Tag Archives: independent contractors

7 tips for recruiting and onboarding independent contractors

Many companies depend on a contingent workforce to stay flexible in a competitive marketplace. For these organizations, three critical components must align for success: finding the right independent contractors (ICs), sourcing them efficiently and effectively, and sealing the deal with a smooth onboarding process.

With more and more businesses vying for the services of skilled ICs, it’s no easy task to make all three phases work. Nevertheless, with proper planning and execution, it can be done. This article outlines seven tips to help optimize your process—four for recruiting and three for onboarding.

4 tips for recruiting ICs

The first step in the process is sourcing the right candidates. Then you’ll need to persuade them that your company is a good fit for their skills and preferences. The following suggestions can help you achieve these goals:

1. Advertise openings on the right platforms, in the right way. First, gather knowledge of how your ideal business partners prefer to consume information. For example, do independent contractors in transportation and delivery browse LinkedIn and Facebook, or do they prefer online job boards like Indeed.com? The bottom line is that your business partner search will yield a higher ROI if you advertise on platforms that your target demographic uses.

In addition, it’s important to provide a clear description of the advertised opportunity’s required skills, qualifications and duties. Vague or misleading descriptions will only frustrate interested ICs and attract unqualified candidates. At the same time, your vetting process will become more stressful and time-consuming.

The best way to avoid such issues is to provide a transparent description of the work. For example, if certain certifications are required, make that clear right away. If you practice transparency at the very outset of the process, it will save both your company and the IC a lot of headaches later on.

2. Make your contracting process portal mobile-friendly. Never underestimate the impact of a mobile-friendly contracting portal in today’s market: At least 94% of American job seekers use their smartphone to conduct research, and half have completed the required forms over the phone. Leverage this trend by ensuring that your website, and especially your candidate portal, is mobile-responsive and easy to navigate on a smartphone or tablet.

2. Conduct quality phone interviews. Phone screenings are an important part of the contracting process. Often, they can help a quickly identify whether the contracted worker is a good fit for the position; if not, the company can quickly explore more suitable options.

Of course, it falls on the company representative to conduct phone screens that effectively accomplish their purpose. Generally, the caller should:

  • Keep the phone screen short.
  • Stay on topic.
  • Ask standardized questions.
  • Take notes during the interview.

A superior process for conducting phone screens will lead to savings in time and resources, as well as better contractor fits.

4. Never stop searching for quality talent through referrals and advertising. ICs who enjoy contracting with your company can be excellent referral sources. For instance, they may recommend a contracting opportunity to another IC with similar skills and qualifications. You may even want to ask these ICs to send solid contractors your way. Never discount the impact of this built-in network.

Furthermore, even if your company has no open contracting opportunities, you can continue to seek superior talent in anticipation of future needs. Gather all of the needed information from a potential contractor and keep it on file. By doing so, you’ll develop a queue of contractors ready to step in at short notice if the need arises.

3 tips for onboarding ICs

Once you’ve found the right IC and they want to contract with your company, the next step is to onboard them. An IC management platform such as Openforce can help you do this in the simplest and most efficient way.

These three tips can help you onboard ICs:

1. Streamline qualification, verification and negotiation. Making the qualification and verification process faster and easier allows ICs to get through it more quickly—which means fewer will abandon it before they’re contracted. Not only that, but Openforce provides a way for clients and ICs to do interactive rate negotiations within enrollment workflows. Having documented negotiations can help reduce misclassification risks.

Plus, with Openforce, active follow-ups with ICs can help get them through every stage of enrollment. Our onboarding coordinators will call, email, and text ICs to help them through enrollments, prevent and overcome stalls, and remind them to complete critical steps such as drug screenings. This helps you contract with the IC more quickly, relieves the contracting company’s internal team from needing to perform frequent follow-ups, and vastly reduces average enrollment time.

2. Simplify the onboarding workflow as much as possible. Jumping through hoop after hoop to onboard with a new company can be frustrating for even the most interested independent contractor. Ultimately, they may decide to move on to a better (read: easier) contracting opportunity.

You can avoid this outcome by streamlining and simplifying your onboarding process as much as possible. For example, give prospective contractors an overview or “map” of the process and explain where each step fits into the overall framework. Not only will this help you get top-notch talent, but you’ll also spend less administrative time on onboarding, which could save thousands of dollars.

3. Enable contractors to easily access, sign and store important documents online. Onboarding a new contractor always involves paperwork. However, you can reduce a lot of the friction in the onboarding process by allowing the IC to access and sign necessary forms online and then store them in the cloud. It’s easier for candidates and less work for your administrative staff.

