CWS 3.0: December 10, 2014

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Agents of record & IC compliance: a growing industry

Staffing Industry Analysts recently completed a comprehensive review of companies providing payrolling, umbrella and IC evaluation services: The Staffing Industry Analysts 2014 Payrolling & IC Compliance Report.

Contractor payrolling. Companies that engage contingent labor are constantly looking for the best solutions to engage workers they already know or find on their own. Often, the more cost-effective solution for those situations is to go through a payroll provider rather than a staffing firm. This is what Staffing Industry Analysts calls contractor payrolling, for workers who are not recruited and are employed by a payroll provider (or an umbrella company in the UK). For instance, a student referred by another employee who might be engaged for a short term project.

ICEC. Then there are independent contractors, whose engagements are under more and more scrutiny from federal and state agencies. Companies can turn to independent contractor engagement and compliance (ICEC) firms to evaluate and mitigate risk to companies; some of these firms also serve as the agent of record for the independent contractors, handling their pay.

ICEC are services that are used to evaluate whether a specific company or worker for a particular assignment meets the legal requirements to perform as an independent contractor. The evaluation will look at such criteria as whether they have a business license, multiple clients and insurance, for example. Some ICEC providers only evaluate the scope of work and contractor entity, while others also become the “agent of record” and pay the independent contractor on behalf of the client company. Staffing Industry Analysts uses the term “agent of record” to describe arrangements across the globe in which a provider is paying an internally sourced, self-employed worker on behalf of a client company.

In the US, the contractor payrolling market grew 9 percent to $11 billion (companies that participated in SIA’s survey accounted for $7 billion of that spend). Expansion in the UK has driven the payrolling/umbrella market to $6 billion; globally, the market is estimated at between $20 billion to $30 billion. In the UK, an umbrella company refers to a company that acts as an employer to workers on temporary assignments normally provided by a staffing company.

Meanwhile, ICEC and agent of record spend grew a whopping 17 percent nationally and globally in 2013 and approximately $1.3 billion in global agent-of-record spend was reported by participants in our study. Based on 2013 spend, we estimate the US market at roughly $1.5 billion and the global market at roughly $2 billion.

The Staffing Industry Analysts 2014 Payrolling & IC Compliance Report includes a listing of both contractor payrolling and ICEC firms with specific spend reported. Use this report to find companies you can utilize to streamline engagement for your recruited contingent workers, evaluate the scope of work and contractor entity to determine if an independent contractor may need an “agent of record" and mitigate risk when engaging independent contractors.