker that worker could be classified as that company ’ s employee .
38 customized logistics & delivery Magazine I spring 2023