How to Ensure Compliance When Working With Talent Solutions Providers

But there’s an important caveat: outsourcing workforce management never means outsourcing responsibility. Even with trusted partners, your organization remains legally and financially accountable for compliance.

If a supplier mishandles worker classification, payroll taxes, or wage requirements, the consequences can be serious: audits, fines, back payments, and reputational damage.

Fortunately, most of this risk is highly manageable. Clear expectations and regular communication make a real difference. The key is working with suppliers who treat compliance as a core requirement, not an afterthought.

How do you ensure your talent solutions providers are compliant?

Organizations usually work with providers who follow clear compliance practices and demonstrate responsibility. Regular check-ins and ongoing communication help keep standards aligned as rules and needs change. Here are our recommendations on ensuring compliance for your talent solutions providers:

Vet suppliers thoroughly

Price and speed matter, but they shouldn’t drive the decision alone. What truly differentiates a strong supplier is a clear, documented way of managing regulatory and operational risk.

Before signing anything, look closely at how each supplier actually operates. Ask direct questions, such as:

• How are background checks conducted and documented?
• What systems verify worker eligibility and classification?
• How do they stay current with labor laws at the federal, state, and international levels?

Strong partners provide clear, specific answers—and support them with evidence like certifications, tax IDs, internal policies, or recent audit results. They expect this level of scrutiny.

Vague responses or missing documentation are warning signs. How a supplier handles these questions often reflects how they’ll handle every aspect of the relationship.

Get clarity on worker classification

Worker classification is one of the most common—and expensive—compliance risks in outsourced arrangements. Even unintentional mistakes can lead to penalties, lawsuits, or investigations by the IRS or U.S. Department of Labor.

Ask suppliers to walk you through their classification process. A solid evaluation looks at:

• How much control exists over how and when work is performed
• How workers are compensated—hourly, flat fee, or project-based
• The length, scope, and exclusivity of the engagement

Each factor needs to align with federal guidelines and applicable state or local rules. Have your HR, procurement, and legal teams review the supplier’s classification procedures and sample contracts. Getting this right protects your organization and the workers supporting it.

Put everything in writing

Vague agreements create problems. Every engagement should be governed by a clear contract that defines scope of work, deliverables, timelines, payment terms, confidentiality standards, and how disputes get resolved.

Your master service agreement (MSA) should also spell out compliance obligations: worker classification standards, labor law requirements, insurance coverage, and indemnification language. These aren’t just formalities. A solid contract is one of your best risk management tools, and the time you put into it upfront will save you headaches later.

Learn More: What Is Worker Misclassification?

Verify all insurance—and maintain audit rights

Even good suppliers make mistakes. Before bringing anyone on, request certificates of insurance and confirm that coverage meets your standards. You’re generally looking for:

• General liability covers negligence or third-party claims
• Workers’ compensation supports employees injured on the job
• Errors and omissions (E&O) protects businesses from claims of mistakes, negligence, or inadequate work in the services they provide

For multi-state or global work, make sure coverage applies wherever the work is actually being done.

Audit rights are just as important. Include them in your agreements—covering audits, documentation reviews, or third-party assessments. Suppliers who know these rights exist tend to stay more disciplined.

Look for suppliers who treat compliance as an ongoing effort

Compliance isn’t something you handle once and leave behind. Laws change, and what worked last year may no longer hold up. Strong suppliers stay ahead of those shifts rather than reacting after the fact.

When evaluating a partner, ask questions such as:

• Do they have internal compliance or legal staff?
• What training do account teams receive?
• How are regulatory updates shared with clients?

Up-to-date policies, relevant certifications, and active involvement in professional workforce organizations are all positive indicators. They point to a supplier that treats compliance as an ongoing practice—and that benefits everyone involved.

Explore: 10 Strategies to Reduce Compliance Risk for Your Organization

Stay engaged after onboarding

Signing a contract is the starting point, not the finish line. Ongoing communication helps surface small issues before they turn into larger problems.

Set up quarterly or biannual check-ins to review performance and any regulatory changes affecting your engagement. Request confirmation of audit results, renewal timelines, and the supplier’s standing with labor and tax authorities.

Have a clear escalation plan as well. When issues arise—and occasionally they will—both sides should know who to contact and how to respond. That clarity speeds resolution and reinforces that compliance is a shared responsibility, not solely the supplier’s to manage.

See: 3 Benefits of Creating an Independent Contractor Compliance Program

A final note: Your suppliers reflect your organization

The partners you choose reflect your values. A compliant supplier helps protect your brand, strengthen trust with stakeholders and regulators, and reinforce your commitment to responsible operations.

Supplier oversight takes effort, but organizations that treat it as a shared responsibility rather than a checklist item tend to build stronger, more dependable partnerships over time.

In a constantly shifting hiring environment, that foundation makes a difference. The right suppliers don’t just meet today’s needs—they’re positioned to grow alongside your organization.