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Businesses are increasingly turning to more nontraditional hiring arrangements, but freelancers, independent contractors and other flexible workers come with their own set of compliance risks.
A few factors are influencing this shift toward more flexible workforces, Stephane Kasriel, chief executive officer of freelancing website Upwork, told Bloomberg BNA March 2. The supply of labor is changing as millennials and younger workers “have a very different perspective on what a job looks like,” he said.
In this environment, if a company wants to hire top talent from the pool of new workers, it may have to look at flexible worker populations, Kasriel said.
The rapid evolution of skill sets needed in the workplace is also influencing this hiring shift, Kasriel added. Skill sets are changing so rapidly that companies need employees who have the skills for short projects and assignments that need to be completed quickly, he said.
Companies plan to increase their use of freelancers in 2017, according to research commissioned by Upwork. One-third of companies used freelancers in 2016, and 55 percent of those employers expect to have more freelancers in 2017.
Some 64 percent of hiring managers believe they use freelancers at least somewhat strategically, Upwork found. However, many employers are still trying to figure out the right hiring balance, as 77 percent of hiring managers said there is still at least some room for improvement in their use of freelancers.
The survey was conducted by independent research firm Inavero, and is based on responses from more than 1,000 U.S. hiring managers between Dec. 1, 2016, and Dec. 10, 2016.
While the benefits of a flexible workforce may make sense for many companies, employers “should definitely not go into contracting and freelancing employment blindly,” Lillian Chaves Moon, a partner in Akerman LLP’s Labor and Employment Practice Group in Orlando, Fla., told Bloomberg BNA March 3.
The Department of Labor, the Equal Employment Opportunity Commission and the Internal Revenue Service all made addressing joint employer issues a priority under the Obama administration and it could remain a priority under President Donald Trump, Chaves Moon said.
Typically, a Republican administration focuses on compliance assistance, rather than enforcement of employment regulations, but “this transition will happen slowly,” Chaves Moon said. Overall, “I don’t see it as being a huge change” in regulatory focus because joint employer issues speak to the basics of many labor laws, she added.
The key issue for employers is to understand that just because the company has labeled a worker as a freelancer or contract employee, employers still must make sure they are not in control of that individual’s work, Chaves Moon said.
Employers should strive to give the worker as much flexibility as possible, she said. For example, freelancers should be hired on a specific project, for jobs that are not necessarily integral to the company, and into a position that the employer wouldn’t typically hire someone to do full-time, Chaves Moon said.
One of the key strategies to keeping flexible workers from becoming classified as employees is making clear the company’s interest in the end product rather than in the method the worker uses to accomplish the project, she said.
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