Presented by Trinet
It would be an understatement to say the preferences of the nation’s workforce have evolved over the last decade. Our technology-driven, digitally connected and increasingly mobile society has spurned an increasing interest in more flexible and remote working arrangements. For many, the concept of working full-time for one organization is not an attractive option. This has led to a significant rise in the number of contract or contingent workers, especially in professional markets such as accounting, marketing, IT and research.
The increase in contingent workers has coincided with the ongoing escalation in costs associated with running a business and hiring employees. These costs can include payroll, healthcare, retirement benefits, and insurance. They can be particularly prohibitive for start-up ventures and small-to-midsize businesses. When a young company can’t accurately forecast cash flow one year out, hiring contingent workers can be a prudent decision. The benefits of the so-called gig economy run both ways: young companies can reduce costs and mitigate some start-up risks, while those seeking temporary work have more options than ever.
Yet, the rising role of contingent workers in our economy has not been without controversy. While many contingent workers covet the flexibility their roles provide, they likely are not provided many of the benefits that employers provide to their employees, such as health insurance or access to retirement solutions. This is a hot area with lawmakers, labor associations, and unions, among others, voicing their views on what might be done to provide more rights to independent contractors. In some cases, this has led to an increase in litigation, whereby contingent workers have argued that the work that they do, and the manner in which they do it, means that they are actually full-time employees misclassified as an independent contractor.
Not every contingent worker is the same and deciding to engage an independent contractor is not just about cost savings. Rather, many such workers bring significant talents to the fold and the market can be competitive.
But building a workplace of choice for temporary staffers is a sensitive arena. Going too far in integrating contingent workers can result in a potential finding that the worker was in fact an employee. The impact of such a finding is generally large, resulting in unanticipated costs associated with a claim for items like unpaid sick leave or equal access to benefits such as healthcare. Balancing the need for independent contractors to feel valued and a part of the team against the rules around the classification of workers is paramount to ensuring success.
In laying the groundwork to hire contract workers, here are some basic rules to follow:
- Identify what the contractor will be doing and work with your HR or legal advisors to be sure you’ve classified the role correctly. Keep a detailed record of the questions and answers that go into your analysis.
- Ensure that the contingent worker agrees with the scope of the role into which you intend to hire them, and any parameters that you put around that work. Keep a detailed record of their review and agreement.
- Create the right structure to comply with the advice you’ve received.
Each of these steps, in concert with oversight from your human resources, legal, and accounting advisors, can help to shield your organization from the prospect of legal claims, including misclassification.
You can also foster a more productive environment between your employees and temporary workers by acknowledging the value and ideas your contract workers deliver, as well as by interacting with them in a respectful and personal manner. Everyone deserves to feel welcome and appreciated in a working environment. If you follow the right compliance steps, there’s no reason you can’t promote this kind of atmosphere for temporary staff.
These are just a few of the steps you can take to ensure a successful engagement with temporary workers. Through our representation of over 14,000 small-to-midsized companies nationally, we can confirm that they are an increasingly important component of our nation’s workforce. The benefits of contingent working arrangements can flow to both employers and contractors alike. Maximizing these relationships, within the appropriate compliance framework, can benefit all parties involved.
Jimmy Franzone is Vice President Corporate Development at TriNet.
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