Identify and manage top risks in your contingent workforce program

Contingent workforce program managers want to know their position regarding perceived risks. They ask, “What risks should I be aware of?” and “What can we do to mitigate them?” 

The fact is that anytime you engage a contingent worker, you are co-employing them. You need to understand that you are at risk and know what steps to take to mitigate that risk. 

Contingent workforce programs: what are the risk factors? 

After years of experience working with clients in different industries and countries, we have identified a few of the most common risk categories. 

1. Misclassification – There is no co-employment risk in a proper independent contractor (IC) relationship. Risk occurs when a contingent worker is classified incorrectly as an IC. Companies have two choices to vet ICs properly: conduct self-audits or utilize a third-party IC management/payrolling company to manage these workers. If you intend to self-audit, you must develop vetting criteria that allow you to manage ICs within your program. If your company does not have this expertise, a third-party compliance vendor is the way to go. Another thing to remember is that regulations apply differently if you have a global contingent workforce. This is a good reason to consult a global compliance expert. 
2. Co-employment – Staffing Industry Analysts' (SIA) definition is: "the relationship among two or more organizations that exert some level of control over the same worker or group of workers. Co-employers often share some degree of liability and responsibility for shared employees." Risks can include, but are not limited to, pay, benefits, or unemployment claims; discrimination claims; harassment claims; and, within the United States, workers compensation claims. 
3. Intellectual Property (IP) and other assets – Any worker who has access to your facilities, systems/applications, databases, and documents is a potential risk. Protecting both physical and IP assets is critical. Make sure your program onboards and offboards all workers consistently and in a timely manner. This should include providing access only to resources necessary for the assignment and removing access when the assignment is complete. 

Is your company in danger? Four red flags 

Most companies need to use contingent workers to reach their goals. Loss of confidential, proprietary, and trade secret information, fines, penalties, and even lawsuits are all disasters that could hurt your company financially and reputationally. 

Here are four red flags to watch out for in your contingent workforce program: 

Red Flag #1:  You have former employees coming back as contractors or, especially, as independent contractors 

Red Flag #2:  Your employees and contractors are doing the same work 

Red Flag #3:  Your contractors are doing work that is integral to your business 

Red Flag #4:  You have workers who retain badge or network access after their assignments are complete or project end dates have passed 

For Red Flags #1, 2, and 3, your company should have policies in place to ensure that these assignments are monitored carefully to prevent co-employment risk. 

In the case of Red Flag #4, you should take immediate action to cancel the badge or network access. 

Six ways to mitigate contingent workforce program risk 

To gain the benefits of using contingent workers while protecting your organization, here are six mitigation actions to implement. 

1. Properly distinguish the relationship with contingent workers by asking them to read and sign onboarding documentation that clearly defines their work and role. Make sure they sign an NDA. 
2. Ensure contracts specifically identify the worker’s employer (the staffing supplier) and clearly state that the organization is responsible for taxes, hour/wage compliance, insurance, and regulatory compliance. 
3. Make sure your benefits program clearly defines an employee’s eligibility for all benefits (medical insurance, stock options, 401k, etc.). 
4. Don't discipline or terminate contingent workers. Make sure the supplier handles this as their employer. 
5. Negotiate only the bill rate, never the worker’s pay rate or any benefits. (This does not mean you can't track these. Just don’t negotiate these items with the worker.) 
6. Make sure you have an automated onboarding/offboarding process and that you are auditing suppliers to ensure compliance with your background check policies. 

These suggestions should help your company manage and minimize risk so you can get the most from your extended workforce. Schedule time to talk with our experts for more information on mitigating risks in your contingent workforce program.