As employers large and small continue losing employees to the country's armed services, they're facing new challenges. A big question is: "What do we do to fill the void while our employees called to active military service are gone?" It's an important question because the Uniformed Services Employment and Reemployment Rights Act (USERRA) protects the rights of eligible members of the uniformed services to reclaim their civilian employment after being absent because of military service or training.

So employers must take care in filling a position left vacant by a uniformed service member. Yet it may be necessary to fill the vacant position now. Employers that have had to implement layoffs face a similar challenge. So what's an employer to do? Many employers are seeking alternative working relationships to bridge the gap.

Hiring alternatives. Alternatives to hiring a regular full-time employee are to work with independent contractors, temporary help, and leased or outsourced employees. The most common benefits cited for hiring contingent workers are cost savings, reduced tax and administrative burdens, and increased efficiency and flexibility.

At the same time, there are potential risks, particularly with respect to violating state or federal employment laws. Therefore, employers must understand the different types of working relationships and related legal obligations before deciding whether hiring contingent workers is a better alternative than hiring traditional employees.

Potential pitfalls. Virtually every federal employment law (e.g., Title VII of the U.S. Civil Rights Act, ADA, ADEA, Equal Pay Act, FLSA, FMLA) and many state laws provide special protections for employees that may not apply to contingent workers. However, you need to be sure that all workers are properly classified, and that your policies and procedures make a clear distinction between the working relationship types. In order to determine whether a worker is an employee or contingent worker, courts usually apply an "economic realities" test that generally looks at factors such as:

• Degree of control exercised over the worker.
  
  
• Permanency of the relationship.
  
  
• Required skills.
  
  
• Investment in work facilities.
  
  
• The worker's potential for profit or loss.

Standards for determining whether a worker is an employee or an independent contractor are more onerous than those for temporary, leased, or outsourced workers. For example, you need to be sure the Internal Revenue Service's (IRS) "twenty-factor standard" is met in order to validate an independent contractor relationship. Nevertheless, IRS says: "If you have an employer-employee relationship, it makes no difference how it is labeled. The substance of the relationship, not the label, governs the worker's status."

Avoid borrowing trouble. To avoid borrowing trouble with your hiring practices, investigate federal and state laws that could impact your decisions. A good place to start is with IRS Publication 15-A, which can be viewed here:

http://www.irs.ustreas.gov/pub/irs-pdf/p15a.pdf

It's also a good idea to seek legal counsel.