Keeping your contingent workforce (CW) program informed and ready for statutory changes is critical, as addressed in Staffing Industry Analysts’ Program Maturity Assessment model. However, this is easier said than done, especially with the rapid-fire changes taking place today. Unfortunately, too many programs struggle to keep up with current regulations, whereas others over-react in their risk mitigation efforts, affecting their ability to compete effectively. Against this backdrop, new risk events have been playing out right in the front page of our local newspapers.
There have been significant rulings on the Affordable Care Act (ACA), the Uber independent contractor decision in California and President Obama is proposing new regulations on overtime pay. Each of these events have significant potential to change operating standards in a CW program. The key word here is “potential” because some of these evolutionary movements in statutory governance are narrow in their jurisdiction while others have further jurisprudence activity to sort out the final actual practice impact on CW marketplace commerce.
ACA. The ACA US Supreme Court challenge (King v. Burwell) had the opportunity to derail current US healthcare regulations. The implementation of a deleterious ruling to the current core structure of the ACA program could have confused many in the marketplace on how to proceed. Chaos is good for lawyers and market research advisors but not for market participants trying to manage a sustainable, competitive organization. One would hope that a different ruling would have ultimately produced a managed transition to the new state of affairs, but the reality might have been managed chaos.
Uber. The recent California Labor Commission ruling that an Uber driver was an employee has potentially broad implications for the on-demand services marketplace and businesses leveraging independent contractors. Clearly the Uber business model incorporates a cost-effective fleet of independent contractors to deliver a competitive alternative business model in the marketplace. Classifying on-demand workers as employees will negatively impact the economics of most on-demand business models and other businesses engaging independent contractors. Interestingly enough, Staffing Industry Analysts’ recent buyer market survey research has shown a steady declining use of independent contractors over the last several years. There is more to come on the broader consequences of this ruling, if it stands up to Uber’s appeal.
Overtime. And of course the announcement of pending federal rule changes concerning who qualifies for overtime pay. It is projected that this overtime rule change could affect nearly five million salaried workers in CY 2016. The implications for CW talent may not be entirely clear yet, and may have no impactful consequence. But movement on the “full-time” talent employment statures and government rules can and will impact CW talent engagement policy to varying degrees.
The clarion call here is to develop three important CW program risk management capabilities. One, the ability to develop reliable sources that can deliver timely visibility on employment statute changes. Two, find a trusted interpreter (preferably a legal expert) of these changing rules and statutes. Overreacting to rules and statute changes can be as debilitating as not reacting at all. And finally, execute and update a Risk Assessment Framework Initiative/Strategy exercise. For a variety of risks, there should be an established mitigation action plan in place at the ready to address risk events if and when they occur.
Review this report and this Contingent Workforce Strategies 3.0 article for a good start in establishing a Risk Assessment Framework plan and mitigation strategy. Initially, it will take time to get this plan up and running. But it will be easier to update as changes occur and you can confidently drive your program forward.