Expert Q&A: Busting the Myths of Engaging Independent Contractors

The evolving dynamics of the workforce have ushered in an era where the allure of independent contracting has perhaps never been more pronounced. Embraced for its flexibility and specialized expertise, this model offers businesses a gateway to agility without the traditional constraints of long-term commitments. However, recent headlines underscore the intricate challenges and legal pitfalls woven into this seemingly enticing proposition.

This blog serves as a special preview to an upcoming webinar featuring industry experts Cristin Monnich, Associate Director of Independent Contractor (IC) Solutions at GoGlobal, and Lou Holcomb, Head of Contingent Workforce at UKG. Titled “Bust the Myths: The Insider’s Guide to Independent Contracting,” this webinar, to be held on Wednesday, December 6, 2023 at 12:00 PM ET, promises a deep dive into the intricate dynamics of independent contracting within the modern workforce.

In this preliminary Q&A session, we sat down with Cristin and Lou to glean insights into the deceptive simplicity of independent contractor (IC) engagements and the consequential legal implications that often catch organizations off guard. This sneak peek into their expertise provides a glimpse of what’s to come in the live webinar.

How would you define ICs and how do they fit within the global employment landscape?

Cristin: ICs are self-employed individuals operating their own business and providing services to their external customers. Within the global employment landscape, they comprise about 1.57 billion people. This represents about 46.7% of all workers globally, according to data from the World Bank.

What trends are you seeing relating to ICs? Are there particular geographic regions or roles where contracting is particularly popular?

Lou: I think the multiple platforms that are emerging to connect ICs and customers have become increasingly popular with individuals that want to be entrepreneurs and not employees. I’m hearing that, for some, the autonomy to select fulfilling projects as an IC is reason enough to pass on a traditional full-time role. The workforce is demanding more flexibility and fulfillment in their work. If they can’t find it in an organization, it has never been easier to create their own flexibility with these tools at their disposal.

What is misclassification and how common of a risk is it?

Cristin: Misclassification risk happens when the hiring company treats a worker, who they are compensating as an IC, as their employee. The specifics of the requirements vary from country to country and even regionally within each country.

The risks can be substantial, depending on the location of the worker and the hiring entity. Oftentimes a company will shrug this risk off, thinking the chances of being caught are slim. But that one misclassified worker can potentially be the catalyst for a company-wide audit or a large scale lawsuit. It only takes one claim to put an employer on the authorities’ radar.

What are some of the other common mistakes that you see companies make when it comes to engaging ICs?

Lou: Failing to establish comprehensive contracts with ICs can lead to misunderstandings and a poor experience for all parties involved. This can be avoided by prioritizing the time to build a clearly defined scope of work that outlines the purpose, deliverables, milestones, payment terms, acceptance criteria as well as any other relevant terms, conditions or special requirements.

What do companies need to do to navigate the thin line between ICs and traditional employment?

Cristin: Companies should ensure they have a standardized procedure in place that helps their company navigate this important classification decision. Hiring managers may not realize the implications or have any knowledge of the requirements. Having a compliance process in place will help managers to do business with ease and without taking on unnecessary risk. A formalized IC engagement process can help standardize contracts, minimize risk, control project expenses and reduce data access provided to third parties.

What myths are often associated with ICs?

Lou: One myth is that having an Employer Identification Number (EIN) is enough to meet the criteria of an IC. Another misconception is that serving as an IC for various clients automatically fulfills the requirements for being classified as an IC with any organization.

What will people learn at your upcoming “Bust the Myths: The Insider’s Guide to Independent Contracting” webinar?

Cristin: Attendees at our upcoming webinar will learn all about the do’s and don’ts of engaging freelance talent, uncover common IC related myths, learn how to optimize their population of self-employed workers and receive a guide that they can use to guide their complex worker classification decisions.

Join Cristin and Lou on December 6, 2023 at 12 pm ET for “Bust the Myths: The Insider’s Guide to Independent Contracting.”