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Unemployment Scars Likely to Last for Years

Wall Street Journal (01/09/12) Casselman, Ben

While the U.S. job market is showing signs of a sustained recovery, the nation’s prolonged struggle with unemployment will leave scars that are likely to remain for years. The crisis has exposed problems in the U.S. labor market that will not quickly recover when the economy eventually rebounds, and the longer that unemployment remains high, the greater the danger that it will create structural problems that will endure.

With approximately 5.6 million Americans having been out of work at least six months, and 3.9 million of them for a year or more, long-term unemployment may be the biggest problem. Research shows that the longer people are unemployed, the less likely they are to find jobs. Economists say the risk is that the U.S. will develop an underclass of semipermanently unemployed workers, with severe consequences for productivity, public finances, and social stability.

The U.S. labor market has over the past two decades lost much of the edge it enjoyed over other developed countries. Americans are moving less frequently and changing jobs less often, making the job market less flexible. Also, a smaller share of Americans are working, as the labor force participation rate has been falling for more than a decade.

Job Numbers Mask Complex Picture

Wall Street Journal (01/07/12) Cronin, Brenda

Employment experts say that to truly understand the U.S. labor market, observers need to focus less on the unemployment rate and more on job creation. The current recovery trails previous ones in that area, reflecting, in part, “a very big shift in the way that America runs,” according to Eric Lascelles, chief economist at RBC Global Asset Management. He cites four factors behind today’s weak job generation: first, the extremely slow pace of the overall recovery; second, a sectoral mismatch of workers’ skills to available jobs; third, a geographic mismatch where workers are trapped in areas with few jobs; and fourth, rising efficiency in the work place.

Tom Porcelli, U.S. market economist at RBC Capital Markets, highlights companies’ increased productivity as a strong factor keeping a lid on hiring. When productivity is strong, he says, “companies don’t necessarily have to bring back head count. They can bring back hours first…and that underpins the jobless recovery.”

Analysis: Amid Jobs Gains, Worries Persist Over Europe

Reuters (01/06/12) Zieminski, Nick

The stronger-than-expected December U.S. jobs growth figures on Jan. 6 draws a sharp contrast with European numbers, but executives in the temporary staffing and employment services field say anxiety about a likely recession in Europe keeps cropping up in conversations with clients and, in some cases, is putting hiring plans on hold. Faced with falling sales and profits in Europe, multinational clients may look for offsetting savings in other markets, including the U.S., analysts warn.

Randstad Holding NV’s recruitment outsourcing business, SourceRight Solutions, which handles large-scale hiring of as many as 500 people at a time, says it has a banking client that tentatively plans aggressive expansion in 2012. However, “there’s still caution around Europe and how they could impact the U.S.,” says Joanie Ruge, Randstad senior vice president and chief employment analyst. “That is (clients’) biggest concern right now, though they seem optimistic about all the economic indicators in the U.S. moving in the right direction.”

Robert Half International Is Cashing in on Growth in Temporary Staffing

Barron’s (01/07/12) Doherty, Jacqueline

Robert Half International is rebounding from its 2009 low and, over the next few years, is positioned to increase revenue and earnings beyond their 2007 cyclical peak. The staffing firm is expected to boost revenue by 10% in each of the next three years, while raising operating margins to 12%, up from a current 7%, and producing $2.70 a share of earnings, according to Quoc Tran, a portfolio manager at Lateef Investment Management, the company’s largest shareholder.

In last year’s first three quarters, Robert Half’s Accountemps division contributed 37% of revenue, and Robert Half Finance and Accounting, which offers permanent-placement services in the accounting, financial, tax and banking areas, contributed 8%. “Our mid-market client base for the most part doesn’t have a [human-resources] capability. They’re outsourcing that to us,” says Keith Waddell, the company’s president and CFO.

Weekly Economic Indicators: 2012 Starts With a Bang

Business Insider (01/08/12)

The monthly economic data reported in the first week of 2012 was positive, although a few came in lighter than expectations. Construction spending, Institute for Supply Management manufacturing and services reports, factory orders, vehicle sales, and most importantly, payrolls, all were positive month over month. The ASA Staffing Index fell by seven points to 86 last week, but that is due to seasonality, and in fact, the index is back above year ago levels, after stagnating in mid-2011. Overall, the economic data show an ongoing solid, if not stellar, recovery.

Register Today for the 2012 ASA Staffing Law Conference

Don’t miss the 2012 ASA Staffing Law Conference, April 17–18 in Washington, DC , which will feature prominent in-house staffing firm attorneys and outside counsel who regularly advise staffing firms on employment law. These industry experts will discuss the latest and most pressing legal and legislative issues facing the staffing business—making this a can’t-miss event.

