Several years ago I read a prediction in one of the popular HR magazines that the Enterprise of the future would consist of only 5% traditional employees, while the rest would be contactors, outsource firms and temps. While this prediction has not fully come to pass, all signs show we are moving in that direction. Today, the contingent workforce represents one of the fastest growing segments of the economy. Depending on the study you read, between 65% and 80% of all companies use some sort of contingent workforce. However, while almost 90% of all companies screen their employees, far fewer screen their contractors and temps. (And almost no one seems to worry about the firm they outsource work to). As a quick primer to the topic of background checking the contingent workforce, here are 4 things worth knowing:

1. The risks involved
2. The contractor screening challenge
3. The regulatory environment
4. Some recommended practices

The Risks Involved: The risk comes in two forms. First, it is the fact that contractors themselves are in an equal – if not better position – to perpetrate fraud and abuse than your employees (think Information Technology or people who clean at night: they both literally have the keys to the castle). The second is that you may be more liable than you realize. There is an increasing body of law suggesting that the hiring company has (at least) a “shared liability” for any acts a contractor or temp might do. Think about it this way, if you have a strong program of background checking your employees, but you don’t screen the person they sit next to, you’d have a hard time convincing a judge you didn’t understand the need to do background checks!

The Contractor Screening Challenge: Contracting is a distributed responsibility usually doled out to line managers. The need for the contractor is often immediate and short term, the process is usually treated as a procurement issue and not a human resource function, and you usually have limited visibility into what (if any) screening your staffing company (or contractor) is doing. No wonder it is easy to find a back door if you want to avoid criminal records checks! You don’t need a huge centralized bureaucracy to manage the process – just a simple and enforceable policy that is developed and managed by HR.

The regulatory Environment: The main things you need to know are:
• You are subject to discrimination and fair employment regulations
• FCRA still needs to be followed by either you or the staffing firm
• The concept of shared liability means you have exposure
• You can’t hide from workplace safety issues just because they weren’t your employees
• You still have to be aware of the rules that require contractors to be contractors (and not employees)

Some Recommended Practices:
1. Suggest a unique contractor background checking “package”. This helps create focus on risk management while helping keep an arm’s length in the employee vs. contractor employment law conundrum.
2. Screen to job requirements. Don’t require a credit check for a janitor – but do for the account temp.
3. Document your policy and apply it consistently
4. Get HR involved
5. Confirm the provider’s policy and get confirmation that checks are being performed. Don’t just trust that they are
6. Don’t be afraid to do additional screening if the contracting agency does not cover all the areas you feel need to be covered.

With the huge growth in the use of contingent workers, background screening these resources should be a standard process well backed into your staffing program. Learn more by attending HR.com’s Contract Workforce & Talent Exchange Virtual Workshops on March 23rd.