Engaging Independent Contractors (IC) can be a game-changer for adapting to evolving business demands and accessing specialized skills. It can be a winning talent strategy, but companies must know the risks of engaging and managing ICs and how an Employer of Record (EOR) can help.
GoGlobal is launching its Independent Contractor Solutions to help companies with their independent contractor management needs. We recently interviewed Cristin Monnich, GoGlobal’s Associate Director, for her insights on the new Independent Contractor Solutions.
Why have an Agent of Record (AOR) manage independent contractors?
What does an Agent of Record do? Companies should engage an Agent of Record & compliance provider to ensure their freelance or self-employed contractors are appropriately categorized and paid correctly. An Agent of Record provider who can scale internationally will help companies engaging independent contractors quickly and seamlessly worldwide, regardless of location.
How do you define an IC? How are they different from an employee?
An IC is a self-employed worker. They are responsible for invoicing their clients, paying their taxes and setting up or registering their businesses to comply with local requirements.
Unlike employees, ICs are not eligible for benefits, perks or protections with the companies they perform work for. In most countries, employees are eligible for overtime, paid time off, retirement plans, unemployment and disability leave and are protected by law to ensure they are paid for all time worked. ICs are traditionally paid based on the output of the work or services performed rather than the time spent working.
What are some of the common risks companies may face when engaging independent contractors?
There are several risks companies need to consider when engaging independent contractors:
- If a company treats a worker as though they are an employee, they run a risk of the worker being reclassified to employee status retroactively. This is known as employee misclassification or other terms such as “wage theft” or “sham contracting.” Governments at both a provincial or state level and a federal level are interested in ensuring that workers are appropriately classified based upon specific factors that vary by region. However, it primarily comes down to the right of control.
- Employers can control their employees’ work substantially, assigning the work as needed, directing them on how to do that work, where to do that work, defining the hours to perform the work, how much they will pay them and providing rules, parameters and instructions for how the work should be performed.
- When hiring externally, many of these factors can be mutually agreed upon but the IC must have control over their work performance.
- In many countries, misclassified workers may appeal for the benefits they would have been eligible for if they had been appropriately classified. These claims and lawsuits have made unfortunate headlines for many Fortune 500 companies impacted by multi-million-dollar settlements or lawsuits surrounding misclassified workers.
How can working with an Agent of Record help mitigate these risks?
Ensuring a proper evaluation is conducted at the start of the independent contractor engagement will drive compliance and prevent trouble down the road. A responsible Agent of Record provider ensures their client is indemnified and protected, providing audit files to back up the classification of self-employed contractors.
Further, an Agent of Record provider will be familiar with the local requirements of any country they are doing business in, ensuring the relationship, contract and local tax requirements have all been established and are compliant.
What are GoGlobal’s Independent Contractor (IC) Solutions? What services does GoGlobal provide?
GoGlobal provides a comprehensive compliance evaluation to ensure proper classification of the IC, empowering companies to make informed decisions while adhering to legal and regulatory requirements. In addition to our compliance evaluation, we provide Agency of Record (AOR) services. This means we assist businesses in contracting, engaging and paying ICs in a timely manner.
For workers who are not fully compliant, GoGlobal will provide feedback to help remedy any easily-fixed issues, consulting with either the client manager or the IC.
Where IC status is not recommended and cannot be easily corrected, GoGlobal provides seamless independent contractor solutions to continue the working relationship through our complementary EOR solution. This allows the company to continue the relationship through a more compliant solution.
What steps are involved in engaging independent contractors through GoGlobal’s Independent Contractor Solutions?
First, the evaluation will need to take place. The assessment consists of our compliance experts procuring information from the Client Manager and the prospective IC or worker. Both parties will complete a questionnaire regarding the proposed working relationship. The worker will be requested to furnish copies of any available business documentation.
Once both parties have provided the information, GoGlobal will review the applicable governmental requirements and share the findings through a recommendation. This recommendation will be either “Qualified IC” or “IC Status Not Supported.” Where appropriate, GoGlobal will consult with the business to help remedy any easily fixed items and bring the desired outcome of “Qualified IC.”
After evaluation, GoGlobal will finalize the contract with Qualified ICs and perform any onboarding steps as required by the client. Once complete, the IC may begin conducting services and servicing the project.
Finally, GoGlobal supports qualified contractors by facilitating the invoice and payment process. Skilled contractors will route their invoices to GoGlobal as agreed upon in the service contract. With the client’s approval, GoGlobal will remit payment to the IC for approved and payable invoices.
What makes GoGlobal’s Independent Contractor Solutions unique from other providers?
We are your one-stop shop for global Agent of Record needs. With services offered in 52 countries and many more scheduled to follow, this is a comprehensive Independent Contractor Solutions offering.
Our Independent Contractor Solutions experts are industry-renowned experts who have led clients through state and federal audits and supported many Fortune 500 companies during their startup phases into mature solutions.
Combining AOR and EOR services is a more comprehensive solution that helps companies be agile. For the same reasons they have implemented EOR, they will want an AOR solution to complement it so they can fully support their business needs to engage any worker.
Check out the details for GoGlobal IC Solutions or contact us to learn more about how our services can help you safeguard your talent strategy and onboard ICs quickly, compliantly and cost-effectively.