The Rise and Risks of the Contingent Workforce

Last week, Emergent was invited to host a webinar for HR.com and the Institute of Human Resources on "The Rise and Risks of the Contingent Workforce".

If you'd like to hear the webinar or receive a copy of the presentation, please click here where you will be taken to HR.com and prompted to create an account (it's quick, easy and takes just a minute) so that you can view our webinar on the HR.com site. Alternatively, you can e-mail info@emergent.com and one of our team members will send you a copy.


During the webinar, we asked the attendees to take part in a short poll and we found that co-employment, along with 1099 misclassification, were the top two concerns for companies hiring temporary workers. 

Co-employment is worrying for many companies that use contingent workers as the rules can be complex, change often, and can be challenging to sort out. Co-employment occurs when the company that utilizes the contingent worker’s services (the client company) manages the workers on a day-to-day basis, becoming a co-employer or joint employer along with the staffing supplier.

Co-employment could mean that the client company may be held liable for the decisions and mistakes of the staffing supplier and vice versa. Client companies and staffing suppliers must be clear about who is the employer of the worker and what responsibilities each company has towards the worker. These can vary from state to state, so companies must make sure that they are familiar with local as well as federal laws. Remember, it is both the staffing supplier AND the client company's responsibility to familiarize themselves with the law. Don't simply rely on the other party to tell you what you need to do - they might get it wrong...

Of course, it is relatively easy for a seasoned hiring manager or staffing supplier to become familiar with the laws around employing contingent workers, and they must also make sure that line managers throughout the organization of the client company know the rules and best practice surrounding the treatment of contingent workers, should they have any under their supervision. This can often prove challenging. 

We suggest that companies and staffing suppliers - after thoroughly researching best practice and obtaining legal advice - create a guide book that managers can refer to on how to properly engage contingent workers. Interestingly, when polled during our webinar, 64% of HR professionals said their companies did not issue any such guidance for hiring managers. 


Another concern for our webinar attendees was the misclassification of temporary staff as independent contractors. 46% of contingent workers classified as 1099 independent contractors are found by the IRS to be misclassified and one in three companies fail their worker classification audits.


Again, the rules are complex, so we suggest taking the 20 point IRS test to carry out an assessment of your contractors. If you don't meet the required criteria, your contractors may be more appropriately classified as W2 employees. If so, you should give us a call....


Emergent employs the contingent workers your company recruits or supplies. We are part of a family of companies that is one of the largest employers of contingent labor in the U.S. - trusted by many Fortune 500 companies to employ their contingent workforce.

Talk to us today to find out how we can help you manager your contingent workforce, maximize your profit and minimize your risk. Call us on 855 250 5000.

For Staffing Companies: Temporary Staffing Sales are Booming, Here is How to Present Your Services to Clients

Earlier this week, the American Staffing Association reported that contingent workforce sales totaled $87.4 billion in 2010 – that’s 21.3% more than in 2009. With figures like that, it’s no wonder more and more staffing companies and independent recruiters are looking to increase their contingent workforce services to clients. However, staffing companies and independent recruiters, who would like to ride the contingent workforce wave, may be wondering how to communicate the value of these services effectively to clients. Here are a couple of tips:

IF THE SUPPLY TEMPORARY WORKERS AND CONTRACTORS IS A NEW SERVICE FOR YOUR COMPANY it may be effective to simply put in a call to your clients to tell them about your new service, even if you think they may not use this type of labor. If you've worked with a manager for many years, they may simply assume that you don’t recruit temporary workers because you have not done so in the past, and could be overlooking your company and passing business to other staffing companies. 

IF YOU HAVE NEVER PROVIDED CONTINGENT WORKFORCE SERVICES TO A CLIENT BEFORE or you haven't asked them about it for some time don’t assume that just because some of clients have never recruited for temporary positions in the past, that they would not be interested in doing so now. Research suggests that 34% of hiring managers are looking to hire contingent workers this year AND the contingent workforce is growing at twice the rate of the permanent workforce currently – meaning that companies are demanding more temporary labor like never before. 

WHEN MARKETING TO NEW CLIENTS it may make sense to suggest using temp- or contract-to-hire workers for companies who don’t have the budget for new internal headcount. Contingent workforce spend often comes out of a different cost center for clients than internal hires. This allows companies to scale up to meet their immediate needs without blowing the budget allotted for employees on the internal payroll. Mentioning that your company can offer contingent workforce services as temp- or contract-to-hire situation can help your clients – especially since lots of companies are uneasy about recruiting for a direct hire position in the current economic climate.

On the phone, clients may ask you about your new offering, here are a few questions we’ve heard asked of staffing companies we work with:



Why is your company different? Small to mid-size staffing companies and independent recruiters usually have a distinct advantage over large staffing companies -- they are experts in their niches and passionate about what they do. Usually this translates to higher quality workers delivered faster to clients than larger services. Where these companies sometime fall short is handling employer responsibilities. Large staffing companies have vast and dedicated resources for risk management, insurance, legal and finance. With Emergent staffing companies of any size gain big company resources (the Emergent family of companies is one of the largest employers of contingent labor in the U.S.)to compliment their service expertise and dedication. 


Why does your company supply contingent workers? Statistics have shown that the direct hire placement business declined 50% between late 2008 and 2010!  The economic environment has made it essential for companies to leverage cost effective ways of doing business. Contingent workers allow companies to easily and flexibility tap into the skills they need to execute tasks and projects for a period of time potentially saving a large amount of money over internal hires.  


Why should my company use temporary workers or contractors? Many companies may have excess workload and need help immediately but cannot get approval in time for internal headcount. By engaging contingent workers clients will expediently gain the skills they need now without having to make a long-term commitment to the worker.  Additionally companies that are unsure about bringing on full-time, internal workers can utilize contingent workers until they gain clarity on hiring strategy. At this point they may convert the contingent worker to direct hire. 

How does your company employ contingent workers?

In general clients will want to be sure that the contingent worker your company supplies is delivered in compliance with Federal and State laws and regulations. Engaging contingent workers on a 1099 basis can be risky for both the supplier and the client if all the items in the IRS 20 Factor test are not met. By working with Emergent staffing companies recruit the workers and then Emergent handles the statutory employer responsibilities that come with engaging contingent staff on a W-2 basis, leaving you to look after sales and client services.  
See our blog post on 1099s and Independent Contractors: What you need to know for more information


Do you provide contingent workers for most skill types? In all States? The answer to this will depend on your companies specialties, insurance, risk management strategy, financial capacity and whether your company is set-up to employ workers in each State.  For staffing companies Emergent makes it easy to do business in new States and skill areas by becoming the employer for the workers for the duration of their assignment. 

What are your fees for providing contingent labor?

Generally, contingent labor pricing can be offered is offered in the following ways:
(i) with a markup rate on top of the worker’s pay rate
(ii) as a pre-negotiated bill rate
(iii) as a pre-negotiated pay rate and markup rate
(iv) as a statement of work.
See our blog post on The Basics of Staffing Markups for more information. 


Call Emergent today on 818.955.6870 to find out how we can help you grow your business!