Contingent workforce

Scope

These non-permanent employees help employers to meet their work demands.

Regulatory citations

• None

Key definitions

• Contingent worker: The terms contingent workforce and contingent worker refer to non-permanent, provisional employees. Examples of contingent workers include:
  • Free agents
  • Consultants
  • Temporary workers (temps)
  • Independent contractors
  • Seasonal workers
  • Multiple job holders
  • Freelancers
  • Independent professionals
  • Temporary contract workers
  • Leased employees
  • Self-employed workers
  • Outsourced employees

Summary of requirements

Employers are turning to contingent workers as the economy slows and hiring traditional workers becomes more of a hardship. Many of today’s workers enjoy the flexibility and independence of contingent employment, preferring it to permanent employment.

Staffing agencies or “temp agencies” do big business placing temporary or “leased” workers throughout the U.S. In fact, one of the world’s largest staffing agencies employs over 33,000 clients. Almost five million people work for the company as associates (their services are available for leasing).

The Bureau of Labor and Statistics (BLS) places contingent workers in its “nontraditional workforce” category. According to the BLS, “… nearly four out of five employers, in establishments of all sizes and industries, use some form of nontraditional staffing.”

Although using a contingent workforce offers employers advantages in flexibility, just-in-time project staffing, and employment cost savings, it can also expose employers to significant risks. To minimize your liability, make sure you understand the rules and regulations covering temporary employees and the distinctions between traditional employees, common-law employees, and contingent workers.

Best practices for employing contingent workers include:

• Know who employs the contingent worker. If you’ve used a staffing agency, the contingent worker is not technically your employee. The staffing agency handles such necessities as wages, payroll taxes, and health insurance. If you have a problem with the employee’s work, you need to take it up with the agency before addressing the employee. If you’ve hired an independent contractor directly, understand the chain of command. Know who the employee reports to and who is ultimately in charge.
• Make your expectations clear. What is the job about? What do you want the worker to do? Spell out your expectations for the quality of work and for your future plans. Do you hope to hire the contingent worker in the future, or is the job strictly a one-time project?
• Give the worker an orientation. Tell the worker about your organization and your mission.
• Introduce contingent workers to the rest of your staff. At least send out an email message letting employees know who the workers are and what they’re working on.
• Deal openly and fairly with contingent workers. Treat contingent workers just as you would with traditional workers; the arrangement can be mutually beneficial.