Clarifacts

3 Best Practices for Managing Independent Contractors

Publication Date: March 11, 2016

Are you updating your policies and procedures when you hire independent contractors? According to an Intuit study, there will be about 7.6 million people working as independent contractors by 2020. This SHRM article shares three best practices for managing independent contractors:

  1. Understand motivations for better sourcing. Independent contractors aren’t just retirees or people who have certain specialized skills. Part-time students and individuals wanting to maintain independence and flexibility of various clients and projects are just some of the people wanting to be independent contractors. Make sure you are advertising these opportunities where they will be seen by many, which is often in the same place you are already advertising your in-house employee jobs. You also want to make sure you are making it obvious that this is for an independent contractor position so there are no compliance issues.
  2. Rethink dated policies. If you still have policies in place that don’t factor in what your competitors are doing, you may want to update them. If a competitor offers a net 30-day payment policy while you’re still offering a net 60-day payment policy, you may be missing out on some great contractors that are concerned about cash flow. Another instance would be if your policies prevent contractors from using company equipment. The policy may be set up to show the legal difference between an employee and contractor, but may hurt your organization if contractors start to feel disengaged and not part of a “team.” You want your contractors to feel connected.
  3. Make sure HR is fully involved in contractor management. Ensure you are classifying independent contractors correctly. There have been recent lawsuits against Uber and FedEx where employees were misclassified as contractors. “HR needs to create an awareness of risk management issues surrounding contractor employment and foster an atmosphere of collaboration so that hiring managers communicate openly about their staffing plans.”

We’d also like to add getting background checks on contractors to this list. Contractors and subcontractors can still do damage to your company finances and image.

Read the entire SHRM article here.

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