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Mitigating Risk in Contingent Workforce Efforts

Mitigating Risk in Contingent Workforce Efforts

When you maintain a contingent workforce as part of your business strategy, your company takes on certain risks. Bringing on short-term employees as part of your staff means you are responsible for a range of potential costs, including unemployment once they are no longer needed and workers’ compensation if they are injured on the job.

By using employer-of-record (EOR) services, you can effectively mitigate risk whenever you bring in contingent workers. If you are wondering how EOR services such as Passthrough payrolling from nTech can help, here’s what you need to know.

Unemployment Liability

When you hire a contingent employee as part of your company’s staff, you may be responsible for unemployment claims once they are no longer needed. This can increase your unemployment costs significantly, particularly if you rely on contingent employees regularly to manage shifting business needs.

However, when you use an EOR service, that risk is eliminated. The worker is legally an employee of the service provider and never officially joins your company. The employee is working on an assignment with your organization through the EOR service, with the provider functioning as the employer of record.

With this approach, you are not responsible for unemployment costs when the contingent worker is no longer required. That burden falls solely on the EOR service provider, creating a functional way to mitigate the financial risks associated with contingent workforce management.

Workers’ Compensation Claims

Similar to unemployment liability, if you bring a contingent staff member onto your payroll, you are responsible for any workers’ compensation claims that may come forward after an on-the-job injury. Depending on your industry, this can represent a significant financial risk, though some level of risk is always present, even in environments that are largely viewed as safe.

If you choose to partner with an EOR service provider, this is another burden that falls on the provider’s shoulders. Since they are the official employer, any workers’ compensation responsibilities are theirs to manage, allowing you to significantly mitigate the risks that come with using a contingent workforce.

Payroll Processing

Contingent employees who are hired by your business become part of your company’s payroll. This means you are responsible for following all laws regarding wages, tax withholdings, and similar activities associated with being the official employer. Additionally, this puts a larger burden on your payroll staff, as they have to process each employee’s information for every pay period.

With an EOR service, payroll responsibilities are handled by the provider. They are the ones who have to meet all legal requirements regarding the management of wages, taxes, and other related activities. When you partner with an EOR service provider, you do not have to take on these burdens yourself, creating another method for mitigating your risk.

Ultimately, using an EOR service provides you with risk-reducing benefits while ensuring you can maintain necessary contingent staffing levels. If you are looking for a skilled EOR provider who can work across numerous verticals, the professionals at nTech want to hear from you. Contact us today to learn more about our Passthrough services and how they can benefit you.

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