How to Mitigate Risk with Contingent Workers

Photo of man delivering an item on his bike to illustrate contingent workers.

Companies are increasingly relying on “contingent workers. This is term encompassing temporary employees, freelancers, independent contractors (ICs) and consultants.

A report from the U.S. Government Accountability Office found contingent workers make up 40% of the country’s workforce. Additionally, the average American business’s workforce is 18% contingent workers. This trend is expected to continue. In fact, Forbes estimates that by 2050, there’ll be a 50/50 split in permanent and contingent workers.

Mitigating Risk with Contingent Workers

There’s no doubt that using contingent workers offers many benefits. This includes agility and cost-reduction. But it also comes with some risks.

Misclassification of independent contractors – Employers sometimes misclassify employees as independent contractors. This allows these employers to avoid paying overtime and taxes. Whether it’s an honest mistake or an intentional practice, it can result in hefty fines, back pay and taxes.
Co-employment confusion – One type of contingent worker has a single job, but multiple employers. This model is called “co-employment.” Unfortunately, this leads to confusion when determining how much responsibility and liability each company assumes for that worker.
Theft of physical and intellectual property – Depending on the project an unscrupulous contingent worker is assigned to, sensitive information or costly equipment could be at risk.

How to deal with the risk

Clearly define roles – First, have firm definitions in place to differentiate your company’s employees from contingent workers. Then, when you hire contingent workers, make sure their contract defines their responsibilities and relationship to the employer.
Clearly define responsibilities – For projects that involve proprietary information, make sure your contingent workers sign a non-disclosure agreement (NDA). Also, establish firm rules for the use of company resources.
Clearly define benefits – Review your benefits program to make sure it clearly identifies what criteria employees must meet to be eligible for medical, retirement, and other benefits.
Get a staffing agency on board – To help you navigate the details of your business/contingent worker relationships, enlist the assistance of a fully vetted staffing agency such as ICR Staffing Services, Inc.. Our staffing agency can handle recruiting activities, handle discipline, and take care of the administrative work involved with contingent employees.