Since June 2009, about 19 percent of all new jobs created in the United States have been temporary positions. As companies increasingly turn towards temporary workers to bolster their workforces, managers are becoming more concerned with the issue of compliance.
Change in Employment, Temp vs. Traditional Workforce
While using contingent workers offer employers several advantages, there are a few areas of compliance that need to be addressed to offer managers peace of mind. These areas include worker classification, joint employment, OSHA requirements, diversity goals, screening policies, and more.
The IRS says that it is critical that business owners determine if the individuals providing services are their employees or independent contractors. This requires defining the business relationship between the employer and the person performing the service. Common law rules apply to provide evidence of the degree of control and independence, and are based on behavior, financial, and type of relationship parameters. Businesses must weigh these factors to determine the worker classification.
Joint employment, also known as co-employment, refers to the sharing of control and supervision of an employee’s activities among two or more business entities. This dynamic typically comes into question with temp workers as the staffing provider and the on-site company both assume different portions of the responsibility for a worker’s employment situation. While a staffing agency may pay the worker and is the primary employer of record, the client company is considered the secondary employer under joint employment.
Both are responsible for adherence to government regulations regarding compensation. As companies continue to rely on contingent staff as an important part of their workforce strategy, employers have to be mindful of the intricacies that relate to using contingent labor.
Share of Temp Workforce, by Profession
According to the latest data from the U.S. Bureau of Labor Statistics (BLS), the number of temp workers injured on the job rose from 542 in 2011 to 715 in 2012. Contractors represented 15.5 percent of all fatal occupational injuries that year.
Fatal Occupational Injuries Involving Temp Workers, 2012
Just recently, the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) announced a new Recordkeeping Bulletin aimed at raising compliance with requirements that temporary workers receive the same training and protection that permanent employees do. According to the requirements, OSHA delegates responsibility to the host company first if there is a violation or injury, which cannot be pushed to the staffing agency.
Via staffing agreements, many companies require staffing agencies to provide generic training, but it is the host company’s responsibility to supply company-specific training and maintaining training records for all workers.
Other Areas of Compliance
Companies often have many recruitment and management processes and policies that require compliance, despite worker type. Diversity goals need to be established and tracked for temporary workers. Corporate screening policies often apply to temporary workers as well. In the case of certain job types, Department of Defense (DoD) security clearance checks need to be performed and maintained. In government-regulated roles or industries, licensing and certifications have to be verified and kept current.
In addition to other corporate policies regarding worker tenure, confidentiality, system access, and more, contract enforcement is also a compliance concern. This includes tracking and managing contract expiration dates for temporary workers, monitoring performance levels, and more.
How to Achieve Peace of Mind
With all of these various aspects of contingent workforce management, it is no surprise that managers are often overwhelmed.
However, there are many solutions that exist to ensure that employers are provided the information needed to solve problems. These solutions provide peace of mind by safeguarding against areas of temporary workforce risk, such as regulatory non-compliance, failure to comply with corporate policy, safety issues, and supplier breach of contracts.
A Vendor management system (VMS) with effective compliance management features offers a rule-based system that mirrors the business policies and legal obligations of the company, with automatic reminders, alerts and escalations. With audit trails, and onboarding and offboarding checklists, employers are assured that mandatory actions are completed. Advanced VMS systems offer management features including 1099 compliance modules that provide online assessments and calculate risk levels, and validate compliance with licensing, certifications, and DoD security clearance requirements.
For companies that engage temporary workers, investing in a VMS system or partnering with contingent workforce experts is an avenue to pursue to ensure compliance with policies and regulations and maintain peace of mind.