Compliance, Compliance, Compliance – Contingent Workforce Classification

Getting it right pays off in the long-term!

Employing and managing staff can be complex especially if not managed appropriately and taken seriously. Not knowing the legislations around correctly classifying employees can lead to costly mistakes, with serious financial penalties that can impact a brand, business performance and long term organisational objectives.

Classification of Workers

The contingent workforce is made up of an ever-expanding network of consultants, independent professionals, contractors, temporary workers, freelancers and various other types of on-demand quality talent. How an organization chooses to classify its workers will determine tax amounts, as well as other payroll rights and obligations. It is vital thatorganizations understand the differences in classifications and ensure the use of contingent workers is consistent with the country or state legislations they are working within. Some uninformed companies may think it’s “easier” to classify employees as contingent workers – whilst this may be the case in the short-term or for specific project based assignments, this approach may lead to misclassifications in the long-term if not assessed appropriately initially and reviewed regularly.

Defining a Contract Worker

So how does a company know whether to classify one of their workers as an independent contractor or employee? A simple question to ask you may say, but history shows that this is still a very common problem that can equally effect small businesses and large global corporations. Google are currently involved in a case with a former employee who is questioning his and other independent contractors employment classifications. This case and many others are evidence that organizations need to ensure their own employee classification processes are current and compliant, and mitigate any associated risk.

Organizations may be asking who is concerned about how workers are classified? Government agents are tasked with investigating organizational workforces and will regularly audit companies to ensure they are compliant. While there are various guidelines and general rules that can be applied to the determination of the right classification of employees, legislations vary considerably from state to state and from country to country, with some industries being effected more than others. Organisations that have questions regarding workforce classification should consult an experienced contractor management solutions company such CXC Global. Employers should also routinely review independent contractor arrangements to make sure the relationship has not changed over time.

Thinking Global? Stay tuned for the next CXC Global blog post which will discuss the implications of overseas assignments and how to best manage your risk.

Recent Article – CXC Global, Recognized for Global Contractor Compliance & Payroll | LinkedIn

CXC Global™ is a leading supplier of compliant contingent workforce solutions. With an unmatched suite of managed services for employers, contractors and recruiters, CXC Global helps thousands of organizations, recruitment agencies, and individual contractors decrease costs and increase profits by providing innovative contractor management, compliance, payroll and remuneration solutions, risk mitigation and salary packaging solutions.