The Growth, Risks, and Future of the Contingent Workforce

March 28, 2019 Posted by admin In Uncategorized No Comments

As the global economy continues to evolve, the nature of the workforce itself has been changing rapidly. Now firmly ensconced in the digital age, more and more workers are looking for greater flexibility, whether in terms of the freedom to work with more than one client, managing their own schedules, and working from home.

Although definitions of a “contingent worker” can vary, the Government Accountability Office (GAO) estimated in 2015 that workers with alternative work arrangements (contingent, part-time, temp, or “gig jobs”) accounted for roughly 40% of the workforce, with this number increasing by more than 36% in the previous five years. Contingent workers also now serve in a wide variety of roles, from seasonal employees at companies like Amazon or department stores to IT personnel, highly-specialized consultants, freelance writers and translators, and much more.

Contingent workers can bring many benefits to a company, particularly small businesses that either don’t have the financial resources or volume of work to necessitate the hiring of full-time employees. They can also allow a business to rapidly inject innovative and “outside-the-box” thinking into their permanent workforce, keep pace with emerging skills and technologies, get support for large-scale projects, and to access specialized skills and talent during busy periods or as needed. Furthermore, businesses that utilize contingent workers can save on costs because they are typically not responsible for payroll taxes or fringe benefits, and are generally immune from employment discrimination claims and lawsuits.

Of course, working with temporary workers and independent contractors does not come without its risks. For example, one of the biggest issues facing today’s companies that rely on a contingent workforce is how to classify their workers, and whether those classifications are accurate. In an increasing number of cases, some independent contractors and consultants have challenged their classification, and right to benefits typically provided only to employees of the business, such as health insurance, overtime, workers compensation, paid leave, and more.

The U.S. Department of Labor, National Labor Relations Board, Internal Revenue Service, and at least thirty-two state governments, in particular, have also taken notice of this situation, and have become more aggressive in pursuing investigations and leveling fines and other penalties against companies that have misclassified their contingent workers. This can end up creating substantial costs and other types of legal risk for the business, and especially small businesses.

Nowhere has this battle been more evident than in the language services industry – which is one of the top industries for contingent workers/independent contractors (e.g., translators, interpreters, etc.) – and some state governments have begun targeting language service providers for misclassifying their freelance linguists as independent contractors. California, Washington State, and Maryland are just a few of the states where extensive fines have been levied against language companies, and in some instances, the companies have been forced to re-classify some of their independent contractors as W-2 employees.

While it has become increasingly simple for companies to hire freelancers and other types of contingent workers through popular platforms like FlexJobs, Upwork, Freelancer.com, Fiverr – and for contingent workers to more easily find new gigs – this isn’t always a full-proof method for finding and hiring the right talent.

Advising businesses on how to classify workers correctly, drafting the scope of the role appropriately, and establishing a legally sound contract is one of the key benefits that working with an established staffing agency and HR firm can help with, beyond simply assisting companies to source the workers themselves. Especially for small businesses that don’t have internal HR departments, a staffing agency can ensure that there is a constant stream of qualified talent in the recruitment pipeline to make sure positions are filled quickly, with the best possible talent, and to mitigate potential risk.

Despite some of these risks and challenges, however, the contingent workforce is expected to continue growing at a rapid pace. Among the most coveted types of professionals in today’s contingent workforce landscape are Asana work tracking, immigration law, artificial intelligence (AI), social media marketing, C++ developers, machine learning, A/B prototyping, and much more. By taking advantage of the growing and highly-specialized contingent workforce, companies can quickly position themselves on the front end of emerging technologies and processes.

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