Can a Vendor Management System Improve your Compliance Levels? | DCR Workforce Blog

Can a Vendor Management System Improve your Compliance Levels?

With the slow and steady growth in the use of temporary workers, there has been a corresponding growth in adopting a Vendor Management System (VMS) to manage this workforce. All VMS providers claim that their systems provide full transactional support for contingent workers, from issuing requirements to off-boarding workers. Most have adapted themselves to customer needs by going beyond agency contractors to manage outsourced, SOW and/or contract workers.

Today’s Vendor Management applications offer a global approach by providing multi-lingual, multi-currency options. Users have come to expect reporting and analytics capabilities and, of course, complete security and reliability. VMS providers also include “compliance management” in their list of features. However, the question to be answered is: Compliance with What?

Reliable Compliance Services:

In the staffing industry in the U.S., the mention of compliance typically brings to mind worker classification (1099 vs. W-2) or co-employment.  These two basic areas of compliance only begin to address the risks associated with the use of temporary workers.

The question we set out to answer is – can a Vendor Management System improve compliance levels?

The answer, of course is – yes. A competent VMS can improve the compliance levels of an organization by making sure that recruitment and management processes mandatorily fulfill the requirements related to all compliance areas:

Employment Legislation and Regulations – In the US alone, 180 federal laws govern employee management, compensation and administration. FSLA standards must be met for minimum wage and overtime benefits.  Compensation of individuals working under government contracts are governed by SCA/PCA requirements. Regulations regarding ‘protected worker classes’ must be adhered to.

Employment Eligibility verification must establish the applicant’s authorization to work in the U.S.

Worker Classification methods must classify workers as exempt vs. non-exempt as well as employee vs. independent contractor – also known as 1099 compliance.

Diversity Goals may be established to achieve the diversity needs of a business. Performance against goals needs to be tracked.

Corporate Screening Policies require careful screening of candidates to include employment history, academic credentials, criminal history, substance abuse and skills testing. Companies must conduct a delicate balancing act of gathering information that would flag a potentially destructive employee with the need to protect a candidate’s privacy.

Security Clearance Checks must be performed and maintained according to Department of Defense regulations regarding restricted access to classified information.

Licensing and Certification must be verified and kept current for workers in government-regulated roles or industries.

Safety Regulations must be communicated to workers and steps must be taken to ensure a safe worker environment.

Other Corporate Policies regarding job order approval, worker tenure, work change orders, confidentiality, system access, and worker provisioning must be adhered to.

Contract Enforcement efforts must ensure that contracts clearly define performance levels, that all subcontractors maintain required business credentials (insurance, licensing, etc.) that contract expiration dates are tracked and managed, and that all terms and conditions are met.

‘Must Have’ Compliance Management Features

When considering a Vendor Management System, carefully evaluate its compliance management features. For true risk reduction, look for a VMS that can provide you with:

  • Easily configurable business rules and workflows that can allow you to comply with legislative, industry and corporate requirements.
  • A repository for all required information and paperwork that goes beyond collection to include verification.
  • Security features that enable role-based access to information, ensuring candidate privacy.
  • Alerts and notifications that provide an early warning system of potential non-compliance.
  • Full reporting and auditing capabilities.
  • On-boarding system that prevents a candidate from commencing work until all requirements are met. On-boarding must also include orientation that covers site-specific safety regulations.
  • Value-added features such as Fatigue Prevention Modeling and Alerts to eliminate risk of safety violations caused by fatigue. These applications establish fatigue thresholds, monitor worker hours, and issue alerts and reminders of mandatory limits or breaks.
  • Reminders of required renewals of licenses, certifications, and other time-sensitive items.
  • Off-boardingwhich ensures that early warnings of tenure limits enable worker extensions or replacements along with de-provisioning of assets and termination of system access.

Do look at your Vendor Management System for similar features if you have one, or think of adopting one with comparable features if you do not?!

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.