Your company needs more help but you aren’t sure if it’s time to add more staff. Your Senior Leadership team approaches you about bringing on temporary workers or Independent Contractors to fill in the gaps indefinitely until they can “figure it out.” Read what guest columnist, Anitra Walden-Jacobs of Jackson Lewis P.C (Cincinnati, Ohio) advises what to consider when considering utilizing a “Contingent Workforce”. Jackson Lewis P.C. specializes in representing management exclusively in workplace law and related litigation.
The “Dos” and “Don’ts” Of Managing A Contingent Workforce
Attorney at Law
As employers continue to look for ways to do more with less, they have increasingly relied on a variety of arrangements commonly known as "contingent work." The contingent workforce typically consists of independent contractors, temporary employees, and seasonal and leased workers.
Companies have many reasons for choosing to utilize a contingent workforce, including avoiding certain obligations and potential liability associated with regular employees. However, a contingent workforce is not without its own risks, especially when the company – or someone authorized to act on the company’s behalf – does something to change that relationship in the eyes of the law.
To maintain the benefits of a contingent workforce, employers must be careful to safeguard the scope of their intended relationship and ensure that contingent workers do not become employees under the law. At the same time, it is also important to create a sense of inclusion for your contingent workforce. To assist with that endeavor, here are a few best practices for utilizing a contingent workforce:
- DO leave the selection of temporary workers to the service provider, including recruiting, interviewing and on-boarding. Remember, you want to keep a distinction between your temporary workers and your regular employees. This is especially important with terminations. The temporary workers are employed by the temp agency – only the agency can fire those workers. If you no longer want a temporary worker at your workplace, communicate with the agency and have the agency handle it.
- DO make contingent hires familiar with your corporate culture. Just because a worker is not regular employee does not mean he or she should not be familiar with your corporate culture and general expectations.
- DO provide access to the same services regular employees enjoy. While contingent employees are not eligible for the same benefits as your employees, you can still allow contingent employees to have access to the same services as regular employees. This may include simple things like being permitted to park in the same lot, enjoying access to employee purchase discounts, staying informed about casual days, and being invited to office parties. It will improve morale, and happy workers are productive workers – even if they are not your employees.
- DO consider positions on a case by case basis. Money, while important, should never be the sole reason to hire a contingent worker instead of a regular employee. If the position requires a lot of company control with little flexibility, it probably should not be outsourced to contingent workers. Likewise, why would you want to spend considerable resources training someone who you plan to replace on the next project?
- DON’T create confusion when it comes to benefits. Your benefit plans, such as health insurance and paid time off, typically specifically exclude contingent employees from participation. You do not want to risk violating your plan. You also want to avoid taking actions that would support a finding of an employee/employer relationship in the eyes of the law.
- DON’T risk misclassification. Again, part of the appeal to using a contingent workforce is being able to avoid the requirements of certain wage and hour and employment statutes that only apply to employees. You can pay someone via 1099 and call them an “independent contractor,” but if you are controlling the means and manner by which they complete the assigned tasks, the law may consider them an employee and your company will be required to comply with those statutes.
- DON’T forget the contract. What you call it (i.e., “Independent Contractor Agreement”) is not determinative. What matters is what you want the person to do and how much control you have over how they do it. Clearly establish in writing the terms of your working agreement with a contingent hire. Do not rely on verbal agreements or casually mentioned expectations. Instead, create a written agreement in which the employer and worker both clearly define their expectations, working terms, and goals, as well as the estimated length of the assignment and the anticipated deliverables.
- DON’T throw your managers out there without a safety net. Make sure your managers have clear guidance on how to deal with issues that may arise with contingent workers. Consider having training on the issue and invite your managers to submit questions beforehand so everyone can be on the same page.
- DON’T ignore complaints about contingent workers from your customers and, especially, do not ignore complaints from your own employees. You can still be exposed to liability in how you respond, so respond quickly and appropriately.
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