Individuals rarely read all the fine print of a contract prior to signing. Just as a smartphone user clicks “agree to terms and conditions” without reading the document, some contract workers agree to a Statement of Work (SOW) without fully understanding what they are agreeing to. This could be considered as a matter of neglecting contractor compliance, which can lead to severe legal and reputational repercussions.
Legal implications include misclassification challenges by government agencies, such as the IRS, Revenue Canada, DOL, and more. In any given year, the U.S. The Department of Labor evaluates anywhere between 800,000 and 1 million workers and employment relationships. Educating contract compliance is the primary step to ensuring its continuance.
What is Contractor Compliance?
Contractor compliance is accomplished when individuals contracted to perform a service operate according to the terms and conditions outlined in their contract or SOW. These conditions can range from certifications and safety training requirements to specific instructions regarding how to perform a task. Such standards may be enforced by government agencies or corporations to fulfill their own compliance requirements. Clearly stating such conditions and requirements in the SOW helps keep both parties accountable.
How to Educate & Ensure Contractor Compliance
Below, we have listed five common methods for educating contractors and ensuring compliance:
#1 Review the Contract with Your Vendor(s)
Going through the main points of a contract with your vendor in person or via a teleconference can help set expectations. Contract workers frequently skim agreements, merely processing what they perceive to be important, missing key information about specific deliverables or deadlines. By walking your vendor through the agreement, you ensure that they understand the terms of service.
#2 Onboard Contractors
The easiest way to ensure that contract workers comply with guidelines is to provide a demonstration. If a project has specific instructions detailing how a task is to be completed, providing a visual representation helps clear up any confusion. If particular certifications are required to fulfill the task, provide information and resources on where and how to obtain them prior to project kick-off.
#3 Consistently Monitor Performance and Compliance
While a project may start out strong, performance may not always be consistent. Whereas some workers adhere to all applicable standards at the outset of a project, they may become less diligent over time. It is essential to assess continued safety compliance and project milestones. Are contractors on schedule to finish on time? Have they cut corners or ignored specific instructions outlined in a Design & Detail SOW? Are they employing unsafe practices? It is important to be observant and aware of red flags and ensure continued compliance with the terms outlined in the contract.
#4 Conduct Evaluations
Businesses are concerned with maintaining their good status with clients and government entities. To verify that their contractors adhere to the same standards, some companies conduct unscheduled surveys of their contractors. Efforts may range from re-submitting certifications or documentation to quality assurance checks. Passing the assessment helps verify continued eligibility and helps keep track of certification expirations and renewals.
#5 Create an Approval Process
Creating an approval process is key to consistent quality assurance. Setting up approval milestones as deadlines approach is an organized way of letting the contractors know they are headed in the right direction. Providing feedback and approval in earlier stages prevents irreversible and costly mistakes down the line.
Managing A Contingent Workforce
Contingent workforce management solutions exist to streamline independent contractor compliance and payments throughout the contract lifecycle. HCMWorks manages service providers to ensure contract compliance, providing you with peace of mind. Our team of experts helps businesses comply with regional government and industry standards. To learn more about what our contingent workforce management solution can do for you, contact our team of experts.