Dreams Can Come True!

Interview with the co-founder and President of Ridgefield One, Cheryl Marceau.

I recently sat down with Cheryl after a very busy day at work. Ridgefield One is approaching its first anniversary and I wanted to get a sense of how she feels about owning and managing her own business. Aside from her role as President of the company, she is currently on the Board at the Ridgefield Theater Barn and volunteers at the (Danbury) Comcast Channel 23, helping with the production of community programs.

Q: You’ve mentioned on several occasions that you always wanted to own a business. How does it feel?

A. It’s a great reason to get up in the morning, knowing that I will be able to help people.  There is the pyramid of needs that Maslow developed and it includes the basic needs of food, shelter and clothing.  We offer a fourth need, employment.

Q. What other businesses did you think about starting?

A. In 1967, my husband at the time and I had thought about opening a housing development and later a pizza restaurant, or possibly a franchise (I was interested in a Pizza Hut,  JoAnn’s Nut House or a “sock” store), but it didn’t materialize.  For many years I had the dream to own a business.

Q. Why didn’t you start sooner?

A. I was unsure and didn’t have family support.  When I was in high school, I really wanted to be an interior decorator, and even had an interview at the Pratt school in NYC. I was never pushed to do anything ambitious.

Q. What made you decide to start an IT Recruiting Agency?

A. It was all about timing. David (Cheryl’s son and co-founder) felt very strongly about going out on his own. He was ready to make a career move and was very confident about the business model, having worked in the Information Technology field for years. David also knew that I always wanted to own my own business and fortunately we now had some means to do this.

Q. Did you ever question launching a new business in a down economy?

A. No – I didn’t even consider the economy; I saw it as an opportunity.

Q. What made you think you were ready to manage your own business?

A. I always had a very strong work ethic. I had pretty extensive experience providing back office support and managing the administrative needs for other businesses.  I was confident about running an office.  I read a very inspiring book titled, Be My Guest, by Conrad Hilton. It chronicles the business endeavors of a hotel mogul. An honorable and ethical individual, he made his fortunes through hard work, calculated risks, and his “people skills.” This is the type of business owner I always dreamt of becoming and feel that I’m achieving.

Cheryl was interviewed by Elisa Zuckerberg, Director of Marketing, Ridgefield One

Ridgefield One provides An Extra Sets of Hands on a Temporary Basis

Offering IT and Creative Web Services for companies located in Fairfield, Connecticut and Westchester, New York. Ridgefield One recently expanded creating an Administrative Staffing Division, helping companies with their temporary hiring needs.

Bad News for 1099s

Business is good.  Because of all the good press we’ve gotten, our social media presence, as well as a lot of word-of-mouth referrals, we’re getting noticed by people all over the place.  This includes government agencies.

Last month, I had the pleasure of sitting down with a manager from the CT Department of Labor.  She seemed like a very nice lady and was just doing her job.  But I wasn’t happy with what she had to say. 

The DOL is cracking down on companies that issue 1099s to consultants.  Apparently, one of our consultants had filed for unemployment.  We informed the DOL that the consultant had entered into a Temporary Services agreement with us which was intended to be a short-term, part-time consulting gig.  They said it didn’t matter, he was our employee and even though he worked part-time for a short period of time, as intended and agreed-upon, we were liable for making unemployment payments to him.

I was blown away.  The guy had told us he was a consultant.  He had listed a consulting practice (with a phony company name) with clients on his resume and his supposed clients had verified this to us.  He’d said he wanted to work on multiple contracts, including for his own clients.  How could we be stuck paying him unemployment?

The DOL manager said that some people will say anything to potential employers, to get a job and her department will always side with the consultant and declare them an employee.  It was clear in this case that the consultant lied to us, but the DOL was siding with him anyway because that’s the practice in their department.  Wow!

