Companies, however, can’t simply replace employees with freelancers without facing significant risks, McRae noted. Freelancers are best used for defined projects with clear deliverables. Using them to do the same work as former employees, without changing the role or workflow, can lead to legal and operational issues, she said. As reliance on non-employees grows, so do risks like worker misclassification, dual employment, compliance problems, and costly mistakes such as rehiring underperforming contractors or overpaying for services.
“I’ll see this at organizations that instituted hiring freezes, so business leaders turned to contractors to continue to be able to meet their goals,” she said. “It can also create financial risks — when there isn’t much transparency or data collection going on, organizations may find that they are paying the same contractor service provider or freelancer different rates in different departments, for the same set of tasks.”
There’s also a risk that third-party contractors are not vetting temp workers, who may not meet the necessary certifications and trainings to comply with local or national regulations, McRae added.
This story originally appeared on Computerworld
