Most companies go to great lengths to set up ethical and legally sound practices for nearly every aspect of their business. They’ll have lawyers involved in their contracts and accountants monitoring every penny that passes through their channels. Still, there’s one area where we often see otherwise-diligent companies fall short because they mistakenly think it’s worth the risks: worker classification and compliance. We’ll talk about why it happens, why it could cost a business deals, and how to shore up this aspect of your business.
The Unjustifiable Cost of Inaction/Lax Compliance Policies
In short: because Business A was lax in its business practices, Large Company B was found guilty by association in the court of public opinion.
If you commit a compliance violation that lands your affiliates in hot water, it tarnishes all parties’ reputations and can deter top-tier clients and investors from doing business with you. Businesses that prioritize accurate worker classification and compliance practices demonstrate their commitment to ethical and legal practices, which can be a significant selling point. The big dogs don’t want to run with someone that could compromise their standing.
Engaging The Right Partners Protects You And Your Affiliates
For many companies, especially those that engage a contingent workforce, an Employer of Record (EOR) is a critical entity that helps manage employment-related responsibilities such as payroll, benefits, and tax withholding. An EOR takes on most of the risk of ensuring compliance with labor laws, tax regulations, and worker classification standards on their clients’ behalf. To secure top-tier clients and protect your reputation, your business should prioritize compliance and worker classification standards. Wouldn’t you rather know that your affiliates will be found “safe, sound and compliant by association” instead of guilty?
The Bottom Line
Taking care in how you approach hiring/paying workers and investing any necessary resources to make sure you’re compliant with applicable regulations protects all involved parties. Maintaining compliance and worker classification standards is not just a legal obligation, but a strategic advantage. As a fundamental element of long-term business success, accurate worker classification and compliant practices deserve every business’s attention. Have questions? We’re here for you!