Fortunately, we had paid this particular consultant on a W2 because he wanted us to withhold his taxes for him so we had therefore paid unemployment insurance on him, as we will continue to do with anyone who does not meet the state’s strict criteria for being a 1099 Consultant.  But what does that mean for independent consultants who really are self-employed, running their own practice, who would never file for unemployment, but who don’t meet these restrictive DOL requirements?

It’s simple:  W2, baby.

I wish there was another way, but if we get audited, the burden of proof is on us to demonstrate a consultant is really a consultant and not an employee.  This means the consultant must have business cards and a web site or some other kind of advertising and must invoice us on their own paper letterhead rather than through our quick and easy automated online service which goes directly into our bookkeeping system.  They also need to have other clients on the side and be able to refuse to meet our clients’ deadlines, if they just don’t feel like working very hard.   There are additional complicated restrictions too numerous to list. 

But this isn’t the way the freelance IT & Creative world works.  There are thousands, if not millions, of hard-working independent IT & Creative contractors who go from gig to gig, conducting themselves as a business, writing off their expenses on their tax returns, and never thinking of filling for unemployment.  Web and application development project managers depend on this temporary work-force to get things done without incurring the burden of hiring additional permanent employees that they’d have no use for after their projects are completed.  If we’re forced to pay these folks on a W2 rather than a 1099, they’d be restricted in their ability to write-off their business expenses.  If they instead want to continue to take advantage of the same tax benefits that larger businesses get, they’ll need to incur additional business expenses to prove they’re a business.

It just don't make no kind of sense.

The law doesn’t reflect the practice in our industry.  As an employer, it doesn’t matter to me one way or the other – if someone can prove they’re a self-employed consultant, I’ll pay them on a 1099.  If not, I’ll pay them on a W2.  As long as my client is satisfied, I don’t care either way.  Like the state of CT, I will default to W2 unless the consultant can prove otherwise.

If I were an independent consultant however, I’d be outraged by this news.  I was one of these folks for 10 years and my accountant at the time told me that it wasn’t necessary to incorporate nor incur any of the costs that the labor laws state are necessary.  I thought at the time that working under my own name with my SSN (rather than an EIN) and an honest intention to declare all of my income and never to file for unemployment was all that was needed to be self-employed.  I never filed for unemployment payments and would never have dreamed of screwing a customer who had paid me on a 1099 by filing for unemployment and taking unearned money out of their pockets.  Who would do that?

Well, people do it.  And the State is on their side.  And that hurts all of the legitimate independent consultants because agencies like mine can’t take a chance of being liable for their unemployment payments.  Instead, we need to pay people on a W2 and pay unemployment insurance on them or else we can be forced to pay out thousands of dollars in unemployment payments.  If that happened, small companies like ours would go out of business.

The State policy restricts the rights of self-employed consultants and the agencies that put all of these folks to work.  In this economy, it would be better to focus on allowing people to go to work and then tax their income, rather than ensure they can sit on the couch and collect unemployment. This is not to say we should alternatively place any restrictions on folks who are out of work through no fault of their own and deserve unemployment benefits.  We do indeed need to take care of people who want to work and can’t get a job.  We just should not place the unemployed in the same bucket as the self-employed.

If you disagree with this policy, contact your state representatives right away and let them know about it.  The only way to rectify this situation is to change the law, to reflect the actual practice in the industry.  1099 Consultants need to stand up for their right to be self-employed and still take advantage of the same benefits that large corporations are entitled to.

                - David Marceau is the VP and co-founder of Ridgefield One

Ridgefield One provides An Extra Sets of Hands on a Temporary Basis

Offering IT and Creative Web Services for companies located in Fairfield, CT and Westchester, NY. Now assisting companies with their Adminstrative Staffing needs.

The Case for Hiring Consultants

The past few years have shown massive change to the global and domestic economy and to the general population of the US.  This has not been an entirely disastrous time in the business world.  We have, as a country, unfortunately, lost a massive amount of jobs; many of which will not come back.  I am not minimizing the layoffs and what it has meant to the unfortunate individuals and to their families...nor to the country.  However, it has forced many companies to review their business practices and take a more progressive and proactive approach to developing short- and long-term goals. Introspection is always a good thing…something that has sorely been needed in corporate America for quite some time.

