Do You Have a Contingent Worker Engagement Policy? | DCR Workforce Blog

Do You Have a Contingent Worker Engagement Policy?

employee engagementMany of our clients – and potential clients – talk to us about their concerns regarding the use of contingent workers. Procurement personnel often discuss their company’s “rogue spend”. This refers to the hiring manager practice of directly negotiating with a staffing agency to find workers, ignoring the company’s authorized supplier list and established rate cards. Human Resources staff are more likely to worry about co-employment issues.

A thought occurred to me – while both of these issues can be addressed by ensuring that hiring managers understand their companies’ policies on the use of contingent workers, it appears that most companies don’t have a contingent worker engagement policy! I certainly can’t recall ever seeing any of my former employers issue such a policy. So I did a quick online search and found very few examples of contingent worker usage policies. I also couldn’t find one example of representative Code of Business Ethics policies (that document you make your employees read and sign each year) that addresses the use of non-employees. This is an easy oversight to correct, and one that is gaining in importance as a larger percentage of most companies’ workforce consists of temporary workers.

At the outset, define the term ‘contingent worker’ with direct reference to the company’s recruitment policies and workforce deployment patterns; then establish the policy. Let us look at some of the important topics to be addressed in a policy for engaging contingent workers through a third party. Some of these would govern the activities of the staffing agencies that provide the workers, while others set the course for the managers who retain the services of these workers.

Usage of contingent workers:

  • Provide direction on roles that can be filled with contingent workers, and those that can’t
  • Explain how contingent workers fit into existing processes for headcount planning, budgeting and accounting
  • Define the process for requesting a contingent worker. Who must approve the request? What role does Procurement or Human Resources play?
  • Define rules of engagement with staffing suppliers. How are suppliers selected? What criteria is used? How are rates established? What level of interaction is allowed between supplier and the ‘hiring manager’? Who authorizes payment to suppliers?
  • Establish a position of the conversion of a contingent worker to a permanent employee.

Interactions with contingent workers:

  • Identify a program ‘sponsor’ who would oversee and take responsibility for the contingent worker program. This individual will ensure supplier compliance with onboarding and offboarding requirements as well as the compliance with documentation requirements. The sponsor also monitors the workers, their deployment, conduct and safety in the workplace.
  • To avoid potential co-employment claims, contingent workers must be treated differently that permanent employees. The policy must explicitly address allowable levels of interaction, prohibiting hiring managers from directly recruiting contingent workers, making offers, negotiating compensation or benefits, providing career counseling, addressing performance issues, including the temp worker in employee recognition programs, or other actions that would blur the line between employee and non-employee.
  • Tenure and tenure gap limits may be imposed upon the engagement of a contingent worker, which will need to be monitored and adhered to.
  • Treat the workers, on the company premises, according to the company’s culture and values; as per the various personnel policies. Ensure that treatment of contingent workers adheres to their protections under Federal and State employment regulations.
  • Establish a process for escalating any dissatisfaction or negative feedback to the supplier.
  • The contingent workers should be restricted from using the company’s job titles and should not be issued company business cards. They also cannot sign any documents on behalf of the company.

Ultimately, the awareness gained by hiring managers in creating such a policy wins half the battle. The internal staff responsible for managing the contingent workforce program should continuously educate the company on the value of using contingent workers, and risks associated with non-compliance with the company policy. Conducting periodic reviews and audits will help reinforce the policy, and increase operational effectiveness.

If your company has a formal contingent worker engagement policy, please share it with us.

The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.