Who within your organization would you contact to on-board an Independent Contractor (IC) and what processes would you follow? How do you know that you’re properly classifying this contractor as an IC? Are you and the person or department you coordinate with confident in your understanding of the potential risks associated with using an Independent Contractor? What will you need to do in the event of an audit?
Our customer, a Fortune 500 higher education company, like many organizations didn’t have a firm grasp on their overall usage of ICs across business units. When we asked the above questions, we received a variety of different answers depending on which unit or manager we talked to. Many of the hiring managers didn’t fully understand the potential risks associated with using ICs and the processes to on-board and pay these contractors varied widely across the organization; many were not following a screening process to correctly classify these workers at all. Due to the decentralized approach to the usage of over 250 existing ICs, the company was exposed to misclassification risk as well as bad public relations as an organization. As we really dug deep with these managers, it became evident that they were unaware of the risks they were exposing their organization to, and many of them were truly concerned. Almost instantly, their focus shifted from project timelines and deliverables to learning and understanding the compliance landscape and finding a solution to quickly reduce their company’s risk exposure.
Through diligent discovery and active listening, we learned that our customer was looking for a solution to centralize the screening and payment of ICs by partnering with a proven Independent Contractor Engagement/Agent of Record Services (ICES/AoR) provider. They needed a partner who understood the types of ICs they used and could customize their screening process to work type and location to ensure compliance with the constantly changing compliance landscape. Our customer was also looking for a partner who had a secure, automated system for document tracking and storage in addition to one point of contact for invoicing and payment. It was also important that the partner they chose could not only screen and provide a final classification recommendation, but could offer an alternative engagement model for workers who did not classify as an IC and would need to be on-boarded as W2 contract employees in order to retain their talent to meet important project deadlines.
By selecting Populus Group to provide an ICES/AoR solution, the company was able to screen the existing population of 250 ICs and transitioned over 100 non-compliant ICs to W2 employees utilizing our Professional Payroll Services. All compliant ICs were fully vetted to absorb the risk of misclassification and records for these ICs were updated and stored within our proprietary Compliance Management System (CMS™) to ensure the company is audit-ready. Additionally, with our integration into the existing MSP program, the company is able to report 100% of their ICES and Payroll program with Populus Group as tier 2 minority spend.
One of the ICs that was transitioned to W2 employment had this to share: “I want to thank you for everything.. I have worked with several contracting agencies throughout my work history and I must say hands down yours has been the best and easiest to work with. You have been great and your systems and follow up are very easy to work with.”
Want to know more about Independent Contractor Engagement?
*Populus Group has signed confidentiality agreements with this Company so the name is undisclosed.