I would begin by asking what the purpose of your company's limit on tenure is in the first place. For the most part, tenure limits adopted to avoid co-employment status have been discredited. In fact, it could cost you if it's giving your business a false sense of security. The concept of co-employment refers to situations in which a worker is simultaneously treated as an employee of two or more entities. The various federal agencies monitoring employment laws have their own means to determine co-employment as it pertains to the laws they enforce. How long someone has been engaged with a company is almost never an important issue when it comes to deciding whether co-employment exists.
There are certain risks inherent in engaging contingent workers, one being that co-employment comes with the territory. So what you can do at your end is to make sure you classify your contingents accurately and that you have a reputable third-party firm handling payroll taxes.
Ironically, according to research from Staffing Industry Analysts, the publisher of this newsletter, 50 percent of the companies surveyed do not have tenure limits at all. Among those that do have them, the term is usually a year. But there are some business benefits to having tenure limits.
"It has to do with workforce management," says Bryan Pena, director of Contingent Workforce Strategies and Research. "Having a one-year tenure limit in place allows some sort of annual vetting of the candidate," says Pena. There are times at a corporation when a contingent engagement keeps getting renewed because no one is paying attention, he says. So term limits become a good control mechanism; it gives the manager an opportunity to review background screening, pay rates etc.
Again, the answer goes back to the reason why you want a two-year tenure limit. There are those that have a well-organized, smooth contingent workforce structure. The approval procedure for getting contingents on board, the on-boarding and off-boarding processes are all in place. Those companies do not need tenure limits.
So a tenure limit is not going to cure your co-employment risk. But it could help you manage your contingent workforce program more effectively. Tenure limits could be the stick that you beat your hiring managers with so they stay compliant. It could help you organize your requisitions and identify opportunities for savings. And if a contingent's tenure limit keeps getting extended, maybe it's time to bring that skill in-house.