The blended workforce is playing a growing role in business, and that is making compliance with employment laws a more complicated—and critical—challenge. In this second post in our three-part series, we’ll examine how to take a broader perspective on this situation.
Because of the complexity of compliance rules, regulations, and enforcement efforts, when dealing with the blended workforce, the right course of action is not always clear, and it can be easy to get things wrong. For example, companies are usually familiar with the need to ensure that independent contractors and contingent workers are not treated as full-time employees. Yet, the IRS estimates that as many as half of the approximately 10 million independent contractors in the U.S. are classified incorrectly and should be considered employees. You don’t want to join the list of companies that have faced lawsuits challenging their classification of and treatment of workers, which include major organizations such as Wal-Mart, FedEx and Starbucks.
In this charged environment, traditional compliance efforts will not always be enough. Instead, companies and their HR professionals should use a number of tools and techniques to strengthen their compliance capabilities and programs.
First and foremost, companies need to take a big picture approach by recognizing that compliance is a multifaceted issue that they will need to address with a comprehensive approach—something that is lacking at many companies. Too often, employers simply don’t have clear corporate policies about how to manage a blended workforce, especially when it comes to compliance issues. Or, they may have some policies in place, but those policies differ across the company or are not enforced consistently.
In moving from a piecemeal approach to an effective, companywide compliance program, employers can start by conducting an operational analysis and risk assessment. This should identify gaps in compliance processes, areas needing improvement, and any issues that might trigger audits. It should include a review of all existing independent contractor relationships across the organization and examine those relationships in light of current state and federal regulations. As much as possible, it should determine the dollar cost of any current violations that it uncovers.
To be effective, a comprehensive compliance program needs to be based on a clear, horizontal view across all types of workers, including regular employees, independent contractors, and contingent workers. But getting that view can be a challenge, because the information it requires is typically spread across a variety of systems in a variety of places. Traditionally, companies have had to piece that information together manually, undertake a time-consuming and expensive integration effort, or go through the cost and disruption of implementing new systems. In our next post, we’ll take a closer look at the role of technology as it relates to people and processes.