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Risk And Compliance When Direct Sourcing (This is Non-Negotiable!)

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Risk And Compliance When Direct Sourcing (This is Non-Negotiable!)

Risk And Compliance When Direct Sourcing (This is Non-Negotiable!) 1920 1080 Alicia East

Using your own talent pool can be a wonderful way for businesses to meet their contingent workforce needs. Direct sourcing is the practice of finding and recruiting talent and then building, nurturing, and drawing from an internal network rather than enlisting a third-party. It’s an increasingly popular (and feasible) option and it has many benefits. Still, there’s one aspect of the practice that businesses must be absolutely sure to get right: risk and compliance!

Benefits of Direct Sourcing

Direct Sourcing allows businesses to place workers on a temporary basis, while keeping the best workers in the pipeline between projects. Building and nurturing an internal network means companies can draw from their own well, so to speak. There is no third party that will ever know a company and its needs better and cutting out the middle man can make the process quicker and more economical.

Risk And Compliance When Direct Sourcing

While finding your own talent and building your own network has many benefits, businesses need to be in position to do it in a way that protects them from liability. It’s not the glamorous part, but one of the most important parts to get right when direct sourcing is anything associated with risk, compliance, and payroll. 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.

What’s at Stake?

You know who’s paying a lot of attention to all things risk and compliance? The government. As such, errors can be incredibly costly. In addition to heavy fines, offending businesses face damage to reputation and loss of resources–both financially and otherwise. The rules around classification and payroll vary from state to state and on a federal level as well. Regulations change frequently as well and 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 independent contractor classification and payrolling services as a part of its plan.

Does Engaging a Partner Make Sense?

If there are any gaps in knowledge or capacity when it comes to risk compliance, worker classification, and payroll, engaging a partner makes good business sense.  In most cases, any company that doesn’t have a specific department to fill these roles will benefit greatly from engaging a partner with the appropriate bandwidth and skills. The best partner will be able to handle every worker type a business employs and will be equipped to handle everything related to risk, compliance, worker classification, and payroll for a contingent workforce.

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, contact us! This is our jam.