3 Ways to Ensure Success When Engaging Independent Contractors

By MBO Partners | January 23, 2024

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Key Points

When engaging independent contractors, it is important to be aware of the legal landscape and how to mitigate risk.

Prioritize employee education around how to work with independents.

Use a centralized program to engage and manage independent talent.

Learn what contractors value and prioritize their needs.

Growing demand, enabling technology, and expanding supply are three key factors leading to the continuing growth of the independent workforce in America today. In 2023, just over 72 million people reported working independently. As more organizations incorporate independent talent as part of their workforce, it becomes increasingly important to be aware of the legal complexities of doing so and how to mitigate risks.

Engaging independent talent can have huge benefits for enterprises, and learning how to do so compliantly ensures workplace safety, prevents harassment and discrimination, and safeguards both businesses and contractors. Here are three ways your business can mitigate compliance when working with independent talent.

1. Prioritize Education Around Independent Contractors

Avoiding worker misclassification issues begins with education. Understanding why workers are classified in certain ways and what that means for project work and management will go far in helping keep your company compliant. Talk to employees and hiring managers about how, when, and why independent contractors might become part of a project team. have a process sin place to answer questions, and make sure employees know the basic differences between their work and what contractors are hired to do.

Maintain a Basic Understanding of Worker Status

Worker classification regarding independent contractors is in a constant state of flux. Laws and regulations can be interpreted many ways and ongoing lawsuits reflex this confusion. Despite these challenges, having a basic understanding of what makes someone an independent contractor is helpful when it comes to compliance. Generally speaking, an independent contractor will be engaged to provide services that are separate from the core nature of your company. They have the freedom to choose how and where they complete the work outlined din their contract. Independents are financially independent, with most being paid a set fee in exchange for their skills. Lastly, the relationship between a company and an independent contractor a business-to-business relationship, not an employee-employer relationship.

The Legal Landscape: Navigating Compliance with Independent Contractors

2. Use a Centralized Program to Engage and Manage Independent Talent

A centralized program to find, engage, and manage independent contractors is one of the best ways to keep your company compliant. A program will factor in legal requirements for your industry including specific state and county laws. Along with better built-in legal protection, a program has the added benefit of making it easier for independents to work with your company. That can be helpful when it comes to attracting top talent and keeping them coming back for future work.

Eliminate Rogue Engagements

Rogue engagements can happen all too easily. Independent contractors come from various backgrounds and maybe very familiar with working independently or just getting started. Because of this, it is common to encounter independents who fall into a gray zone of worker classification. They might not be fully qualified to work as an independent contractor for certain legal reasons (perhaps they don’t have the right insurance or haven’t worked with a client before), yet they can’t quite be classified as an employee either.

This is where working with a company that specializes in independent contractor engagement can be helpful. The legal aspects of independent contractor classification are complex, and firms like MBO can help assess classification documentation, vet independent contractors, and help to ensure that your program is on the right path.

Engage Talent Compliantly with a Scalable Program Built for Enterprises

3. Treat Independent Contractors Like Independent Contractors

Independent contractors are seen differently by the IRS than your typical, W-2 employee. Independents can provide services to multiple clients, work for defined periods of time on a contract, and pay for their own taxes and benefits. These workers typically bring some type of skilled expertise to a project and don’t need additional training for their job.

One of the most difficult things to understand when working with independents is the idea of degree of control. Just because an independent contractor is part of a project team doesn’t mean that a manager can treat them like another employee on the project. Independents are free to control how, when, and where their work is done, unless specifically outlined in their contract. This can be confusing to employees and sometimes frustrating for managers, which is why education and clear communication about expectations from the start is so important.

Learn What Independent Contractors Value

When independent contractors have a positive experience at a company, they are likely to return for future work and even spread the word among their peers. However, if they have a negative experience where they are treated as an employee and not respected as an independent, they will be more likely to take action that might trigger a worker classification audit.

Taking the time to learn a bit about what independents value and aligning their experience at your company accordingly can go far. Simple actions such as having quick and reasonable payment terms, a simplified onboarding process, a positive work environment, and showing respect for a job well done are highly valued among independents.

How to Attract Top Independent Talent

 
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The information provided in the MBO Blog does not constitute legal, tax or financial advice. It does not take into account your particular circumstances, objectives, legal and financial situation or needs. Before acting on any information in the MBO Blog you should consider the appropriateness of the information for your situation in consultation with a professional advisor of your choosing.  

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