There are 30.2 million independent workers in America today. This growing workforce has increasingly become a vital source of talent for businesses. The shift to a project economy combined with technological advances has not only contributed to the ease of leveraging independent workers but has expanded the breadth of specialized talent that can be engaged. The question facing American enterprise is not if they will use independent contractors as part of their talent pool but how they will engage this vital resource.
Below are the top 5 facts that you need to know independent contractor engagement.
Understandably, some members of the C-suite have shied away from harnessing the full power of independent contractor engagement. Lawsuits in recent years, such as Microsoft vs Vizcaino, cost some companies untold millions, and from the outside, it may appear as though other companies would also be at risk if they routinely engage independent contractors.
Fortunately, nothing could be further from the truth. Though the possibility of misclassification actions can never be completely eliminated, when properly managed, companies can enjoy the benefits of tapping independent talent while minimizing the risks. Securing a reputable Independent Contractor Engagement Specialist (ICES) provider is essential, and ensures that you have a rigorous and consistently enforced process for identifying, engaging and contracting independent professionals.
The price of employment is rising. Whether lucrative or basic, the benefits packages that accompany traditional employment can become prohibitively expensive in short order. With the advent of the Affordable Care Act, for example, employers must offer health insurance benefits to employees working 30 or more weekly hours - or face stiff penalties.
In many cases, outsourcing talent for limited-scope projects is more efficient than hiring a permanent employee who may become a burden after the project's duration. Independent contractors can provide the talent you need without the demands of continued employment when the project is complete.
Some of the hesitation in securing independent contractors is due to an outdated perception of onboarding complexities. Though the process was fraught with difficulties in the past, ICESs, Managed Service Providers and some high-end payrolling agencies have rendered the process much simpler and more direct. Comprehensive ICESs are capable of tailoring this process to your specific business, and can often complete onboarding procedures more quickly, thoroughly, and efficiently than procurement personnel who are more familiar with serving traditional employees.
A number of factors have led to a virtual explosion of talent who are foregoing traditional employment for independent contracting. From artists and accountants to zoologists and technology professionals, what was formerly a trickle has become a tidal wave. Workers in nearly every specialty are moving away from traditional employment and toward an independent consulting model. This includes seasonal professionals who are opting to utilize their deeply honed expertise in an open market that provides them with more control over the career and "mature independents" who, rather than retire, continue to contribute value with an independent career. In fact, independence is quickly becoming a normal part of the overall career portfolio. By 2020, roughly 50% of the private workforce will have spent time as independent workers at some point in their work lives. This trend makes it imperative for organizations to learn to effectively integrate this talent segment into their overall workforce strategies.
Predictably, the move from employee to consultant has been accompanied by a parallel move on the part of employers, both large and small. The traditional model of hiring employees for the long term is rapidly giving way to a profound paradigm shift that involves outsourcing on a project-by-project basis. Not only does this shift entail natural financial incentives, but it also allows employers the flexibility of securing specific expertise when no one within the company possesses the requisite skills.
Companies who depend on a specialized provider of Independent Contractor Engagement are more likely to have broader choices for accessing specialized talent. In times and business circumstances where the right talent can make or break a company's competitive advantage, it is a must to have a Human Capital strategy that includes a safe and easy way to engage independent professionals.
Need to know information for any individuals or companies hoping to engage independent professionals in the 21st Century.
MBO Partners developed a calculator that quantifies what we can: the IRS component of the risk. Our legal team scoured the IRS code and assembled the possible penalties into a single easy-to-use calculator.