March 30, 2018

The Contingent Workforce – Part 3: Using a Staffing Agency to Mitigate Risk

The best way to reduce the risk of hiring contingent labor directly is to use a reputable staffing agency.

Such agencies mitigate risk through:

  1. Worker Classification Clarity. As employment professionals, staffing agencies make it their business to know and abide by all worker-classification laws. Using a staffing agency reduces the risks to employers of tax penalties and fines, including years’ worth of back taxes on consultants’ wages.
    In fact, “using a responsible workforce organization may dramatically reduce the risk of such liability, as well as the likelihood of a lawsuit challenging the classification of a group of workers paid on a 1099 basis.”
  2. Improved Security. Staffing agencies thoroughly vet consultants, drastically reducing threats to personal and cyber security. They take the time required to check references and carefully evaluate prior work before presenting a consultant for consideration. In addition, staffing agencies also have the expertise to provide employment and citizenship verification, background checks, and drug tests as requested by clients.
  3. Higher Worker Quality. When a company has a specific position to fill, taking advantage of expert help throughout the search, review, and placement process saves time and money and increases the odds of a successful match. The experienced recruiters of a staffing agency not only review each consultant’s résumé and skill set, they take the time to meet with the potential hire and ensure an ideal fit with the position as well as the client. With all that face time, good recruiters have built vast networks of available and known talent to call on at a moment’s notice. What’s more, staffing agencies stay current with the industry and can assure clients that they are not overpaying for work.

Additional Benefits of Working with a Staffing Agency

In addition to mitigating the risks of hiring contingent labor directly, the expertise a reputable staffing agency brings to finding, evaluating, and hiring consultants provides employers with three distinct benefits:

  1. Time saved. Every hiring manager knows how long it takes to recruit new talent. Each step of the process—from sourcing consultants to interviewing to negotiating contracts—can take weeks, if not months. A staffing agency assumes almost all of these tasks, freeing up the hiring team’s time, and filling positions quickly. In addition, because the consultant is actually employed by the staffing agency, the client saves hours on calculating payroll, benefits, and taxes.
  2. Cost reduction. Because the staffing agency performs the majority of the recruitment and selection tasks, the client company enjoys significant savings on its own labor. The staffing agency usually also assumes the duties and fees associated with candidate sourcing, scheduling interviews, employment and citizenship verification, background checks, and drug tests, sparing the client substantial costs.
    Finally, the staffing agency is responsible for the cost of the consultant’s employment insurance, disability insurance, and other benefits. Utilizing a consultant supplied by a staffing agency allows the costs associated with human capital to be variable versus a fixed cost.
  3. Productivity. Employee productivity increases when resources are sharedHaving a qualified and vetted consultant in place reduces downtime.


If the trend of the last few years continues, the contingent workforce will only gain more ground. Forward-thinking employers are best advised to partner with a trustworthy staffing agency today for two important reasons:

  1. They are best able to leverage the sources of quality consultants to find the right one with the skills, experience, and pay rate that best meet clients’ needs.
  2. They can provision the consultant compliant with federal and state employment laws and regulations, dramatically reducing the regulatory risks to clients associated with working with independent consultants and other forms of contingent labor.

By saving time and reducing the costs and risks associated with noncompliance in a rapidly shifting labor landscape, companies can enjoy great access to top talent and get down to business.

*Excerpted from The_Contingent_Workforce

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