Even if, by definition, a Contingent Workforce is temporary, it is a mistake to consider that there are neither legal requirements nor risks involved for the client.
Speaking with various clients and prospects, I am noticing increasing interest in the topic of risk mitigation for companies that rely on a Contingent Workforce provided by a staffing firm.
There are measures a staffing firm can take to better shield its client from risks related to Contingent Workforce. Here is a minimum list of things that can/should be done in order to avoid difficult hangovers:
- Establish a Service Agreement that clarifies specifically the nature of the business relationship between the client and the staffing firm and avoids the co-employment issues.
- Validate that the staffing firm is acting as EOR (Employer of Record) for all its employees that are deployed on the client’s site for a temporary period to perform a set of tasks. As it was well summarized in the Staffing Industry Analysts’ recent report Online Work Platforms and Labor-related Compliance –March 3, 2014, “the staffing firm will Assume the ‘principal legal relationship’ (EOR/AOR) with the worker and responsibility for ‘worker classification’ and governmental income reporting and/or withholding.”
- The client must never, ever terminate a vendor employee working on its premises. Of course, the client can stop a project (per rules and conditions established in the Service Agreement signed with the vendor) and must let the vendor manage on-its-own all consequences with its employees in line with employment regulation and employment agreements.
- Enforce a strict process where the client communicates exclusively with the Vendor Account Manager about satisfaction or un-satisfaction of performance to avoid misunderstandings and confusion.
- Maintain consistency across the board on the selection criteria, so multiple labor laws and regulations are respected and applied. For example, I list a few below, such as:
- Equal opportunity: have a candidate selection process that does not discriminate certain categories of individuals
- Run the same background checks on all individuals applying to work on similar jobs. In large Client organizations counting tens or hundreds of operation managers requesting access to contingent workforce, the more direct contacts and business done directly between each manager and a vendor, the more risk there is not to comply. A good way to mitigate that risk is to enforce a vendor neutral system, where managers communicate through a centralized team knowledgeable of the do’s and the don’ts.
- Service Agreement must allow for the vendor to pass along to the client all sales taxes that may exist in certain location or nature of business. This will allow the vendor to channel those taxes to the necessary government agency collecting it.
If you make sure that those aspects are well managed between the client and the staffing firms they work with, then you have done a solid job at mitigating the risks. But don’t just take my word for it. As in all matters related to legal risk, it is essential that you consult your own legal counsel.
To contact Tania Obeid directly, please email Tania@axelon.com.
To learn more about this topic or to request a consultation and explore how Axelon can provide your organization with more high-quality candidates faster than any other contingent workforce provider, call us 877.711.8700 or email firstname.lastname@example.org.