Another Frontier To Be Crossed By HR – The Rise Of The Freelance Workforce

14 Jun Another Frontier To Be Crossed By HR – The Rise Of The Freelance Workforce

By Jeff Russell – GeniusHR

The rise of freelance, independent workers and contractors will require businesses to think more broadly about the application and enforcement of workplace policies, regardless of their workers’ actual employment status.

A recent study conducted by Intuit (makers of Quicken and Quickbooks) predicted that by 2020 more than 40% of the US workforce — more than 60 million workers — will be freelance or contingent workers. This number is sharply higher than the last government survey taken in 2006, which listed the number of independent and contingent workers at around 30%, or 42.6 million workers.

That 40% of American workers could be non-traditional workers startled me but it also made perfect sense. According to the Bureau of Labor Statistics, the sluggish economic recovery has chipped away at the unemployment rate, which is in slow decline. The remarkable exception is job growth among temporary, contingent, and independent workers, which has increased by 29% since 2009. This rise in the non-traditional workforce makes sense as companies have become more agile and employees have become better connected. Mobile technology, anywhere internet access, and the ready availability of software and services that help manage a contingent workforce are surely leading this change from a location centric workforces. Indeed my own company has staff that is scattered across the US and we’ve become very adept at communicating and getting work done even though we don’t all office together.

As an HR professional who closely tracks the evolving nature of HR in today’s companies, this whole acceleration of an independent workforce got me thinking about the challenges that will soon be confronting HR departments with increasing frequency. It is imperative that HR staff be prepared for what will surely be new problems to grapple with, such as:

• How responsible will companies be for the actions of their independent contractors? With work teams being increasingly comprised of a mix of employees and contractors, where does company policy align in order to protect everyone while not crossing the lines from independent contractor to employee? Consider a likely case where a team is a mix of 5 employees and 3 contractors. What is the company’s responsibility if a contractor begins to harass an employee? What if one contractor harasses another contractor? While a quick search yielded no case law that covered such events you can be sure that there is a case coming our way that will seek to answer just such a claim. In other case law (Waggoner Motors, Inc. v. Waverly Church of Christ for example) there is precedent that says a company can be held responsible for the actions of their contractor.
• Who owns the data? This question has been a raging topic of conversation online for months now, as companies attempt to determine how best to protect their intellectual property and customer data when staff are increasingly using their personal devices – phones and tablets – to conduct company business. This problem is only magnified when contractors have access to company information.
• When does a contractor become an employee? This perennial question has been the basis for many an IRS lawsuit. Companies love to consider workers contractors in order to avoid paying taxes, benefits and other employee costs and therefore often step over the legal line in terms of control while still claiming the worker is a contractor. More independent workers and contractors equals more room for abuse in this area.

As of now it’s too early to tell how all of this will be litigated and what the outcome might be but you can rest assured it will be litigated. It is imperative that forward looking HR staff begin thinking about these issues now and getting a complete game plan together. My advice is always (always!) to put yourself in the employee’s shoes – whether they be traditional, independent, or contractor – and to ensure that policies are fair to everyone involved and are consistently enforced. For example, in terms of harassment I would suggest that company policies regarding how such claims are handled be the same regardless of what type of worker is involved and that every independent contractor’s contract contain detailed language holding them to a code of conduct that is in line with published company policy.

About the Author:

Jeff Russell is an entrepreneur with two successful past ventures under his belt before creating the company that became GeniusHR. Most notably, he served as Chief Technology Officer and Chief Operating Officer for OneTravel, one of the industry’s first consumer-focused online travel agencies. He is a longtime observer and tinkerer in the area of administrative efficiency, believing that a common sense approach works best every time. His current specialty is the HR function in small to mid-size enterprises. In 2010, Jeff began work on the technology platform that is the basis for GeniusHR and currently serves as its CEO and Chief Thinker.

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