CWS 3.0: October 16, 2013

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Challenging the Myths of Co-Employment

Co-employment risk mitigation is a common best practice area that is now fairly established but still misunderstood by many. This misunderstanding has led to unproductive, damaging talent management rules and policies that have put numerous organizations at a competitive disadvantage. 

One of the important goals of the Certified Contingent Workforce Professional (CCWP) program is to establish a common understanding of strategic issues in contingent workforce program management, including co-employment risk. There are universal common best practices that successful CW programs engage, and their understanding and application is central to what CCWP certification seeks evidence of in a CW program management professional’s knowledge and skills.

CW program risk factors:

Faulty tactics. Many companies use tactics such as assigning different colored company badges and segregating contingents from social events as a means to mitigate their co-employment risk, but such tactics have very limited if any value in mitigating one’s risk exposure to co-employment challenges. Such talent management policy rules may provide benefits in other ways, and deserve some merit and consideration, but not to create a safe harbor from co-employment risks. 

A benefit. One of the most prominent risks faced by businesses engaging talent has to do with personal injury, and that’s where co-employment is a significant financial and strategic benefit. In most states and circumstances, co-employment provides workers’ compensation exclusivity protection. What that means is workers’ comp is an injured worker’s sole financial remedy from both the staffing provider as well as the worksite employer. Companies should particularly guard against mistakenly avoiding co-employment responsibility and in turn losing workers’ compensation exclusivity and incurring a personal injury lawsuit with potentially uncapped damages.

Awareness. Co-employment often is a problem only if you are unaware of it. For example, co-employment has become a concern with litigation relating to the IRS, the Department of Labor, the Equal Employment Opportunity Commission and other agency investigations. The issues arise from unequal treatment of contingent workers with confidentiality agreements or with issues of employment discrimination, harassment, disability, medical leave, etc.

Know the fundamentals. Recognizing the real issues around co-employment will help focus one’s efforts to manage and mitigate risk for your CW program. There are some fundamental policies and practices that can help to mitigate the risks associated with co-employment. To name a few:

  • Review benefit plans, employee pension, profit sharing, and stock bonus plans, including 401(k) plans, for the definition of an employee.
  • Review benefit plans to ensure non-discrimination testing. Businesses are able to exclude leased employees and other contingent workers through plan design and amendment. A benefit plan that fails non-discrimination testing may lose tax benefits or incur penalties.
  • Communicate with your insurance company and make sure they know the structure of your workforce, and make sure that you’re covered.

Co-employment is just one of the CW program risks reviewed in the CCWP certification class, where managers review strategies for identifying and managing risk in their CW programs. It provides an overview of the risks and best practices that will help these managers mitigate risk in order to protect themselves, their customers and their contingent workers. It also includes several hands-on activities that enable the CCWP certification applicants to actively analyze potential risks and suggest steps to mitigate them.

For more information about SIA’s CCWP program, go here or call Stephen Clancy at 617-610-5820. The next CCWP class will be held Dec 3-4 in Manhattan Beach, Calif. Take the class, pass the test and get certified.

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