Businesses are increasingly evolving their talent strategies, turning to the contingent workforce and staffing agencies to augment their team of employees with non-employee workers.
As your company’s use of contingent workers increases, however, so do the risks associated with your contingent workforce management program. To avoid any potential costly missteps and to truly optimize the performance of your contingent workforce, it’s crucial to take some steps to mitigate those risks.
That’s why in this blog we will list some of the risks associated with your company’s contingent workforce and what steps you can take in your non-employee management program to mitigate those risks.
What are the risks associated with contingent workers?
The contingent workforce is a complex. Not only are there risks when it comes to the effective management and optimization of this workforce, but there are also legal and compliance risks that your business needs to address.
Here are the two most common legal and compliance risks for contingent workforce programs.
Misclassification: Contingent workers that fall under the independent contractor (IC) umbrella must be considered legal ICs in the region your organization operates - if not, they could be considered employees and your organization could be falling foul of misclassification. Most countries and states will have an online test to help your business ensure it is correctly classifying independent contractors in your contingent workforce program.
Co-Employment: Most businesses use staffing agencies to source and engage their contingent workers. In this relationship the contingent worker is employed by the staffing agency and placed within your organization for a specific period of time as a temp. It’s crucial that you have the procedures and protocols in place for this relationship not to be seen as co-employment, which would essentially mean your business is categorized as a joint employer of the contingent worker - meaning the worker could take legal action against both you and the staffing agency and receive compensation.
A few ways to mitigate risk in your contingent workforce program
With the compliance risks associated with your contingent workforce program in mind, here are a few steps you can take to mitigate contingent workforce risks and dramatically improve how you manage and optimize your non-employee workforce.
Make sure you track and manage compliance processes
Most organizations have fragmented approaches to managing their contingent workforce program, with hiring managers across different departments all using their own procedures and processes to source, engage and pay contingent workers.
This leads to significant risk to your business. Instead, your contingent workforce should be a company-wide initiative.
The use of a vendor management system (VMS) - which we will discuss the importance of shortly - will ensure your business can create a visible contingent workforce program in which all hiring managers stick to company-agreed policies. You’ll then be able to seamlessly track and manage your compliance processes across your entire organization.
Keep up to date with new regulations in your region
No matter how confident you are in your contingent workforce program, the management of such a program is never set in stone. The introduction of new regulations or laws in your region can transform an area of low risk in your contingent workforce program into a potential liability.
Keeping up with legislation changes around contingent workers will ensure that your business is able to quickly adapt its contingent workforce management program, mitigating potentially new risks in your non-employee workforce.
Use a Vendor Management System
Every contingent workforce management program must be underpinned by technology if your business is to mitigate risks. A vendor management system will ensure that your organization is able to manage and track important data, such as supplier performance, contingent workforce spend and compliance processes.
By gaining true visibility into your contingent workforce program, your organization will be able to significantly mitigate risks associated with the hiring of non-employee workers. A VMS makes this process simple by allowing your company to properly document, and manage, your contingent workforce - this seriously mitigates the risk of co-employment and misclassification.
Interested in learning more about Vendor Management Solutions?
Whether you are looking for a new VMS Solution, or just getting started, we are here to help. See how easy Conexis is to use by taking a quick 2 minute Self-Guided Tour. Contact Us for a Free No-Obligation Consultation to discuss your workforce challenges (and get immediate actionable insights) or Book a Personal Demo Today!
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