Transferring Employees From One to Another Employer,

¶ … transferring employees from one to another employer, it is important for a company to have the necessary agreements in place. There should be an agreement not only with the new employer, but also with employees themselves. In Thompson's case, the employees were transferred to the PEO for the purpose of restructuring the organization and saving on labor costs. The PEO acted as a subsidiary company for Thompson. In terms of the agreement with the subsidiary PEO, Thompson has certain obligations (Ministry of Manpower, 2014).

The new employer, for example, should inform Thompson of anything that might affect its employees as a result of the transfer. One case that might be considered under this obligation is the new health care scheme employees are obliged to use under the PEO. One employee's wife, for example, has breast cancer and is no obliged to use a different medical establishment for her care. Her husband has told a fellow-employee that he is not certain if she could handle the many changes that have resulted from the transfer.

Employees should have been informed of these changes as well. The PEO should also have agreed to take over all the rights, powers, duties, and liability of the previous contract of service, which the employees' union had with Thompson beforehand. It does not appear that such an agreement was in place, which could result in legal liability for Thompson. The terms and conditions should have not been changed, since there was no agreement with employees about this beforehand. Thompson also had certain obligations regarding the transfer towards its employees.

Employees or their union, for example, should have been notified of the transfer within a reasonable time, including the terms of the transfer so that consultations and negotiations could be held with the company. This was not done. Thompson should also have ensured that the terms of the employees' employment were not less favorable than before. This is also not the case, particularly in terms of health and other benefits. Thompson's employees therefore had the right to be notified of the transfer and all matters associated with it.

They also had the right to consult with the employer about the matter of the transfer and to maintain their terms and conditions of employment in place with the new employer. All the employees seem to be holding up their own obligations, which is to serve the new employer in the same way as the original employer. According to the nature and obligations of their work, the employees seem to be co-employees of Mayfield and Thompson.

Although they are classified as independents, they are unable to do any other contract work due to the hours they are obliged to spend at the company. Furthermore, the duties they are expected to perform are still those of employees rather than independent contractors. The companies receive all the benefits, since they are exampled from taxes on payroll or benefits paid to those classified as regular employees. There are certain risks associated with changing employee clasification, especially where such classification means the difference between exemption from taxes or paying them.

In Thompson's case, misclassification of employees could lead to legal prosecution and potentially great difficulty for the employer (Bizfilings, 2014). The IRS is very specific about the way in which employees may be classified. This is directly dependent upon the relationship between the employer and employee, as well as the level of control the employer is allowed to exercise over his or her employees.

Thompson, for example, expects its employees to work the same hours and fulfill the same duties as before the reclassification, which means that they are in essence misclassified. It also appears that Thompson has done this only to gain employee tax exemption. The risk associated with this, as mentioned above, is red flagging by the IRS. To avoid this risk Thompson can use certain strategies. One strategy is to use the IRS's 20-factor guideline for classifying employees.

Common law rules, for example, determine that workers are employees if an employer maintains a right to direct and control them in the way they work, as well as when, where, and how the work is being performed. All this seems to be the case with Thompson's employees. They are expected to serve on employment committees in addition to remaining at their work station during the amount of their work hours before the reclassification.

The application of the 20-factor analysis can provide considerable guidance to help Thompson determine how to classify its workers. To minimize risks, employees should either be classified as such or their working conditions and hours must be.