Recruiting in the Gig Economy

In this tight talent market, organizations need to change the way they look at talent acquisition. Traditionally, employers have relied on full-time employees, attracting workers and hiring through traditional channels. However, in recent years, a growing number of workers have eschewed the traditional model, turning to the gig economy. Now, the best person for the job might not be looking for a conventional job.

To stay competitive, many employers are tapping into this gig economy talent, but the process can be complicated. Organizations need to be able to attract these workers and manage the compliance risks that come with a contingent workforce. To accomplish this, many employers turn to a Managed Service Provider (MSP).

Attracting Gig Economy Workers

To understand how to attract gig economy workers, employers first need to know who these are and what they’re looking for. On one end, high-skill, high-earning freelancers enter the gig economy because they are looking for independence, creativity and increased pay. On the other end of the spectrum, low-skill, low-wage workers are looking more for the flexibility and ability to set their own schedule. You can learn more about the gig economy talent landscape in last week’s blog post.

Depending on the type of gig worker an organization wants to attract, it will have to tailor job descriptions to appeal to that kind of person. Because contingent workers are not permanent employees, they aren’t drawn to traditional perks like 401K contributions or generous vacation policies. Additionally, the types of factors that influence an employee to stay at a job or with an organization don’t always apply when it comes to contingent workers. The Harvard Business Review reports the biggest reasons employees stay at an organization are a clear career path, good pay and company culture. Gig economy workers are already starting an unconventional career path, and depending on their roles, gig workers may not fully take part in company culture. However, gig workers are drawn to more than just money.

In a sense, gig workers are always candidates. Generally, employees search for jobs when they’re looking to make a career move. Gig economy workers are always looking for their next move. If a gig worker is on a contract, they are still looking for the next one. If a project doesn’t take all of their time or provide enough income, they are looking for supplementary work. This sets them apart from traditional employees.

Organizations need to focus on their employer brand to attract gig workers. That brand can tap into gig workers’ desires to do meaningful work, which according to the Harvard Business Review, is something workers of all generations are looking for.

The Risks

While the gig economy can provide top talent for organizations, there can be legal risks, and the biggest is worker misclassification. Worker misclassification happens when an organization classifies a worker as an independent contractor when the person meets the legal definition of an employee. This means the person doesn’t get the benefits associated with permanent employment, even though for all intents and purposes, the person is in a traditional working arrangement.

A judge in Ohio recently ruled that American Family Insurance Group misclassified insurance agents as independent contractors in a class action lawsuit that could cost the company as much as $1 billion. While the judge ordered immediate appellate review, Staffing Industry Analysts reports that the impacts could ripple throughout the entire insurance industry. Other companies have shelled out hundreds of millions of dollars. Fed Ex settled a worker misclassification class action lawsuit for $228 million in 2015.

The line between freelancer and employee can be slim, and the classification isn’t always simple. According to Entrepreneur, the courts have put together six questions for organizations that can draw the line between an employee and an independent contractor. Aside from independent contractors, there are other classifications of contingent workers, including statement of work (SOW) and temporary – either hired directly or through a staffing agency.

Additionally, organizations need to remain compliant with the patchwork of laws impacting contingent workers across the country. New York City’s “Freelance Isn’t Free” law affects companies that hire New York-based independent contractors. Other legislation, like paid sick leave, that isn’t specifically aimed at contingent workers may impact certain classifications of workers depending on local laws. Because many of these compliance issues are based on state, county or even city legislation, organizations need to be prepared to keep track of the constantly changing compliance landscape.

Managing the Gig Economy

To alleviate much of this administrative burden, many employers work with an MSP to manage their contingent workforces, including handling compliance and risk mitigation, supplier management and driving cost savings. MSPs serve as strategic business liaisons, managing the entire lifecycle of an organization’s contingent workforce program from finding qualified workers and suppliers to standardizing processes and much more.

MSPs help organizations source the best talent from the growing gig economy by understanding the contingent workforce landscape and working with the best suppliers to meet clients’ needs. They enable organizations to take full advantage of the talent, providing peace of mind that all compliance requirements will be met.

MSPs are also valuable partners when it comes to workforce planning. An organization looking to find talent in the gig economy will have to find the right mix of full-time and contingent workers. An experienced MSP provider can help an organization determine whether the best person for the job can be found in a gig economy or as a full-time worker.

Additionally, an MSP can help with permanent hires. An MSP can pipeline strong contingent workers into full-time positions within the organization. Through this process, the new full-time hires already have experience with the organization, and the organization knows more about the new employee’s work abilities.

As companies of all sizes become leaner, their supply chain and procurement groups are openly embracing outsourcing for the non-employee category. As a result, the value of the MSP has evolved. MSPs were initially a strategy to help companies drive down costs, gain visibility and attain management reporting for their contingent labor usage.

Today, experienced users of MSP and those just beginning to evaluate an MSP strategy alike are putting more weight on the value of a broader supplier network for their contingent workforce. They are now looking to MSP providers to do more than just manage costs, but also to support end-to-end supplier management from sourcing to contracting to performance management to ensure better results and drive compliance in all aspects of the program.

You can read more about what an MSP can do for an organization here, on our PeopleScout Managed Service Provider (MSP) Solutions Fact Sheet.