Companies grapple with strategies for avoiding risk in hiring Independent Contractors

Companies Grapple with Optimal Strategies for Avoiding Risk in Hiring Independent Contractors ClearPath says concern is heightened with changing legislation in U.S.

MOUNTAIN VIEW, Calif. – Mar. 17, 2009 – A growing contingent workforce and changing legislation is heightening concern of worker misclassification, an issue increasingly discussed at industry forums.

Even companies in markets not typically worried with contract worker issues, such as the pharmaceutical industry, have sounded warnings by firing executives who’ve violated contingent worker policies. Management is increasingly asking “how do I become compliant” when hiring independent contractors.

“Companies in the U.S. are closely watching pending legislation from the new administration,” said Jason Posel, senior vice president of ClearPath, a provider of contingent worker management services.
Some companies have responded conservatively, mandating all contingent and temporary workers become employees of their suppliers to steer far clear of onerous fines and penalties resulting from misclassifying contract workers. This is not always the best strategy, according to Posel.

“It takes a state-by-state approach in the U.S,” added Posel. Posel was joined by representatives of industry giants Cisco and Google at the last Contingent Workforce Strategies (CWS) Summit.

Cisco System’s Randall Levinson, Global Contingent Workforce Program Manager, said a key driver of the company’s contractor compliance program is “managing around the precedents,” set by Microsoft, Fed-Ex, Time Warner and HP that dealt with legal issues between assumed employees who were actual contractors—resulting in enormous fines and penalties.

“With ClearPath engaged to handle our Contractor Compliance Program we have streamlined our processes and had a significantly positive impact on misclassification management in the U.S.," said Levinson. “They’ve helped us institute a clear and repeatable process dealing with our contract workers.”

About ClearPath
ClearPath is a leading HRO with a focus on the contingent labor market. With 17 years of experience our contractor management and payroll programs include: Employer of Record (ClearPath hires your contractors as our own W-2 employees); Agent of Record services (billing and payment consolidation for Independent Contractors); Direct Source (leveraging your brand to drive internal recruitment); and Independent Contractor compliance solutions. With ClearPath, companies can efficiently and cost –effectively engage, retain and manage the talent they need, while mitigating the risks associated with contingent workers.