As an added bonus for the 2012 election year, the ASA Staffing Law Conference luncheon speaker is Charlie Cook , the pre-eminent authority on U.S. elections and political trends.

Register today
or contact ASA at 703-253-2020 for more information.

Rule Gives Illegal Immigrants a Break

Wall Street Journal (01/07/12) Jordan, Miriam

The Obama administration on Jan. 7 announced it will make it easier for illegal immigrants who are related to a U.S. citizen to seek legal U.S. residency, a rule change that could affect thousands of illegal immigrants who might qualify for a green card but have not applied because they feared either not being allowed back into the U.S. or a lengthy separation from family. Currently, an illegal immigrant must apply for and receive a legal visa from his or her country of origin to rejoin a spouse or child in the U.S., a process that can take years. The rule modification will enable the immigrant to remain in the U.S. for much of the process.

Suit Planned Against Hotel Staffing Company

WTHR-TV (Indianapolis) (01/09/12)

Fourteen employees of Hospitality Staffing Solutions are filing a lawsuit against the company in Indianapolis, alleging that Hospitality underpays its employees. The suit claims that housekeepers, food service employees, and others in hospitality were not getting paid for the 40 hours they worked, or told they would not be paid overtime even if they worked more than 40 hours. Ten major hotels are expected to be named in the lawsuit, which also alleges that Hospitality interfered with workers’ abilities to find work elsewhere.

Hospitality chief executive Rick Holliday says news of the suit is the first he has heard of any problems employees had with pay, noting the company has a system in place for complaints. He also says the timing of the action is suspect, with the Super Bowl being held in Indianapolis on Feb. 5.

GOP Cautious in Payroll Tax Fight

Roll Call (01/09/12) Shiner, Meredith

Republicans are reported to be loath to repeat the fight over an extension of the payroll tax cut in the opening weeks of 2012. The conference committee formed at the behest of House Republicans to deal with a long-term extension of the payroll tax holiday has already begun its work, and members of each faction are working to reach a deal before March. Democrats clearly believe they have the upper hand, emboldened by a serious messaging win on the short-term payroll extension that divided Republicans in December.

California Court of Appeal Provides Roadmap on the Proper Classification of Independent Contractors

Seyfarth Shaw (01/05/12) Ortman, Tripper; McFadden, Robb

The California Court of Appeal recently held in Arnold v. Mutual of Omaha Insurance Company that insurance agents and other types of salespeople with the discretion to determine when, how, and whether to sell a company’s products may properly be classified as independent contractors. A lower court had previously applied the common law test for independent contractor/employee status set forth in S. G. Borello & Sons, Inc. v. Dept. of Industrial Rel. and found that Arnold was properly classified as an “independent contractor,” and granted Mutual’s motion for summary judgment. Arnold appealed.

The Court of Appeal rejected Arnold’s argument that Division Three of the Labor Code provides a statutory definition of the term “employee.” Instead, the court agreed with the trial court and held that the common law Borello test should be used to determine whether Arnold was an employee or an independent contractor. Because the court determined that the common law Borello control test was the appropriate test to analyze employment status in California—and many jurisdictions around the country employ similar control tests—this decision should have far-reaching implications for the insurance and other industries that employ independent contractor salespeople outside California. Post-Arnold, companies that utilize independent contractors to sell their products in such states may apply the analysis in Arnold as a benchmark to assess and review these relationships in order to determine whether changes should be made.

Do Your Social Media Accounts Belong to Your Business? Why Worry, When There Are Safeguards You Can Take Now

Social Media Law Update (12/29/11) Sherman, Michelle

Michelle Sherman of Sheppard Mullin Richter & Hampton LLP cites a federal case in the Northern District of California where a mobile news and reviews resource company, PhoneDog, is suing a former employee Noah Kravitz over who owns a Twitter account that was started in association with PhoneDog, and is now being used by Kravitz as his own Twitter account. A key issue drawing attention to the case is who owns a social media account—the employee who posts on it, or the employer on whose behalf the employee was posting. The other issue is what value, if any, can be placed on Twitter followers when social media attracts people who are portable and not “owned” by the social media account.

Sherman says that while PhoneDog “does not enter court with the best of facts in order to decide these larger issues of interest to employers and the social media community … the shortcomings in PhoneDog’s case are instructive in terms of steps employers should take to better demonstrate ownership over their social media sites.” She concludes that in general, companies should to the greatest extent possible register social media accounts in their own names or through a senior marketing person and/or social media manager if the account needs to be in the name of a person. The case also highlights the importance of having an agreement with employees concerning their access and use of social media accounts on behalf of the company, according to Sherman, and ensuring that the agreement clearly spells out the relationship and the parameters for it because some courts will literally interpret agreements with employees.