If you find value in today’s article, make sure to download our latest State of Contingent Workforce Management research study (click here to check it out). Whether you are interested in learning more about the inner-workings of the Best-in-Class contingent workforce management (CWM) program or want to be a part of the “future of work,” our new report will guide you through another year of exciting non-employee workforce evolution.
There is a major reason why compliance (independent contractor compliance, compliance with federal regulations, etc.) has now become the top pressure within today’s contingent workforce management programs: as the utilization of contingent labor increases by the year and fresh sources of on-demand talent are mixed into greater engagement strategies, the functional CWM leaders can lose control over many of the non-employee workers within the greater business. Famous cases in the 1990s and early 2000s proved that even household brands can fall victim to reclassification or co-employment risks; seven-figure fines are regularly levied to global organizations for mismanaging independent contractors.
As discussed in the new State of Contingent Workforce Management research study (available here for download), top-performing companies are leveraging a series of compliance management capabilities to ensure they do not end up on the wrong side of this evolving contingent workforce challenge.
The compliance management capabilities discussed at-length in the new report revolve around one core element: consistency. The rapid flux of contingent workers in and out of the organization means that today’s businesses must be incredibly consistent in how they monitor the relationships (a capability in place in 74% of Best-in-Class program vs. 49% for all other programs) and standards between themselves and their independent talent (64% for Best-in-Class vs 36% for all others). Enterprises today face two potentially damaging scenarios in regards to contingent workforce non-compliance:
- Reclassification by the federal government and become liability for back taxes, Social Security, benefits, etc., often to the tune of millions of dollars for the average co-employment case brought against large enterprises, and/or;
- Becoming a “how not to” case in the eyes of the public and the business world, which is potentially damaging for the enterprise brand.
Aspects such as consistent enterprise-wide education (57% in Best-in-Class program vs. 21% for all other programs) can help present the greater enterprise with an ideal set of guidelines in how to approach the newer talent outlets (such as social networks and online talent platforms) in a compliant manner. Localized experts (including those provided from outsourced compliance management solutions) can assist businesses in better understanding the customs and laws in new regions when sourcing fresh talent.
Compliance is a recurring theme in today’s contingent workforce management programs, and, as discovered in our new research study, it has become the top challenge and area of focus for businesses in 2017. With so much evolution occurring on the talent engagement front, as well as the general increase in utilization of non-employee talent, enterprises today cannot afford to overlook this critical CWM aspect.