As many as 41% of employers have used more independent contractors over the past two years, according to an online survey of 430 senior human resource executives conducted by Right Management.
Asked if their organizations had seen an increase in the use of independent contractors in the last two years, 41% of respondents said yes and 59% said no.
“Nearly all companies are re-examining their talent management practices in order to align their workforce with their business strategy,” Michael Haid, Right Management’s Senior Vice President for talent management.” This has required a behavioral shift that includes the greater flexibility afforded by independent contractors.”
Many of the contractors, Haid acknowledged, eventually become full-time employees. “But just as many prefer their independence and organizations must accommodate the goals of these workers to stay competitive in the marketplace and attract the best and brightest talent available.”
The increased use of independent contractors creates legal compliance concerns, cautioned Neil Alexander, Co-chair of the Contingent Workforce Practice Group of Littler Mendelson, a national employment and labor law firm. “Many firms haven’t taken precautions to help limit the likelihood that a government auditor or court will determine such workers have been misclassified. Taking the time to design a workforce model in advance can reward productivity, lower overall labor costs, and help avoid findings such workers have been misclassified. The penalties, interest, and uncompensated overtime can add up very quickly.”
Survey respondents were also asked if their organization had seen an increase in flexible working practices over the past year. Twenty-three percent said “Yes, a lot” and 54% said “Yes, somewhat.” Only 22% said no.
Haid advised that such HR policies and practices are on the increase. “These might be more flexible work hours, telecommuting, or even a greater use of temporary or contingent workers for specific projects or short-term assignments.”
As more people move from being unemployed to being employed or becoming an independent contractor, there is a ripple effect throughout the economy. For example, http://www.leasetrader.com/ saw a 5.3% increase in March from personal lease escapes due to and increase in company cars (4.8% increase in February). Until the beginning of 2011, the main reason for dumping a lease was the driver's need to find a lower monthly car payment. Since January, more vehicles have been listed by people for non-financially distressed reasons. "The increase in more company-issued vehicles, and in these cases people look to shed their personal car leases." - Sergio Stiberman, CEO and founder of LeaseTrader.com
Source: Right Management surveyed 430 individuals on March 15, 2011, in partnership with law firm Littler Mendelson.