Many companies incorrectly believe that the responsibility for ensuring proper worker classification and addressing other regulatory compliance issues rests with the employer of record, often a staffing vendor or service provider. But In reality, if a compliance issue arises, the regulatory authority will follow the relationship from the worker to the recipient of the work product, including the hiring company.
All it takes is one claim asserting that a worker has been misclassified and should be an employee of the client company, or one workers compensation claim due to a work-related injury, and these claims could lead to an audit or even potential legal liability for the client company.
For these reasons, it is vitally important for a contingent workforce program to ensure that its vendors are compliant with all applicable laws and regulations. Your vendor management system (VMS) can help to ensure your vendors meet these standards.
It is vitally important for any organization engaging contingent labor to have a vendor qualification process in place to mitigate risk from a financial aspect. But ensuring vendor compliance is also important from a reputation standpoint. In too many cases, companies have seen their reputations damaged by news stories about workers being underpaid by subcontractors, and while the subcontractors’ names may be quickly forgotten, it is the brand name of the hiring company that is permanently damaged.
Having a vendor qualification process in place not only mitigates this unnecessary risk, but also help organizations bring on vendors quickly, efficiently and compliantly. With Beeline VMS and our ecosystem of approved and vetted talent partners, you can be confident of operating a contingent workforce program that combines flexibility and cost savings with compliance risk mitigation.
Enterprise clients frequently use large numbers of service providers and specialized consulting firms to perform projects involving hard-to-find worker skillsets. These projects are generally performed according to the terms of a statement of work (SOW) and the contractor may either be paid a fixed price or compensated on a time-and-materials basis. Due to their structures and the employment relationship of their workers, service providers can potentially introduce worker misclassification risk to the enterprise.
Using the services procurement capabilities of Beeline VMS, companies can reduce these risks. Beeline VMS allows organizations to select contractors by competitive bid and negotiate SOWs using their preferred terms, rather than the contractors’. This allows enterprises to establish firm and consistent compliance requirements for contractors and ensure that service providers meet client-defined standards for vendor status, including:
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