In summary, companies must invest in their contractor sourcing and onboarding processes to stay ahead of the competition. By implementing the seven tips above, you and ICs can both enjoy the benefits of a fast, efficient and intuitive contracting process.

Openforce’s innovative IC management platform can help you make that happen by simplifying enrollment, streamlining qualification checks and consolidating key information in a single location.

Ready to get started? Contact Openforce today using the form below or by emailing sales@oforce.com.

Reinforce your business model with standardized independent contractor agreements

As more states enact laws designed to prevent employee misclassification, especially in highly regulated industries such as transportation and delivery, more and more businesses are getting hit with stiff penalties for noncompliance, whether or not the misclassification was intentional. At the same time, many workers find themselves confused over their own status—are they independent contractors (ICs) or traditional employees?

Despite a company’s best intentions, research indicates that misclassification is a widespread challenge, occurring at 10-20% of businesses. If you run a company that uses ICs, it is critical to have a clear and detailed process in place for dealing with these relationships. And one of the best places to start, as we mentioned in our article on the broker–carrier model, is with your independent contractor agreement (ICA).

Why are ICAs so important?

When dealing with a contingent workforce, ICAs are a critical component in the contracting process. Here are two reasons why:

1. ICAs may help enhance compliance by defining the legal entities of both parties.

It’s true that ICAs cannot guarantee that a worker will be considered an independent contractor under the law; only a government agency, such as the IRS or the court system, can make that determination.

Nevertheless, an ICA can provide powerful evidence that a worker entered the contract with full acceptance of their status as an IC, and that the work performed was compliant with all of the legal requirements pertaining to a contingent workforce.

In basic terms, a good ICA sets the status of both entities, as well as helps you to set clear expectations and solidify your workforce model at the same time.

2. ICAs outline the responsibilities of both parties.

When you enter a business relationship with an independent contractor, it may be tempting to think that you both are on the same page from the beginning. However, the reality is that misunderstandings can easily arise if the terms of a contract are not set down in writing.

A clear and detailed ICA can avoid such misunderstandings at the beginning of a project. Once you and the contractor are both on the same page, everything else should fall into place much more smoothly.

What to include in your ICA

The next logical question is: What should you include? While each contract should be customized to your company’s specific needs, here are 10 sections that have proven to be beneficial when incorporated into almost any ICA:

  • Statement of ICA and effective date. At the beginning of the contract, make it clear that this is an independent contractor agreement, rather than a standard employment contract. You should also specify the date when the contract goes into effect.
  • Legal identities of each party. Both you and the contractor should put down your legal names or the legal names of your companies. In many cases, it’s a good idea to partner with ICs who are established as their own business, such as those who are established as an LLC or Incorporated. Having taken these steps usually indicates a high level of professionalism and may strengthen your defense against misclassification.
  • Definition of agreement and parties. This is where you and the contractor clearly define the nature of this agreement—specifically, that the contractor is knowingly entering into the agreement as an IC, not an employee. Since this is one of the most crucial parts of the agreement, it’s important to get the legal terminology right, so having counsel review the ICA is highly recommended.
  • Effective duration of contract and provisions for termination. This section describes the term of the contract, whether it is for a set period of time (such as three months) or until the specified project or scope of services is completed. You should also include details on how either party can terminate the contract before its completion.
  • Scope of the contractor’s duties. In this section, you should clearly describe the services that the contractor is agreeing to perform. Be as detailed as possible, but make sure that this section stays results-oriented, since placing controls on how the contractor performs the work could suggest misclassification.
  • Materials and labor. This section details which party is responsible for the cost of materials and labor. To avoid the impression of misclassification, the responsible party is generally the IC. For instance, if a company contracts a delivery driver, the driver would be responsible for their vehicle’s maintenance and fuel costs.
  • Compensation. You should clearly define the amount of compensation due to the IC, and when it is due. We recommend not paying by the hour but ensuring it is obvious the contractor had an opportunity to negotiate rates, and the rates should be tied to completion of services, projects, or other agreed upon “jobs.”
  • Definition of independent contractor status. This provision in the ICA can protect both parties, since it outlines that as an independent contractor, the working party does not have the rights of an employee. At the same time, the company has no control over the contractor’s schedule, materials or methods of completing the work.
  • Confidentiality agreement. This section makes it clear the contractor should not disclose any confidential or proprietary information obtained while providing services.
  • Indemnification. This says that the company is not responsible for anything bad that happens to or because of the contractor. For instance, a company that contracts with an IC delivery driver is not liable for any damages they may suffer in a car accident.

