Contractor Payroll refers to the tasks a company must execute to ensure temporary W2 Workers and 1099 Independent Contractors (ICs) are paid correctly and on time in accordance with their contract or Statement of Work (SOW).  Contractor payroll is a complex business responsibility that can often appear confusing to employers unfamiliar with the different set of obligations that must be met when paying contractors vs. traditional employees.

Before your organization decides on a payroll model that’s the best option for bringing qualified talent quickly and cost effectively into your contingent workforce, below is a list of critical considerations that will help you on your journey to making an insightful decision:

In today’s competitive business climate, organizations need an agile workforce that can execute strategies and achieve corporate goals quickly and efficiently. Yet, employers must also be responsible for managing their workers’ wages, bonuses, and deductions as well as provide support during the length of a worker’s assignment(s).

It’s a complex, time consuming process, and staying on top of the frequent changes to legislation can be problematic. Any oversights will result in non-compliance, which could lead to serious fines and negative employer branding.

To stay compliant and competitive, growing organizations will typically shift from a ‘direct contractor payrolling model’ to a third-party payrolling model, either built around the selection of a dedicated supplier or through informal referrals to a variety of vendors.

But which model is the best option for bringing qualified talent quickly and cost effectively into your contingent workforce? Depending on your organization’s acquisition needs, below is a list of payrolling models to consider:

Contractor tenure refers to the length of time that a contingent worker can be on an assignment for a single organization. However, in an attempt to lower the risk of co-employment, it's common for organizations to implement a policy that limits the length of time that a contractor can work on any one assignment. Once the tenure limit has been reached, the contractor can no longer work on the assignment- regardless of the project length.

Contingent workers bring many benefits to an organization's workforce; however, they also open employers up to a range of financial, legal, tax and branding risks. These Contingent Workforce risks will arise when an organization is flagged for non-compliance and is assessed based on its failure to comply with employment standards.

Without proper classification in place, one of the major risks employers face is co employment, and not even major corporations can escape the penalties if found in non-compliance.