Risks of a Contingent - Temporary Workforce

Contingent Workforce Arrangements

Continue to become more popular with employers.

Contingent Workforce includes:

1. Temporary staffing
2. Long-term staffing
3. Employee leasing
4. Third-party payroll providers
5. Managed services.

As the contingent workforce continues to grow, employers need to be aware of the risks associated with using non-traditional working arrangements.
Because temporary workers don't have long-term relationships with employers, they tend to be less loyal, potentially putting trade secrets and intellectual property at risk. Temporary workers are given access and privileges on their employers' IT systems and some are not informed of policies and procedures regarding data information and access during their onboarding.

Employers should provide security guidelines and processes to contingent workers during their onboarding. The same procedures for managing security access for regular staff should be applied to contingent workers. Contingent workers should also sign confidentiality and nondisclosure agreements to protect proprietary information.

Another risk of employing contingent workers for the long term is that courts may consider them eligible to for employer’s benefits. Employers should implement a tenure policy where after a certain period of time, a temporary employee must leave the position. In addition to considering a tenure policy, employers should ensure that their corporate benefits plan documents clearly define who is a nonemployee and specifically eliminate these workers from eligibility for benefits.

Employers should also consider unemployment compensation issues when hiring temporary workers. Often temporary workers will identify the employer as the business, not the temporary agency who provided the assignment. The employer will then deny the claim which can lead to additional inquiries as to the worker’s status. In some instances, both the temporary agency and the employer may be found to be liable as a joint employer.
Employers should weigh the benefits of having a flexible contingent workforce with some of the risks mentioned above. By putting a few safeguards in place, employers can help protect themselves from any potential pitfalls.

Lauren Sims is the article author and the Director of Human Resources Consulting for eqHR Solutions.

Whenever you require professional Human Resources or Payroll guidance to navigate the ever-changing landscape of California and Federal Employment Laws & Regulations, contact us for a no-obligation consultation. eqHR Solutions offers professional, tactical and strategic, human resources support, ADP payroll product implementation/training and payroll processing services for businesses throughout Southern California.