Tips for Managing Risk When Hiring Contingent Workers

Last updated on July 10th, 2018 at 07:26 am

When it comes to managing the risk of utilizing a flexible workforce, business managers and HR leaders would do well to remember Benjamin Franklin’s axiom: “An ounce of prevention is worth a pound of cure.” The truth is that staffing clients can open themselves up to liability, co-employment and contractual hazards unless they proactively implement policies and internal controls to manage the risks associated with hiring contingent workers.

Fortunately, there are numerous methods that can help to mitigate these risks and clients aren’t alone in this responsibility. Staffing suppliers should play a role as well and involving them in the process can help with risk identification and the implementation of uniform policies and internal compliance measures that protect clients from serious economic threats.

The following are examples of strategies you may consider using to mitigate the risk of hiring contingent workers.

Risk Management Practices

Select Capable Suppliers

Managing more sophisticated risk requires highly skilled staff, well-defined processes and decisions points and robust technical capabilities. That’s why selecting capable staffing suppliers is the first step toward limiting exposure and ensuring compliance with contractual and labor employment laws applicable to assigned employees.

Failing to stay up-to-date and follow new employment regulations can lead to disgruntled employees, legal disputes and penalties for staffing firms as well as clients. For instance, erroneously classifying an employee as exempt or non-exempt can impact their eligibility for overtime pay. But status determinations are based on local laws, the nature of the employee’s work and compensation level. Getting those decisions right requires an environment and support system that equips recruiters to consider numerous factors and deliver.

Standardize Contracts and Policies

Failing to apply consistent language, terms and conditions across the entire supply chain can turn into a huge administrative headache for even the most experienced program managers. Plus, having different Ts & Cs creates hazardous loopholes. After all, program administrators and line managers don’t have time to consider whether sourcing a contractor from one staffing firm is risker than another when selecting talent for a critical requisition. In our view, the best way to limit risk is by avoiding contractual exceptions whenever possible.

Design and Implement a Consistent Background Screening Policy

Having a clear and consistently applied background-check and drug screening program can help staffing firms and clients limit turnover, deter theft, reduce liability, and even prevent litigation for negligent hiring practices. In addition, enactment of uniform criteria which states that a background check and purchase order must be satisfactorily completed before a contractor can start work reduces subjective opinions and the likelihood of a discrimination claim. As the Society of Human Resource Management pointed out earlier this year: “Employers conducting pre-employment background checks will have to keep compliance top of mind as focused regulatory oversight, a growing number of class-action lawsuits and the ever-present threat of data breaches impact screening programs and practices.”

Take a Risk Management Approach to Onboarding

Compliance starts from the beginning. Treating onboarding as a proactive and preventative risk-management process can mitigate the hazards inherent in transitioning new contractors and temporary workers. Staffing firms that provide new contingents with accurate and complete information about safety, badging and policies regarding cybersecurity and the handling of data and information can significantly reduce the risk of using flexible workers.

Educate Hiring Managers

What’s the best way to ensure that hiring managers are following company policies — and the law? Education. Training hiring managers on co-employment – and what they can and can’t say during an interview — can head off problems at the pass. By working together, HR leaders and their staffing partners can develop and deliver training curriculums that save money by minimizing exposure to risk and preventing unnecessary claims.