For several years now, the world of work has been in flux. When the economy was ailing, many organizations were able to attract top talent by offering highly competitive wages. However, as the economy came roaring back to life, many employees found they were unsatisfied with this model and took to the job market, seeking new opportunities.
Today, we’ve evolved our way into a “gig economy,” where many of these top candidates no longer want to be beholden to one single organization. Instead, they want to redefine how they work, when they work, and for whom they work.
At the core of the gig economy is an increasing number of contingent workers. This group of contingent workers has traditionally included freelancers and contract workers, but the definition is also expanding to include part time workers as well. The U.S. Department of Labor conducted a study of contingent workers recently, and it has estimated that approximately 40 percent of the nation’s workers fall into this class.
With such an increase in the number of people pursuing contingent careers, employers are now scrambling to reshape the ways in which they acquire and manage talent. This mad dash has created some confusion for employers, especially in the following areas:
1. Worker Classifications
Many employers seek to classify contingent workers as 1099 employees, or independent contractors. However, it is easy to make critical mistakes when classifying employees – especially when employers overstep their bounds by telling independent contractors how, when, and where to work.
Employers face great risk when it comes to worker misclassification because it can trigger costly regulatory fines and audits. In some cases, these expenses can be large enough to shut a business down entirely.
Ride-sharing giant Uber recently came under fire for its worker classifications as it battled a class-action suit brought about by drivers who felt that they were really employees, not independent contractors. The corporation has been forced to re-examine its worker classifications, and though the lawsuit has been settled, Uber still has to pay out $100 million to the drivers who brought the suit.
Employers who are unprepared to closely scrutinize their worker classifications may be at great risk of not only penalties and fines, but similar lawsuits.
2. Managing Vendors
Many employers acquire their contingent workers by using staffing vendors. As an organization grows, this can become quite cumbersome, requiring the oversight of 50+ vendors. In industries like health care, this can create inefficiencies, compliance risks, and opportunities for rogue spend outside of budgetary guidelines.
The challenges of vendor management in the gig economy have caused many employers to seek out vendor management solutions (VMS) and managed service providers in order to help them streamline operations and reduce risk. Using these tools, employers are better able to manage risk and enhance the way they manage contingent workers.
3. Recruiting Contingent Workers
For organizations that don’t rely on staffing firms to recruit contingent workers, talent acquisition poses a significant challenge. Companies have had to get creative in order to source contingent workers, and many have adopted technological tools to help them step outside of their immediate geographical areas and source talent wherever they can find it. Using things like VMS technology, ATS systems, and video interviewing, employers are able to source and hire seamlessly across broader regions.
4. Managing Talent Remotely
Many employers that want to increase their use of contingent workers will need to effectively connect with talent across city, state, and national borders. This will require employers to rely on conferencing tools, project tracking software, and more. Employers will need to address the new challenges that come with managing distributed teams of contingent workers.
As the workforce continues to grow and change in this gig economy, employers will increasingly face new challenges as they struggle to keep current with the shifting climate. If employers want to effectively manage their risks while engaging contingent talent, they’ll need to get proactive about how they source, hire, and manage contingent and remote workers.