Managing Risks and Rewards for Your Contingent Workforce

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Contingent labor can be a highly appealing option for many employers, given the benefits of reduced time spent on recruiting top talent, potential cost savings and avoidance of future reductions in force (RIF). Before making a final decision, though, those companies may want to learn more about operational topics, such as:

  • What is the impact of co-employment?
  • How is Worker’s Compensation handled?
  • Who’s responsible for data security?

Employers should look for a recruiting firm that prioritizes collaboration and establishes open lines of communication that ensure all potential legal and compliance issues are thoroughly mitigated.

Education is key to helping client companies navigate uncertainties and develop a proactive approach to handling unique workforce challenges, notes Aerotek’s General Counsel Dana Baughns. “We need to be able to engage in open dialogue to discuss options and how best to proceed in order to avoid potential claims.”

Download the Maximizing Your Contingent Workforce white paper


One particular benefit of contingent hiring is that on-boarding functions are performed by a staffing company, including pre-employment background and credit checks, required drug screening and verification to work in the U.S. Also look for a service agreement that addresses liabilities covered by the staffing agency, including taxes, insurance and Workers’ Compensation.


Co-employment exists when there is any degree of joint responsibility for things such as workplace safety, training or control of work performance for an employee hired by a staffing company but assigned externally to another company. Primary employers traditionally handle pay, benefits, insurance and taxes, whereas the secondary employer must refrain from interfering when temporary workers exercise their protective rights and to ensure a safe work environment for all employees per Occupational Safety and Health Administration (OSHA) regulations.


Companies must also respond accordingly to requests for religious or disability accommodations, where risk is mitigated when both employers work collaboratively with the employee to provide a reasonable accommodation. Primary and secondary employers need to engage in an interactive process with the employee to explore alternatives.

Workers’ compensation

Although some companies mistakenly believe that utilizing co-employment increases their day-to-day responsibilities and risks, the opposite is often true, especially regarding Workers’ Compensation. For example, if an employee is injured in the workplace, the injury and liability typically falls under Workers’ Compensation, thus prohibiting the employee from suing the company for negligence. But a denial of co-employment actually opens the host company to a negligent tort claim. Such challenges are most effectively managed in a primary-secondary employer partnership that values and emphasizes communication and collaboration.

Data protection

As with all employees in a company, the handling of proprietary, confidential and protected personal information and general information security may present incidental risks. With client approval, the staffing firm should address this in Code of Ethics and Confidentiality Agreements that detail protection of employer data: encryption and password protocol, procedures for company laptops and other issues.

Managing risk, maximizing workforce

The key to mitigating risks is a strong collaborative relationship between the staffing firm and the client company. When employers have a thorough understanding of the responsibilities and the potential outcomes, they can proceed with confidence when including contingent staffing in their talent strategy models.

Want to know more? Access the full white paper.