BroadPeak Executive Forum

Employers Hit for Misclassifying Workers

House members hear complaints about workers being misclassified as independent contractors, enabling some businesses to inappropriately scrimp on taxes.

Sarah Johnson, CFO.com

May 09, 2007

A growing number of larger companies are incorrectly calling some of their employees "independent contractors" and saving as much as 30 percent in payroll costs by doing so, according to employee advocates testifying at a House Ways and Means Committee hearing on Tuesday.

Misclassifying some of the more than 10 million independent contractors in the U.S. in this way leaves small businesses that follow the rules at a competitive disadvantage, the advocates said. It also allows companies that purposely — or mistakenly — fail to follow the rules to take advantage of low-level workers unaware of the labor-law protections that they're entitles to.

While the issue has garnered lawmakers' attention, some House members said they're unsure how to penalize companies that intentionally misclassify workers without harming businesses that are simply confused about the current rules. Much of the confusion stems from the abundance of differing rules, which vary widely by state and among federal agencies.

More and more companies are apparently finding that tapping into a person's expertise temporarily or on a contract basis is useful. The number of independent contractors in the U.S. workforce grew from 6.7 percent in 1995 to 7.4 percent of the workforce in 2005, according to the Government Accountability Office.

Read the entire article at CFO.com

May 1, 2007 CFO Forum Recap

(Photo L-R Front Row: Tom Hrinowich, Stephanie Simmons, Pam Osmanski, Tony Martorano. Back Row: Hope Schall, Ed Maier, Liz Handlin)

On Tuesday May 1, BroadPeak and Vedder Price partnered to host our third CFO Forum of 2007.  Hope Schall, an attorney at Vedder Price was our host at the Vedder Price offices in downtown Chicago.  The venue was wonderful and the folks at Vedder Price really did a great job of making everyone feel welcome.  Thank you Hope!

Our speaker, Ed Maier of the Maier Consulting Group, gave a fantastic and interactive presentation entitled "Communicating the Tone from the Top".  Ed talked to the group about the importance of understanding different communication styles in order to effectively deliver messages throughout an organization.  One thing that Ed said really stuck with me:

"People don't care how much you know until they know how much you care."

The point was that if you don't connect with the folks that you manage they may not be fully committed to their jobs or the organization.  It's an important concept that we should all spend some time thinking about.  We rounded out the morning with a fun exercise designed to show us that we all have different communication styles. 

I have been to similar presentations before but this one was a standout because of the presenter, Ed Maier. Before becoming a full time executive coach and leadership development expert Ed led a regional practice for one of the Big 4 professional services firms.  His practice generated annual revenues in excess of $360 million and employed more than 1,300 professionals and 80 partners.  The point is that Ed has actually utilized the techniques that he teaches to drive profits in a competitive environment.  That makes him very different than many other "executive coaches" who don't have that kind of experience. 

We had a great turnout and it seemed like everyone was engaged in the presentation as well as in the networking before and after the session.  Thanks to all who attended!

If you are interested in talking to Ed or having him present to your organization you can reach him at: egmaier@ameritech.net

Fed Warns of Hedge Fund Threat

Blames recent high correlations among hedge-fund returns, which suggest concentrations of risk comparable with those preceding the 1998 meltdown of Long-Term Capital Management.

Stephen Taub, CFO.com

May 03, 2007

The New York Federal Reserve has warned that hedge funds pose the greatest risk since the meltdown of Long-Term Capital Management in 1998.

In a paper published Wednesday, Fed capital markets economist Tobias Adrian blamed the recent high correlations among hedge-fund returns, which suggest concentrations of risk comparable with those preceding the LTCM crisis.

Adrian asserted, however, that the current increase in risk stems mainly from a decline in the volatility of returns, while the earlier rise in risk was driven by high covariances. In this context, covariance measures the extent to which hedge-fund returns move together, or apart, in dollar terms.

"Despite some seeming parallels between the recent and earlier rise in correlations," stated the paper, "the current hedge fund environment differs from the 1998 environment because volatility and covariances now are lower."

A lot is at stake.

Hedge funds — lightly regulated investment partnerships whose top managers' personal earnings are capturing a lot of attention — currently manage an estimated $1.5 trillion, according to the Fed. The funds contribute more than half of average trading volume in equity and corporate bond markets.

To read the entire article go to CFO.com