The right tools can help

ICAs are an important piece of the puzzle when it comes to working with ICs. And combining a detailed ICA with a streamlined signing and storage process helps protect you and your contracted workforce, while enabling successful business growth. A software solution can help optimize the contracting process through:

  • Automation. Digital signing sidesteps much of the hassle associated with hard-copy ICAs and ensures the agreement is always distributed and signed as part of your contractor onboarding.
  • Archiving and updating. Secure digital storage and a complete audit trail creates an accessible record of the formalized agreement and enables ICAs to easily be updated and re-signed as needed.
  • Customization. Your business needs will determine the exact terms of your ICAs, but the right software solution enables you to customize your onboarding workflows to verify that each IC meets the requirements of the ICA.

Openforce enables you to distribute and store compliant ICAs as part of a powerful end-to-end solution designed to help you qualify, onboard, pay, insure and manage independent contractors.

To start reevaluating your contracting process today, reach out below or contact sales@oforce.com.

Openforce does not provide legal advice and is not a law firm. Although we go to great lengths to ensure our information is accurate and useful, Openforce does not represent or warrant that any information is fit for any specific purpose, nor should any portion of it be used without first consulting your own counsel.

How tech trends are reshaping workforces in the new decade

In 2018, the U.S. Department of Labor reported that one in 10 workers were independent contractors. Others claimed the number was closer to one or two in five and predicted that, over the next decade, the total amount of independent workers could jump as high as 50%.

As we begin to settle into the 2020s, the message is clear: These non-employee workers, variously classified as 1099, freelance, contingent or gig workers, will continue to play a vital role in the national workforce, especially as more organizations embrace this employment model. And with growing numbers of contingent workers comes an escalating need for technology that tracks and manages them.

From ride-sharing apps like Uber and Lyft to comprehensive suites of onboarding and risk management software, tech is playing an ever-increasing role in managing various types of non-employees and providing platforms for workers and companies to find one another. Are you taking advantage of these technologies? Are you prepared to capitalize on trends when they emerge fully realized into your field? If not, you should be.

The biggest tech trends for 2020

Typing “biggest tech trends” into Google provides endless lists about artificial intelligence, blockchain and Internet of Things. While each of these topics will influence how we do business as they create a more dynamic, interconnected world, many of those changes are happening passively, in other industries or in the background, whether you choose to adopt them or not. The real question is how to take these trending technologies and use them to ensure the best long-term results for your business.

The answer is embracing tools that enable flexible work models. Contingent and traditional employees alike are demanding tools that allow more flexibility, and these tools also let you place the right people in the right roles, no matter where they work or what they do. This means video conferencing, cloud-based collaboration tools, and AI assistants to tie it all together while personalizing the individual experience. But it also might mean leveraging wearable devices that enable more comprehensive communication with and management of independent contractors.

You may be thinking, these tech trends all sound great on paper, but my organization is too large and complex to leap on every trend—or maybe my organization is too small to afford it. Believe it or not, there are tools that deal specifically with the intricacies of aligning entire workforces.

Should I use a total workforce solution?

Considering that contingent workforce growth does not appear to be slowing down anytime soon, a variety of new and emerging technologies are being developed to assist in this growth. While managed service providers and vendor management systems have been around for a while, we can expect to see more organizations begin to rely more on software to keep track of contingent workers.

Total workforce solution (TWS) software, which attempts to streamline processes for hiring and managing both W-2 and 1099 workers, blend full-time, part-time and the various contingent labor classifications into a single, unified workforce. As a result, TWS platforms can provide a big-picture understanding of hiring needs for combined workforces, but they can create risk as well.

How? First, a TWS can allow organizations to:

  • Source full-time or temporary 1099 workers in a single program.
  • Reduce silos created by traditional employee management models.
  • Enhance organizational agility by updating legacy technology.

As you can see, there are some advantages to using a TWS, but trying to manage full-time employees and independent contractors in the same system opens a company up to misclassification lawsuits, meaning separate systems are still desirable. Regardless of how you look at it, platforms that streamline hiring decisions will continue to grow, and we can expect them to become more mobile as the workforce does the same, especially in industries like logistics and delivery.

Contingent labor in transportation

One of the biggest changes in the logistics and delivery industries is the increase in the contingent workforce’s tech-savviness and the number of consumers expecting more from supply chain fulfillment. Most people have smart devices, and most consumers expect fast shipping and a process over which they have more power than in times past.

Both pressures are creating a ride-share model for trucking, giving clients more control over delivery time while providing consumers with multiple fulfillment options. More trucking agents will become freelancers as platforms are developed to connect consumers and companies that offer unique delivery options.

Ultimately, these changes will allow for a more flexible and responsive transportation industry. But, as mentioned before, they may also create more chances for noncompliance and litigation.

