It’s easier than ever for companies to use their own talent pool to meet their contingent workforce needs. Direct Sourcing allows businesses to place workers on a temporary basis, while keeping the best workers in the pipeline between projects. Direct sourcing is a great tool in the toolbox for contingent workforce management, but companies must remain vigilant to stay compliant.
Risk and compliance when direct sourcing
The real work when direct sourcing begins with risk, compliance, and payroll. Mitigating risk requires specialized skills, a great depth of knowledge, and a department with enough bandwidth to understand and follow rules on a state and federal level.
Errors can be incredibly costly in many ways, including heavy fines, damage to reputation, and loss of resources–both financially and otherwise. The rules around classification and payroll vary from state to state and on a federal level as well. Regulations change frequently as well and hiring organizations must do due diligence to make sure they keep their practices compliant and their businesses in good standing. Any company using direct sourcing simply must also include effective IC classification and payrolling services as a part of its plan.
When does engaging a partner for risk compliance, worker classification, and payroll make sense?
Sometimes a partner can fill in the gaps for payroll for a contingent workforce. Companies without a specific department to fill these roles will be served by engaging a partner with the bandwidth and skills to handle everything related to risk, compliance, worker classification, and payroll for a contingent workforce. The best partner will be able to handle every worker type a business employs.
When direct sourcing talent, many businesses find an Employer of Record (EOR) that takes care of all the administrative details of managing a contingent workforce is an indispensable part of their team.
If you’re considering whether an EOR would be helpful to your business, let us know! This is our jam.
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