What you don’t know can hurt you.
Claims of independent contractor misclassification can sneak up on companies that don’t even know they have a problem.
Businesses usually treat the retention of contractors as an expenditure, not an increase in headcount. Since no new employees are being hired, Human Resources Departments and Legal Departments often have no idea when operations managers have retained contractors–sometimes at distant locations.
Operations managers usually don’t know the risks of independent contractor misclassification. Why would they? They don’t know what to look for in contracts or what words to avoid. They need a job to be done, and they find someone to do it. End of story, right? No! It feels great if you can trust your operations managers to solve their own problems, but if this is what happens at your company, you may have hidden misclassification risks.
One way to prevent these unforeseen risks is to create an internal gatekeeping process. Require approval by a point person before any manager can retain an independent contractor. The same rules would apply for outsourcing any work to a consultant or an agency. This gatekeeper would be trained to spot potential misclassification risks.
The gatekeeper could approve or disapprove requests to retain contractors and could guide managers on best practices for overseeing contractors’ work without exerting too much control.
Summary: Large organizations can benefit from designating a gatekeeper who must approve all requests to retain independent contractors. The gatekeeper process can help to ensure that misclassification risks are evaluated and controlled proactively.
© 2017 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.