Direct sourcing allows businesses to place workers as needed and on a temporary basis. One of the biggest benefits is that they get to keep the best workers in the pipeline between projects and tap their pool of talent as needs arise. Direct sourcing is a great tool for managing a contingent workforce, but companies must remain vigilant to stay compliant.
Direct Sourcing And Risk & Compliance
While direct sourcing is an incredible asset to companies, it’s important to keep risk, compliance, and payroll top of mind. Mitigating risk requires specialized skills, a great depth of knowledge, and a department with enough bandwidth to understand and follow rules on a state and federal level.
Errors can be incredibly costly. Companies can be subject to heavy fines when they classify workers incorrectly or make mistakes with payroll. In addition, companies can face damage to their reputation and end up directing resources (including time) that could otherwise be directed elsewhere. Worker classification and payroll rules vary from state to state and on a federal level as well.
Since regulations change all the time, hiring organizations must do due diligence to make sure they keep their practices compliant and their businesses in good standing. Any company using direct sourcing simply must also include effective worker classification and payrolling services as a part of its plan.
When is it Time to Engage a Partner?
For companies that use direct sourcing, engaging a partner for risk compliance, worker classification, and payroll can be an incredibly sound business move. A partner can fill in the gaps to fill payroll demands and other contingent workforce management. Companies without a specific department to fill these roles will be well served by engaging a partner with the bandwidth and skills to handle everything related to risk, compliance, worker classification, and payroll for a contingent workforce.
The best partner will be able to handle every type of worker a business employs. When direct sourcing talent, many businesses find an Employer of Record (EOR) that takes care of all the administrative details of managing a contingent workforce is an indispensable part of their team.
If you’re considering whether an EOR would be helpful to your business, let us know! This is our jam.