Compliance in the digital age

In everything we do, there is a spectrum of flexibility and risk. The more adaptive and agile something is, especially in business, the more susceptible it is to imbalance. In short, an increasingly flexible workforce has many benefits, but it also increases risk, as we see with legal trends like California’s AB5.

Laws like AB5—and similar legislation in states like New Jersey—make it harder to classify a worker as an independent contractor. As a result, there is a critical need for technology that helps provide a solution. We need something that structures and documents the professional link between contracting companies and independent contractors as the compliant, business-to-business relationship it is.

By forging strategic partnerships with solution providers, contracting companies can get ahead of this threat before it becomes a serious problem. Openforce is one such provider, leveraging nearly 20 years of experience in onboarding and staffing compliance to ensure you can effectively implement best practices designed to strengthen your workforce model. Our onboarding, insurance, and compliance offerings allow you to manage contractors without worry or hassle.

Ultimately, independent contractor management will continue to develop throughout the 2020s as more of the workforce begins to participate in gig and freelance work. Technology will not only continue to drive this behavior as companies and employees find this model of work beneficial, but also continue creating spaces for solutions that make these relationships easier. Staying ahead of the curve by keeping up with these trends and forming partnerships that matter will be the true challenge for leaders in the coming decade.

Ready to strengthen your workforce model? Contact Openforce today using the form below or by emailing sales@oforce.com.

7 tax tips for independent contractors

Working as an independent contractor (IC) has become a way of life for many people in the U.S. The Bureau of Labor Statistics’ most recent report suggests that nearly 7% of the workforce is composed of contingency workers. That is an estimated 10.6 million people working as ICs, and the number may very well have increased since then. If you’re part of this population, do you know the full extent of your tax obligations?

To simplify doing your taxes—and the filing deadline was extended to July 15 due to COVID-19, so you have plenty of time—the IRS has released several essential tax tips for independent contractors. Here’s our breakdown of these tax tips, plus one of our own.

1. ICs must still pay taxes on their earnings

It is a myth that ICs do not have to pay taxes on the wages they earn. Because ICs are paid differently from W-2 employees, they must also pay their taxes in ways that are unlike employees.

This usually means acquiring a 1099 form from any contracting companies you’ve worked with in the past year. This form will provide the information you need to complete and submit your taxes on your own (or with the help of tax software or a certified public accountant).

2. Are you a gig worker? You have to pay up as well

Like other contingent workers, gig workers must pay their taxes, including income taxes, Contribution Act taxes and Medicare taxes. Though terms such as gig worker and independent contractor may have different connotations and nuances, the IRS and Department of Labor place them in the same tax-paying category.

3. Both ICs and the companies they service have tax obligations

Adhering to government tax requirements is a fact of life for both ICs and the companies they provide services for. A company that uses ICs must require them to complete proper government forms (such as W-9s). This enables you to handle your own taxes in a way that is fair and responsible. The company must also maintain accurate and complete records as to how much contractors were paid. So if you need that information, you know whom to ask.

4. All income is taxable regardless of what form it takes

Some companies may think they can pay ICs or temporary workers in cash to avoid having to deal with tax-related paperwork such as verifying taxpayer IDs. This simply isn’t true. Though paying ICs in cash isn’t against the law, not maintaining payment records to show these cash payments may be, even for part-time or side work. Moreover, contractors must still pay taxes on cash payments they receive from these companies, so keep careful track in your own records as well.

5. Reduce your taxes the right way by writing off expenses

Another tax tip for ICs is keeping track of expenses that may be used as tax write-offs. For contractors in transportation, mileage is a common tax expense that can be written off—but only if records and receipts are maintained in an organized manner. In addition to mileage, home care nurses may be able to write off the cost of scrubs, medical equipment, sanitizing supplies and costs associated with maintaining or renewing licensing. Writing off these expenses can lower your overall tax obligation.

6. ICs have two ways to pay what they owe in taxes

Want valuable tax tips as an independent contractor who also has standard employment? Submit a new W-4 to your employer to have additional taxes withheld. These additional tax withholdings can cover the taxes you are required to pay when you provide services as a contingent worker.

Independent contractors who do not have standard employment can make tax payments on a quarterly basis. Making quarterly payments helps prevent a surprise tax bill from creeping up at the end of the year. To simplify this process, the IRS has set up a no-cost Electronic Federal Tax Payment System (EFTPS) on its website.

7. Get help through Openforce

If you contract through the Openforce platform, you have a member benefits portal. This gives you access to serious discounts on all kinds of products and services, including tax filing, accounting and bookkeeping services through Equinox, a leading provider of business solutions.

Simply sign in through the User Login button at www.oforce.com and click on Perks in the upper right-hand corner to start exploring your member benefits today.