The market today demands speed and flexibility to remain competitive. When it comes to human capital, the landscape is changing rapidly as the war for talent rages on and the trend towards a gig economy begins to take shape. The use of contract workers will remain a critical component to every growing company’s human resource strategy as evidenced by the growth of MSPs across every industry worldwide.
According to Staffing Industry Analysts, “by 2020 all Fortune 2000 companies will incorporate an MSP as a critical component of their contingent workforce management program”.
Managing a large non-employee workforce in addition to finding the expertise to strategically source, benchmark, and maintain engagement from an effective supply-chain can be a significant undertaking. An MSP uses vendor management system (VMS) technologies as an effective tool but also has the skill sets and experience to manage the entire life cycle of sourcing contingent labor and services, onboarding and offboarding non-employee workers, and managing the entire invoicing process.
Data capture and program metrics are also an integral part of the MSP strategy. An effective MSP program enables a company to have better information on agency performance, overall program spend, as well as corporate compliance.
Top 5 Reasons MSPs Have Struggled in the Energy Sector
- Lack of trust/conflicting interests
- MSP acts as gatekeeper or middleman to agencies
- Service team lacks industry knowledge or know-how
- Overly complex VMS systems or cumbersome processes
- Lack of responsiveness and feedback
Additional Risk Factors
The recent rise in Fair Labor Standards Act (FLSA) claims has brought increasing focus into the risks of worker misclassification, day-rate pay structures, and the utilization of independent contractors. The exposure to companies utilizing large numbers of non-employee or contracted workers is in some cases more elevated than their counterparts due to the joint employer liability and the inconsistencies between how recruitment agencies document and track contractor hours.
How MSPs Can Mitigate Risk
- Revise agency contracts to gain more compliance and consistency across the supply chain
- Use technologies to monitor contractor hours worked
- Establish SOPs for contractor job classifications
- Confirm Non-Exempt/Exempt status at placement meetings and on all service orders
- Document and maintain compliance through VMS systems
In addition to these steps, there are specific tactics that Gemini has developed with the aid of some of the top employment law specialists in the world to address this ongoing risk in the ever changing landscape of employment law in the US. Gemini has developed proprietary methods to address the misclassification of contractors, alternatives to traditional day-rate structures and how companies can remain in compliance to using independent contractors known as 1099 workers. Due to new federal labor regulations, the fight for minimum wage hikes and an intense focus on independent contractor classification and joint employer status, risk mitigation in this day and age of class action lawsuits will remain to be a critical component to every company’s human capital strategy.
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