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At Procom, our mission is to be the best at helping companies hire great people and helping people find great jobs.

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What is Contractor Tenure?

Leveraging a contingent workforce in today’s business landscape is a risky but rewarding strategy. With the velocity of emerging technologies, skills gaps in the workforce, shifts in employment attitudes and increasing customer expectations, employers need to be able to engage talent quickly and flexibly to remain competitive.

Contingent Workforce Management

What is contractor classification?

When onboarding an independent contractor, organizations must classify aspects of the contingent worker relationship to ensure the correct legal and contract management structure is in place. Misclassification of workers happens when tax authorities and/or regulatory bodies deem one or more of an organization’s contract workers as actual employees. 

Managing a blended or contingent workforce is a logistical challenge in the ever-growing gig economy, and contractor classification is one of the biggest risks facing organizations that operate one.  

Between 10–20 per cent of employers misclassify at least one worker, and the Internal Revenue Service (IRS) estimates organizations have misclassified millions of workers in the U.S. alone.  

When onboarding contingent workers, these insights will help categorize and classify your worker relationships, so you can focus on moving your business forward. 


Common types of classification
The issue of worker classification arises from government concern that organizations may be attempting to avoid tax obligations by misclassifying workers – either accidentally or on purpose. While classification is primarily an on-boarding activity, organizations must be vigilant to ensure the status of the relationship does not change over time and invalidate the original classification. To ignore this may result in future reassessments and penalties.


Below are the common types of contractor classification: 
• Legal Status
• Employer payroll
• Overtime status
• Right to work status (I-9)
• Health and safety sensitive


Why does contractor classification matter? 
The first thing to understand about classification is that a worker is not classified by their title or by the wording in their contract (e.g., “Independent Contractor Agreement”). Instead, it’s the context of the worker’s role that determines their classification.

If your organization operates a contingent or blended workforce, contractor classification is critical to avoiding tax, government and brand related consequences like wage claims, fines, back payments, class-action lawsuits, benefits owed to re-classified employees and reputational damages.

Classification also provides clarity on employer obligations. Employers have certain obligations to traditional employees that they don’t have to contingent workers, such as pension plan or insurance premium contributions and income tax deductions; whereas contractors take on these responsibilities themselves. Furthermore, contractor classification helps organizations manage the engagement with the worker and provide a unique and tailored onboarding experience. Similar to traditional employees, contingent workers want to feel as though the organization they're working with is excited to have them on board, is prepared for the engagement and has all required internal processes in place.


Who handles contractor classification? 
Some organizations’ internal HR function will handle classification for employees, and many times, contingent workers are slipping through the cracks. As such, competitive organizations are no longer approaching the management of their contingent workforce in an ad-hoc or as needed basis, and many are turning to a third party to assist in creating an effective contingent workforce management program that drives high levels of compliance. 


These third parties include: 
Managed Services Provider (MSP): An MSP will manage all or part of a contingent workforce needs according to client requirements. MSPs may or may not offer a Vendor Management System (VMS) of their own, but they normally combine some type of VMS technology into the program(s). 

Vendor Management System (VMS): A VMS is a technology solution that provides visibility into an organization’s contingent worker program, including every worker, the length of their engagement and project scope. Basic system functions handle everything from requisition to off-boarding, hiring approvals and processing of time sheets and invoices.

Independent Contractor Engagement Specialists (ICES): ICES will act as an Agent or Employer of Record for IRS purposes in the U.S.. 


What is the process for handling exceptions? 
Contractor classification can be something of a balancing act, and to ensure compliance, employers should audit their processes, documentation and internal rules with the latest legislation and classification systems.  

There are also certain scenarios that fit outside the 90 per cent of regular classifications. In such cases, who is accountable for making the final decision? Without a defined escalation process for exceptions, front line management, more often than not, is forced to take on the responsibility of classification as well as their day-today-operations, which can lead to a poor on-boarding experience, delayed on-boarding, last minute rejections, poor documentation or in the worst case scenario, misclassification.


What is the role of a staffing agency?
Staffing firms have a role to play — in meeting clients’ changing skills requirements, advising on the best solutions available to meet their business goals and delivering innovative services that transform how they acquire and manage talent.  

Furthermore, due to the risks involved with the misclassification of workers, service providers like staffing agencies embed classification as an integral component into their contractor on-boarding process, and these classification systems evolve over time to be current with the changing realities of contract and employment law.  With expertise in contract labor, a trusted partner can help organizations avoid the risks of misclassification – while also protecting the interests of the skilled workers represented.


Contractor classification isn't the only risk organizations face when managing a blended or contingent workforce. If you're interested in engaging contingent talent, or want deeper insights into how to manage the risks posed by your current program, download our free whitepaper A Checklist for Contingent Worker Risk:   

Contingent Workforce Management

Guide to designing a high impact talent acquisition strategy

For over two decades, the ‘war for talent’ is still making headlines—ever since Steve Hankin coined the term in 1997 and McKinsey wrote the book by the same name. Yet, more than 20 years later, the fight for skilled contingent workers wages as competitive as ever. 

Because it’s getting harder to win. 

With current low employment rates, supply is down and demand is up, driving both enterprise-level organizations and small businesses to compete for workers qualified to fill skill gaps created by emerging technologies, shifts in employment attitudes, lower project costs and educational gaps. And hiring strategies that worked years ago aren’t as effective in today’s gig economy.

Deloitte reports organizations that can effectively recruit and retain talent see 18 per cent higher revenues and 13 per cent higher profitibility over those that aren't as adept. And when contingent workers are expected to make up 43 per cent -- or almost half-- of the U.S. workforce by 2020, it’s more important now than ever to have an effective strategy to engage these types of niche workers. A successful recruitment program recognizes that hiring is more than just filling positions.   Here’s how to design an effective high-impact talent acquisition strategy that finds the right fit for your contingent worker needs.


1. Job descriptions: Write job descriptions that attract the right candidates
Crafting compelling job descriptions is an organization's first step in marketing their company and position to a future hire. And with job boards like Indeed listing over 20 million jobs, yours needs to stand out to have a competitive advantage. Go beyond core qualifications: A great job description will list the must haves and nice to have skills, desired industry experience and level of education, but remember that candidates need compelling reasons to leave their current workplace or choose your job over another opportunity. Aside from what you’re looking for, what can your organization offer? Describe benefits and perks that come with the position, like skills that will be learned on the job, new technologies that will be used, growth opportunities, location and flexible work or remote work options. 

Use traditional titles: Non-traditional job titles like "ninja," "rock star," and "bad ass" can not only confuse an ATS and significantly lessen your talent pool, they're also potentially discriminatory. Studies show that when listed in job descriptions, these words are major deterrents for women job seekers.

Talent Acquisition

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