On November 13, 2019, VectorVMS hosted a live interactive webinar addressing compliance issues for the contingent workforce in the US, UK and EU. Speakers for the webinar included Spend Matters Research Director Andrew Karpie, MSP GURU founder David Ballew, and VectorVMS Product Manager Taylor Ramchandani. The speakers provided high-level overviews of compliance regulations as well as practical program management tips and insights on utilizing technology to manage compliance in the growing gig economy.
Contingent Workforce Compliance: Onboarding and Offboarding
Compliance is at the heart of contingent workforce management. The first level of compliance most organizations tackle is their onboarding and offboarding procedures.
From a programmatic standpoint you should determine what on/offboarding requirements are essential to you and how you are going to maintain compliance in a systematic manner. With compliance defined, your program manager should routinely audit your compliance requirements to ensure accuracy. Your program management team should also review any changes to policy requirements or forms to keep compliance up to date
When using technology to manage your compliance, look to see what compliance is needed globally and what compliance is useful on a case-by-case basis. For example, in a hospital environment, I may want all my workers to have a background check but I may want to have more licensure compliance associated with my registered nurse positions versus my receptionists. Build your workflow around this compliance to ensure that your technology halts the workflow when requirements are not met or are due to expire.
2020 promises to bring continued growth of the gig economy, which means an increased use in the number of Independent Contractors (ICs). Independent Contractors are also commonly referred to as 1099s due to the IRS pay form that they utilize. As we increase our use of ICs it is critical to ensure that we are not substantially increasing risk that is commonly associated with them.
It is important that business owners correctly determine whether the individuals providing services are employees or independent contractors. That being said, if your program manager today does not have a proper way to vet 1099s, it is time to start looking at third-party organizations to do so. When picking a provider, make sure that they provide indemnity language with their vetting services.
Once correctly identified by your third-party provider, Vendor Management System (VMS) technology can help you easily identify and track your 1099s. Two methods presented in the webinar were:
- Using milestone-based service requisitions to track workers across deliverables while still maintaining compliance
- Flagging workers as ICs in the staff augmentation module that may have come from vendors or direct sourcing
Original IR35 legislation enacted in 2000 ensures that UK contractors pay the same tax and National Insurance contributions as an equivalent employee would. Under this version of the law, private sector independent contract workers are responsible for determining if they are inside IR35 (taxed like an employee) or outside IR35 (taxed like an external provider). New IR35 changes, effective April 2020, transfer this determination from contractors to companies that are deemed mid- to large-size.
Similar to your vetting process for 1099s, you should proactively look through your contractor population to see if they fall inside or outside IR35. A simple way to make this determination, discussed in the webinar, relies on these three principles:
- Does the worker have the right of control over their work?
- Do they have the genuine ability to substitute?
- Are they using client equipment to complete the project?
If a worker is deemed outside of IR35, you should manage those workers through a VMS. Workers outside IR35 should be made suppliers in the application and receive project-based work similar to the 1099s in the SOW module. Again proper worker documentation is extremely valuable so make sure you include this on the workers record.
Workers inside IR35 should be tracked through a VMS only if they are willing to become a PAYE worker payrolled by a third party (i.e. staffing supplier or payroll service provider).
General Data Protection Regulation (GDPR), was enacted in May of 2018 and protects the personal data of all EU citizens, but not only companies based in the EU are affected. It is important to note that wherever based, all companies that touch the data of EU citizens must comply with GDPR. Fines can be up to €20 million, or up to 4% of a firm’s global revenue. Whether you use technology like a VMS or spreadsheets, you are liable for data protection.
To ensure GDPR compliance in your VMS, house your GDPR statement in the vendor management tool and require user acceptance before using the technology. A VMS can also track candidate acknowledgment that their data is going into technology and ensure your technology has a process in place for the anonymization or deletion of personally identifiable information (PII).
Section 508, an amendment to the US Workforce Rehabilitation Act of 1973, is a federal law mandating that all electronic and information technology developed, procured, maintained, or used by the federal government be accessible to people with disabilities. These guidelines not only apply to all federal agencies; compliance is also required for all vendors, contractors, and partners of those agencies operating in the US or abroad. More and more industries are making it a requirement to be 508 compliant.
WCAG is a set of formal guidelines on how to develop accessible web content. These standards represent a higher level of accessibility than 508 standards. Your vendor management technology should not only be 508 compliant but also WCAG compliant. Look for your technology to be perceivable, operable, understandable, and robust for all assistive technologies.
Watch the On-Demand Webinar
The “Using Technology to Master Contingent Workforce Compliance” recorded webinar and presentation deck are now available.
Download the presentation deck.
If you would like to learn more about utilizing a vendor management system for compliance tracking, contact us for a free demonstration.