4 Ways to Guard Against Worker Misclassification In the Evolving Contingent Workforce

The recent courtroom dramas involving FedEx, Uber, Microsoft (and numerous other far lower profile brand names) has cast a bright light upon the shifting legal and regulatory ground beneath worker classification. Whether it is technology that is disrupting the historic definition of what it means to be an IC (as in the Uber case), or simple misinterpretation of what should be cut and dried regulation (as in the FedEx case), the fact remains that the laws/regulations governing worker classification are not keeping pace with the rate of change. So how can companies take action to ensure they’re not at risk? Here are four things companies of any size can do to support greater compliance with worker classification rules and avoid costly fines and penalties.

1) Evaluate the plausibility of transitioning hourly staffing spend to statement of work (SOW) type models. An increasing number of organizations have taken steps to create services procurement shields against classification issues by pursuing this strategy. By carving off non-essential work functions and making defined projects of the work, organizations can then produce an SOW and hire a contractor or team of contractors to complete the projects while clearly adhering to classification rules.

2) Work with a VMS technology provider and/or Managed Service Provider (MSP) that will indemnify and insure your organization against any classification-related lawsuits or costs, based on their onboarding and supplier management processes. In short, leave the classification challenges to the experts and let them assume legal responsibility. Just don’t forget your joint-employment best practices!

3) Navigating worker classification laws/rulings for your contract workers can be complex and time consuming. So identify a partner whose expertise and experience in the industry allows you to stay up to date on ever changing legal/compliance rulings as they happen. Whether this partner is a workforce management solution provider like nextSource, a legal professional or an industry expert, it is a good idea to have a knowledgeable yet impartial arbiter review your plans and processes to help identify risks you may have overlooked.

4) Consider engaging worker types from across the broad spectrum of the contingent workforce, including independent contractors and freelancers. Recent rulings suggest this rapidly growing group of non-staffing workers could be as low – or even lower – risk in certain cases, provided they go through a sufficient vetting and onboarding program.