Outsourced

J9JC · February 2009

I work for a small company that has been utilizing outsourcing for some of our software development needs. There is currently a lull in business, and we have Developers and Quality Assurance Techs here in the US that we currently do not need. My question is, if we lay them off, can we then later outsouce thier job? We do have a potential big contract coming in , in the next 3 months and we will need more QA Techs and Developers, but current plans are to accomplish this through outsourcing. Would we be in a bind if we had more work and did oursouce it, rather than bring back laid off employess?

Believe me, I know what some of you are going to say about why not to oursource, but I don't make the decisions at that level and right now I am best to make sure they have no reason to outsource me!

SpartanFan · February 2009

As long as you are not violating your own policy about layoffs and recalls you have an outsourcing option. However, be careful that you are not just classifying those techs as independent contractors (IC's) when, in fact they would actually be considered "employees" by the I.R.S. or D.O.L. from a payroll tax standpoint. Much of that analysis tends to focus on how much control you (the employer) maintain over the IC, whether you determne their hours of work, or determine the means and methods of of how the work is performed, the manner in which they are paid, where the work is performed, the IC's ability to perform other work besides yours, etc. You can get a list of the so-called "20 factor test" off the internet to see all of the criteria that the IRS or DoL would use to analyze the employment relationship.
But you certainly can outsource the work as long as you go about it correctly.

Outsourced

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