Nothing has been so transformed as the staffing needs for a company.  The old habits of both the employee and the employer are either no longer applicable or in dire need of updating.  Prior to 2006, statistically, the candidate would land a job within 2-3 interviews as the market was in the candidate’s favor.  Employers would rush to offer perks that ranged from signing bonuses to casual work environments that allowed jeans and flipflops.  It was often the case the candidate would have the luxury of having to choose between multiple offers, balancing commuting distance, salary and benefits.   Employers were willing to keep less than productive employees because the alternative was to hire someone that would be more expensive to the firm.

All of that changed with the economic crash and the layoffs that ensued.  Employees were released in bulk, in many cases regardless of the skill sets and value to the company.  Also, the same skill sets were let go in mass by all the companies.  HR employees went first and the market was suddenly filled with HR skill sets no one needed.  Manufacturing, marketing, sales….no one was immune and suddenly, the unemployed weren’t finding work even after twenty interviews.  Those that were fortunate enough o find work now faced the prospect of a vastly different work environment.  Gone were the days of just doing your job…now you were asked to do your part and pick up the slack for the coworkers that were laid off.  The signing bonuses were gone and salary negotiations were not contemplated.  If you wanted the job you took what was offered, even if it meant a drastic cut in your salary for the same job performed 12 months earlier.  Fast-forward a few years and the effects of the layoffs are being readdressed by both the companies and employees.  After 3 years of doing the work of many, employees are now looking to leave their current jobs in search of opportunities offering a bit less stress.

However, there are signs offering hope. The GNP is growing, albeit anemically.  Wall Street is at its highest in years and nowhere is this more evident than in the technology sector.  IT jobs are taking a new twist.  The staff members that survived the layoffs of a few years back are now tired, overworked and more marketable.  These candidates have developed skill sets due to their growing responsibilities over the past few years and are now testing the market once more, more often than not with success.  This puts the employer in a quandary.  They want to replace this employee with only one other person but that will prove to be impossible.  Rarely can a jack-of-all-trades be hired to replace such an employee.  What the company is finding out to their dismay is that it will take 2 and sometimes 3 people to replace the skill sets of this one former employee.

One solution for companies is to hire consultants.  Consultants offer options to employers not found in the traditional full-time hire.  For one thing, it is not a permanent commitment for either party.  This allows the company to continuously evaluate the candidate.  If it seems to not be working out, then it is time for another one.  Also, a consultant brings a sense of flexibility to the team not found with a straight hire.  Once the need for the candidate has been completed, then it may be time to hire another one with a different skill set that will elevate the project to the next phase.  Finally, if the company is looking to actually hire a permanent staffer, hiring a consultant will help by offering the hiring manager the best possible evaluation for offering the job to a candidate.  More importantly, make sure the consultant knows this is an option.  There are some consultants that only want to work in a consultative role and would not be comfortable being a permanent employee for anyone.

Am I advocating a consultant-only approach to staffing? Absolutely not.  To not have any permanent members of the team opens the team up for dysfunction and chaos.  Every team needs a sense of cohesion and that would not be possible if everyone is there only for the short term.  However, a good balance of permanent and consultant team members may be the difference between just existing in this marketplace or being a leader and a trendsetter.

Nery Leal, joined Ridgefield One as Account Executive in September 2010. Prior to this role he was a Senior Account Manager with Tech Depot, a division of Office Depot located in Trumbull.  Leal began his sales career over 11 years ago with the Sanborn Map Company, in Pelham, NY where he worked on proposal coordination and sales relating primarily to GIS and CAD based platforms for municipalities to assist in tax parcel mapping and 911 systems. Feel free to email Nery directly at nleal@ridgefieldone.com or follow him at twitter.com/nery_leal.