fact sheet

COMMON MISTAKES WHEN ENGAGING INDEPENDENT WORKERS & HOW TO AVOID THEM

The surge in independent workers in the US demonstrates a significant shift in the labor market. As businesses increasingly turn to freelancers to maintain their competitiveness and adaptability, the engagement of independent workers, also known as independent contractors (ICs), offers valuable flexibility and expertise.

However, the complexities of independent worker engagement should not be underestimated, as they can lead to substantial legal and financial repercussions if mishandled. Companies found to have misclassified an employee as an IC face significant costs, with major corporations being fined millions of dollars.

To navigate this landscape successfully, organizations must be aware of common mistakes when working with independent workers. From the risks of misclassification to the perils of inadequate contracts, recognizing and addressing these pitfalls is critical for ensuring compliance and achieving successful engagements with independent workers.

Continue reading to dive into these critical mistakes and discover how Atrium empowers you to ensure compliance and streamline processes.

Common Mistake: Lack of Process

Failing to establish a centralized, consistent process to properly assess workers for classification as ICs or employees poses a high risk of misclassification.

atrium best practice: Process efficiency

Our digital proprietary evaluation process, Engagent, ensures accurate freelancer assessments and indemnifies you from potential costs associated with misclassified workers.

Common Mistake: ignoring regulations

IC compliance requirements can vary state to state, on the local level, and even by auditing body; failing to understand and adhere to all applicable regulations can lead to legal consequences.

atrium best practice: expert collaboration

An experienced IC compliance partner, like Atrium, understands the legal landscape, keeps up with changing regulations, streamlines the process, handles paperwork, ensures timely compliance, and provides expert guidance.

Common Mistake: treating ics like employees

ICs should be treated as outsourced vendors. They should have autonomy over how their work is performed and should bear the risk of profit and loss depending on the quality of the service or product delivered.

atrium best practice: risk mitigation

With a thorough understanding of IC classification nuances, Atrium identifies potential issues, such as treating ICs like employees, and addresses them before they become a problem.

Common Mistake: inadequate contract

Organizations sometimes use ambiguous or incomplete contracts with independent contractors; specific clauses or payment structures may be mandated by state or local regulations.

atrium best practice: comprehensive agent of record (aor) solutions

As the Agent of Record, Atrium streamlines the full lifecycle management of contracts, invoicing and payments for independent workers, simplifies administrative processes, and saves valuable time and effort.

Common Mistake: lack of documentation

Proper record-keeping is vital. Organizations should maintain accurate records related to IC engagements, contracts, payments, and compliance efforts.

atrium best practice: real-time, valuable data

With Engagent, you can monitor evaluation statuses in real-time, automatically retain documents, submit online requests, secure an electronic audit trail of the complete evaluation process, and search historical engagement records.

Common Mistake: inconsistent practices

Organizations may have inconsistent practices across different departments or projects.

atrium best practice: consistent workflows

Atrium ensures workflows are consistent across departments and roles while providing indemnification against misclassification. We offer extensive resources such as: compliant contract templates, compliance education materials, and industry insights to help clients and independent contractors seamlessly navigate the relationship effectively. 

events that may trigger an audit:
  • Unemployment claims
  • Workers’ Compensation claims
  • IRS Classification form (SS-8) filing by IC
  • Minimum wage, overtime, and meal and rest violations
  • Improper deductions from the person’s wages
  • I-9 verification requirements
  • Healthcare contributions
  • Anti-discrimination violations
  • Willful misclassification
  • Family leave and disability benefits violations
  • Dissatisfied ICs
  • Wage & hour disputes
  • W-2 & 1099 forms issued to the same worker by the engaging company in the same year

ATRIUM CAN HELP

If your company’s policies and procedures for independent contractors are not crystal clear, consider partnering with Atrium. By leveraging modern workforce technology and a concierge service model, Atrium provides effective solutions for IC compliance. With over 28 years of experience, Atrium offers a proprietary technology, Engagent, to support independent contractor management. This platform ensures accurate assessments of freelancers and protects you from potential costs associated with misclassified workers.

Engagent allows you to submit IC evaluation requests online, automate document retention, and create electronic audit trails. After a project ends, you can view the engagement history and gain visibility into your independent workforce for future re-engagement. It also offers AI scoring systems and alternative workflows encompassing all engagement types. Whether you’re a small business or a large enterprise, Atrium will tailor an IC Compliance solution to your specific needs. Visit us online at atriumglobal.com.

DOWNLOAD THIS FACT SHEET

​*As your talent solutions and workforce management partner, we monitor developments that could affect your business. However, please note that the information provided on this fact sheet is not exhaustive, is not intended as legal advice, and should not be relied upon as such. Instead, all information, content, and materials available here are for general informational purposes only.

let’s talk about the future of work.

Complete the form below and we’ll get in touch within 24 hours.


additional RESOURCES

The owner of this website has made a commitment to accessibility and inclusion, please report any problems that you encounter using the contact form on this website. This site uses the WP ADA Compliance Check plugin to enhance accessibility.