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CWS Preview: Mitigating Contingent Labor Risk

At next week’s Staffing Industry Analyst’s Contingent Workforce Strategies (CWS) Summit, one of the key topics is always risk. Because of the Affordable Care Act (ACA) and many companies now using more contingent workers, this topic is sure to be of interest.

So, how can you mitigate your risk? The short answer to that is to hire a managed service provider (MSP) or establish a centralized managed staffing program. With consistent policies and procedures you can help to mitigate your risk.

The reality is that many companies have gradually increased their use of contingent labor and may be surprised to find that temporary workers make up 20%-25% of their workforce. Even at 10% or 15%, that can add up. But not everyone has established a program to gain visibility and centralized the processes around contingent labor.

To help get started, and as a preview to many of the discussions at CWS (including a round table discussion as noted below), here are a few questions to ask around your organization about the use of contingent labor.

  • What are other divisions/locations/business units of your company doing? Is everyone doing the same things or are there differences? Differences may equal risk.
  • What do managers know about contingent labor policies? Have managers been trained on treating non-employees differently than employees. The typical line manager also turns over frequently – so does the new guy know?
  • How are they reporting their hours/work? Are contingent workers going through the same system/process as employees? Are they entitled to overtime or days off?
  • Are they screened and tracked consistently? Do you know where all of your temporary workers are and when they came on board were they screened the same way (see the first bullet above)? Inconsistent screening is a problem and one of the best arguments for a managed staffing program.

One myth I can bust right now is the one about how long they are with your company. Notice that wasn’t a question above. There was a Microsoft case many years ago where temporary employees sought benefits after working there for a long time. But that was more about how they were treated, rather than how long they were there.

In short, if contingent labor is handled correctly, you can have “temporary” workers at your facility for years. There is no IRS rule or standard for temporary employees that I am aware of that sets a duration for their temporary employment. It’s about how they are handled vs. your employees.

So, if you are attending CWS, make sure you stop by the round table session on “Mitigating Contingent Labor Risk,” to find out how others are handling risks like these. It’s always a good discussion.

Go ahead and feel free to use my busted myth above and see what others have to say. I bet their response will be only that legal told them to set term limits, but they’re not sure why. There’s many other things more risky in my opinion, like most of the things above.

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