Create a high performing contingent workforce.

Expert guidance from Procom Enterprise to help you build and manage a best in class contingent workforce program.

Contractor Payrolling

Avoid the risks and unnecessary costs your organization is exposed to when you want to engage pre-identified, non-competitively sourced workers.

MSP
Services

Whether you're looking for visibility into your extended workforce, compliance with corporate policies or strategies to reduce your costs, we can help. 

Direct Sourcing

Save time and money by creating a direct channel to the talent your organization needs by leveraging the power of your company's brand. 

SOW Compliance

Like it or not, spend that should be going through your contingent worker program is showing up in your statements of work. 

Alex MacKenzie

Vice President
Procom

Why Procom?

Find out why Procom is chosen by
leading organizations across North America.

What is contractor payrolling?

Amid the rise of the gig economy, more and more organizations are turning to non-traditional workers to quickly and effeciently reach their corporate goals -- so much so that 40 per cent of the U.S. workforce alone is currently made up of contingent workers, with the number expected to rise to 50 per cent by 2050.  

Yet while gig workers are trending toward becoming the norm in most companies, a flexible workforce can open organizations up to a myriad of tax, financial, legal and branding risks not associated with traditional worker programs.

Fortunately, however, there are methods to help mitigate these risks, and organizations don’t have to face the threats that come with a contingent workforce alone.  

One of these methods is outsourcing employer responsibilities like contractor payrolling to a trusted vendor who will manage workers’ wages, bonuses, and deductions as well as provide support during the length of a worker’s assignment(s). The client partner will also identify and implement internal measures to protect organizations from serious risks like unforgiving fines, penalties and negative employer branding.

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

Direct Sourcing: 5 big decisions to make when designing your program

They go by many different titles: contingent workers, gig employees, freelancers, contractors, but regardless of naming, they all serve the same purpose: providing organizations with flexible, skilled staffing solutions to help them quickly respond to market changes and demands.

In the past it was very common for organizations to source their contingent labor through a staffing or recruiting company. For a flat fee or a percentage of each workers’ pay, the recruiter would vet resumes, qualify workers, negotiate pay rates, and manage all payroll and compliance for that worker. In return, the client received timely access to skilled consultants and workers and was glad to outsource the process to their trusted suppliers.

In an effort to save money, better manage talent, and regain control over their recruits, companies have become increasingly more comfortable taking on some or all of the contingent worker engagement process for simple or frequent openings within their organizations. The practice of engaging contingent workers directly is known as direct sourcing and while it is true that direct sourcing can save companies money, the opposite can also be true if the company doesn’t have the proper resources in place or a formal program to manage the process. This post will address some of the challenges with direct sourcing, as well as five key decisions companies need to make when establishing their own direct sourcing program.

It’s important to note, direct sourcing programs don’t have to be an all-or-nothing approach. In fact, many companies use direct sourcing for routine or frequently engaged contingent worker requirements and still use an outside staffing agency to manage complex roles, executive positions and other senior company positions.

Whichever route you choose, below are some considerations to help enhance your program:


Making Direct Sourcing Work for You
According to the World Economic Forum there is a world-wide shortage of skilled workers, which makes the process of sourcing and recruiting talent that much harder for companies, particularly ones with global operations. Having a program in place that gives you immediate access to a pool of skilled, proven workers has many obvious benefits, not the least of which is a reduction in ongoing recruiting fees and shorter down-times.

It’s no surprise that technology has made direct sourcing easier than ever. Social networking makes reconnecting with your former contingent workers (alumni) simple: job openings for contingent workers can be posted for free on a company’s Intranet, their public-facing website, or more widely through online job and social media websites.

As with any online presence, companies must consider the brand image they’re putting forward. Employer and company branding is just as important for contingent workers as it is for traditional employee recruitment efforts and the two need to be complementary as well as truthful.

One of the first steps everyone takes when considering an organization for a future contract/engagement is to perform online research about the client. Websites such as Glassdoor indirectly keep companies honest by allowing past and present workers across all levels to rate their experience with the organization. Companies with frequent turnover or a low rating are viewed less favorably, for obvious reasons. Having and maintaining a strong workplace brand can be very advantageous for companies recruiting in highly competitive industries and can be the differentiator for a contingent worker contemplating multiple offers from potential client suitors.

Chances are you already know that one of the best sources for recruiting new talent comes from existing and former employees whose own personal and professional networks expand your company’s reach well beyond traditional recruiting sources. Employees, contingent workers, and alumni who already have a positive work experience with your company are more likely to recommend highly-qualified candidates since the referral has a direct impact on their reputation at the company. A side benefit of this is that internal referrals tend to start out with a higher level of trust than unknown candidates which can make the interview process faster and easier.


Designing Your Own Direct Sourcing Program
The best direct sourcing programs usually complement other recruiting practices rather than replace them altogether. And programs can vary greatly based on the individual company’s needs and available internal and external resources.

Contingent Workforce Management

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