Employment Law Commentary - Volume 27, Issue 4: Mitigating Risks To Maximize The Advantages Of Your Contingent Workforce

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The “traditional” workplace as we once knew it is changing, and a key component of this evolution is the rise of the contingent workforce. Companies are continuously seeking innovative ways to cut costs, increase efficiency, and perform competitively, and the strategic use of contingent workers can be an effective tool in advancing these goals. Across the board, companies are increasing their use of contingent workers, which can include independent contractors, temporary workers, consultants, and interns. Indeed, according to a research study published by Oxford Economics, a whopping 83 percent of American companies say they are increasingly using contingent, intermittent, seasonal, or consultant workers.1 The changing nature of the workforce is forcing companies to learn to manage their workers in new and different ways. There are also risks associated with the use of contingent workers, including significant potential liability for worker misclassification. It is critical for companies to be aware of those risks, and knowledgeable about how to navigate them.

THE BENEFITS OF USING CONTINGENT WORKERS -

There are myriad motivations driving companies’ increased use of contingent workers. The most obvious benefit, of course, is that effective and appropriate use of contingent workers can provide significant cost savings—including employment tax savings, savings on unemployment and workers’ compensation insurance, administrative savings, and savings on employee benefits (which are typically not provided to contingent workers). Using contingent workers also gives companies flexibility to better match the flow of work to the amounts they pay for that work, by using fewer contingent workers during periods of downtime. Ironically, these cost savings can provide additional job security to a company’s permanent workforce.

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