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HR must update how it works with this emerging staffing model
As the on-demand economy grows and more companies rely on independent contractors to conduct daily operations and meet business needs, HR may need to update policies and practices to ensure that these individuals are as successful and effective in their roles as possible.
According to data from a recent study by software company Intuit, the number of people working as independent contractors will more than double from 3.2 million to 7.6 million by 2020. Experts agree that HR professionals need to have ongoing involvement in this important staffing trend to ensure that these workers are productive and engaged.
“It’s no longer about being an employer of choice, but being a client of choice,” said Gene Zaino, president and CEO of MBO Partners, providers of business operating systems for independent workers and the corporations who engage them.
Here are some best practices for managing independent contractors:
Understand motivations for better sourcing. Gone are the days when most independent contractors were retirees or had certain specialized skills. Zaino pointed out that today’s on-demand workers are as diverse as the workforce itself. Some are part-time students, some have personal reasons for wanting to maintain independence, and some may just enjoy the flexibility of having a variety of clients and projects. Whatever your target demographic, make sure your opportunities are advertised where they will be seen, often in the same place you post regular job ads. For compliance purposes, you should always make the contractor nature of the position clear in the job advertisement.
Rethink dated policies. Zaino said companies don’t often consider their policies holistically when ensuring that they are a client of choice for independent contractors. A net 60-day payment policy may be appropriate, but if your competitors offer net 30-day payment, this could be a significant draw for a contractor concerned about cash flow. Similarly, many companies have instituted policies in the past preventing contractors from using company equipment. Meant to emphasize the legal difference between employees and contractors, these inflexible rules can also serve to inhibit business operations and create a situation where contractors feel disengaged. At the end of the day, giving a client-facing contractor a company shirt to wear for an event will not automatically undermine their employment status if they are otherwise classified correctly, and it’s likely to make them feel much more connected.
Make sure HR is fully involved in contractor management. According to a 2014 survey by MBO, corporate practices vary greatly on the question of which department is responsible for contractors. Only 35 percent of surveyed companies with more than 10,000 employees put HR in charge, while the rest let procurement, the hiring manager or other parties oversee these relationships. Janette Levey Frisch, founder and principal attorney at the EmpLAWyerologist law firm based in New Brunswick, N.J., explained that “People can often be protective of their own turf,” but failure to take a holistic approach means that an issue like contractor management, with significant legal liability, may not be vetted by the proper parties.
Recent lawsuits against companies like Uber and FedEx have served to highlight the risk companies incur when employees are misclassified as contractors. Frisch said that while HR is sometimes viewed as the “compliance police,” in reality, the goal should not be to get people into trouble but to keep the company out of trouble. To meet that goal, HR needs to create an awareness of risk management issues surrounding contractor employment and foster an atmosphere of collaboration so that hiring managers communicate openly about their staffing plans.
Amy Gulati, SHRM-SCP, is a freelance writer based in the Washington, D.C., area.
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