How to Effectively Manage the Background Screening Process for a Growing Contingent Workforce

An Intuit report showed that contingent workers of all types (temporary employees, independent contractors, project-based gig workers and on-demand workers) make up 36 percent of the workforce, and are expected to reach 43 percent by 2020. Around 80 percent of large corporations plan to substantially increase their use of contract employees.

A contingent worker in the extended workforce may be engaged for a particular project or for a specific time period and paid by a third-party agency, such as a staffing firm, a Professional Employer Organization (PEO), or firms that specialize in managing extended workforces.

Between 2009 and 2012, according the Bureau of Labor Statistics, the number of temporary employees rose by 29%. A survey of the 200 largest companies found that temporary workers represented, on average, 22% of their workforce, and that percentage is growing. Workers from all different industries (not just tech) are discovering that they’re able to be productive outside of the corporate office and without a long-term employer. And employers are finding that hiring contract workers increases efficiency and flexibility, plus they cost less and turn employment expenses into variable costs.

With this rapidly growing contingent talent pool, employers will need to adapt their screening processes. Contract freelancers have access to your software, your physical location and other valuable organizational assets. Whether it is a freelance graphic designer or a contract engineer for your growing IT department, your organization should do their due diligence.

These individuals are critical to the success of your organizations and their numbers are growing — making it even more important to establish a background screening process for your contingent and gig workers. According to SHRM, employers screening the contingent and extended workforce has nearly doubled in the last five years from 48 percent in 2011 to 81 percent.

Where to begin?

1) Create a contingent workforce background screening process and flow for others to follow. This should include the agency or other business your company may use to hire contractors, whether temporary or contract-to-hire.

The same level of screening used for similar positions should be used for a position that is to be filled by a non-traditional worker or else the firm may be subject to allegations of disparate treatment of similarly situated people.

2) Transparency. Be upfront with your desire to do a background screen and include the language in any job postings.

3) Ensure compliance. Follow the Fair Credit Reporting Act guidelines. The fact that this background screen is for a gig worker and not a permanent employee doesn’t change FCRA compliance requirements.

Some states have passed laws requiring criminal background checks of gig workers such as Uber and Lyft drivers, and the EEOC announced that it would focus additional attention on the complex employment relationships in the emerging gig economy.

All of the rules of due diligence apply with equal force if a member of the extended workforce causes harm. Business can be liable if – in the exercise of reasonable care – they should have known that a member of the extended workforce was too dangerous, unqualified, or otherwise unfit for employment.

4) Communicate often. Just like candidates your contractors are in demand, making the ability to move quickly important as is the ongoing communication process. With the rapid growth of the contingent workforce, contractors have many opportunities to choose from; communication and transparency can make your company stand out.

Using screening technology that integrates well with HR systems and requires less effort from candidates will be a key step toward improving the user experience.

5) Measure and re-evaluate your process often. Is your process consistent? If you use an agency, what screening process do they have in place? And, most importantly, is the screening process creating a bottleneck for your potential contractors?

Employers should also consider using background screening providers that undergo an annual Service Organization Control, or SOC 2, audit from the American Institute of Certified Public Accountants to ensure high standards for the protection of privacy, security and confidentiality of consumer information used for background checks.

Finally, employers should subject any workers from the extended workforce to the same screening as would be done with a regular employee. A best practice is to have the same firm that performs the background checks on regular employees to also perform them on the extended workforce.

Make sure that you are properly screening your prospective contingent workers, vendors, or independent contractors. Cisive’s vendor screening program helps companies ensure that contingent workers and vendors meet specified corporate standards relating to licensing, insurance, compliance, and other minimally acceptable personal and corporate standards.

To learn more about Cisive’s vendor screening program, contact us at 1-866-557-5984 or email [email protected].

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