De-Risk with Confidence: 3 Ways to Reduce Misclassification Risk

By MBO Partners | August 4, 2022

Consultants at a table

Key Points

Optimize your workforce by compliantly engaging independent talent.

One of the most important parts of this modern business model is worker compliance.  

When specific project needs arise, partner with trusted, compliant, and vetted independent talent to add the skills you need to your workforce.

Your ability to achieve workforce optimization is only as good as your staff’s abilities and bandwidth. When specific project needs arise—that may be highly technical or involve in-demand skills not found in your FTE population—partner with trusted, compliant, and vetted independent talent. 

In order to effectively source independent talent end-to-end, it is important to establish a centralized engagement program to manage the entire lifecycle from sourcing, engagement and payment to management and re-engagement. One of the most important parts of this modern business model is compliance.  

Compliance is key to reducing misclassification risk 

Independent contractors fall under a different legal classification than your typical W-2 employee. The general rule of thumb when classifying aa worker as an independent contractor is that clients only have control over the results of the work that is done—not how or when it is done. In other words, an independent contractor is responsible for providing the work or deliverables outlined in their contract, but how and when they get that work done is up to them. 

If you try and control how independents do their work or extend too much oversight, you risk treating them like an employee. These practices can lead to misclassification and consequences such as paying back-taxes with interest, class-action lawsuits, or negative press.  

In order to minimize the risk of misclassification, ensure proper contracts and insurance are used, and manage independents with a centralized program. This will help create guidelines around whether a worker is self-employable and provide policies and procedures for evaluating and engaging workers as independent contractors.  

Accelerate Enterprise Value Creation through Use of Independent Professional Talent 

Proactive talent pools support compliant engagement

With a centralized program in place, you can then focus on proactive recruiting. Top candidates only stay on the market for 10 days, so finding and engaging the talent you need quickly is important. A talent pool is a way to proactively source and manage groups of top independent talent in critical density areas. 

Your talent pool includes independent professionals who are of particular interest to your company. These may be people who have specific skills, are based in a certain location. When candidates join your talent pool, you will be able to easily communicate with them when project opportunities come up. 

What is Project Based Staffing, And Why Does It Matter? 

A Virtual talent bench can help achieve workforce agility 

The next step up from a talent pool is a virtual bench. A virtual bench is a group of talent that is ready-to-deploy. This group consists of talent who you know already meet your needs. They may have applied for previous positions, be reliable referrals, or have previously completed projects with your company. 

Candidates in a virtual bench have already completed most onboarding procedures such as background checks and compliance reviews, so it is much easier and quicker to get them started on a project. Not only is this beneficial to your company, but it is also how independent talent want to work.  

Having a fast and efficient contracting and onboarding process is an important factor that influences who independent contractors choose to work with. Independents place a high value on things like automated systems and limited paperwork. If you can create a great experience for them, you can position your company as a top choice for the most talented candidates. 

How a Workforce Optimization Strategy Attracts Tomorrow’s Top Independent Professional Talent 

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