On the surface, the idea of bringing in a job candidate for a few hours, days, or weeks in a “working interview” to test his or her skills before you hire sounds perfectly logical and sort of fantastic, doesn’t it? This is especially great if the employee agrees not to be paid, or to be paid a fixed amount for the day. No harm no foul, right?
Except, according to the federal government, working interviews aren’t so harmless. They’re considered tax fraud!
First, a bit of background: Working interviews were invented by temporary employment agencies as a “try before you buy” option. The agencies sent out potential job candidates to their clients’ offices to work for a few hours, days, or even weeks to give the client time to test the candidate’s skills. If a client liked the candidate, the client could hire him or her as an employee. If the candidate did not impress, the agency sent another until the client was happy. From that, the idea of working interviews was born.
But today, the prevailing (and alarming) trend is that most working interviews are done without a temp agency as a middleman. Employers contact job candidates directly and invite them to work in the office for a few hours or days to test their skills before hiring them. Many employers either get a verbal or written acknowledgement that the candidate waives his or her rights to be paid while interviewing. Others simply compensate the candidate as a 1099 and pay them a fixed amount for the day.
However, employees may not sign away their rights, even if they want to. Thus, in the eyes of the IRS and Department of Labor, if you do not pay an employee for time worked, you are viewed as attempting to avoid your obligations as an employer. The employer obligations I’m referring to include withholding taxes, paying matching taxes, wage notice requirements, I-9s, and more.
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Similarly, misclassifying the candidate as an independent contractor also violates IRS and DOL rules. If a candidate performs duties usually done in your office by employees, and does so under your control, using your equipment, in your office, during the hours you request, the person is an employee. If you call someone a contractor, you have misclassified the person.
So what is the difference between a temp agency working interview and your working interview? To put it simply, the candidate is employed by the temp agency. The temp agency fulfills all of the employer obligations because it hires the candidates and temps them out to you. The IRS and DOL are satisfied because the new hire paperwork is filled out and all the applicable taxes are withheld, matched, and paid.
However, when you do a working interview yourself, none of the employer obligations are fulfilled, thereby violating a myriad of labor and tax laws.
Now you may be asking, “Okay, I can’t do working interviews, and I can’t call them independent contractors. So what can I do?”
The answer is skill testing.
The difference between working interviews and skill testing is the environment. Unlike a working interview, where a candidate is asked to demonstrate his or her skills on patients, during skill testing a scenario is set up and the candidate is asked to walk you through the scenario as he or she understands it.
Here’s an example: Take a dental assistant candidate into a room and show the candidate your setup. Then ask the person to reproduce the setup in another operatory. For a hygienist candidate, create a chart for a fake patient and have the candidate look in the mouth of one of your employees and tell you how the chart differs from what they’re seeing.
This skill testing method is not only legal, it will grant you an inside look at a candidate’s skills and personality.
Remember, hiring doesn’t have to be scary. By using skill testing and good hiring practices, you will have all the benefits of a working interview, but without the risks. In cases where a working interview has taken place or is currently going on, practices should seek counsel from attorneys or HR experts who specialize in employment law.
Paul Edwards is the CEO and cofounder of CEDR HR Solutions, which specializes in crafting individually customized employee handbooks for dental offices, and helping dentists and their office managers successfully solve employee or HR issues. Learn more at CEDR HR Solutions. Contact Mr. Edwards at 866-414-6056 or [email protected].
