Due Diligence and Ongoing Monitoring

How does your company handle contract workers? So, not an employee hired through a temp agency, but a temporary employee (W9) brought on for a defined time period to do work for the company? What documents do you require - W9, contract, insurance? Do you require insurance coverage? 

Is the onboarding and maintenance of the records managed within a vendor management function or HR? 

Hi there,

Without more details regarding what "work for the company" means, I think it is important to differentiate between a temporary employee and an independent contractor.

Temporary Employee

• Temporary employees are individuals hired to work for a specific period or task
• They have an employment relationship with the company or staffing agency
• The temporary employee does work related to core business functions
• Works under the close direction and supervision of their employer
• The temporary employee's schedule is set by the employer
• The employer has the right to control the details of how the temporary employee's services are performed.
• Employers withhold taxes from their paychecks, and they receive a W-2 form at the end of the year.
• Temporary employees are covered by employment law

Independent Contractor

An independent contractor is a self-employed individual who provides specific services on a project or task basis. Independent contractors are often hired for their expertise in a particular field and are responsible for their own taxes and benefits.

• They work on a project-by-project basis and are not considered employees
• They might also be referred to as freelancers, contract workers, independent consultants, or gig workers
• They have autonomy and control over how they complete their tasks
• They set their work hours or methods
• They determine the location in which they will perform the work
• They invoice the company for their services and handle their own taxes
• If your company pays an independent contractor $600 or more, you must provide them with a 1099-NEC form

It's essential for businesses to correctly classify workers to avoid misclassification issues and potential penalties

Temporary Employees should be managed under your HR policies and requirements.

Some Independent Contractors are best managed through the vendor management program, policies, and requirements. But before you determine this, you should consult with your HR department to validate your decision and ensure that all federal, state, and local employment law is taken into account.

For Independent contractors under the jurisdiction of vendor risk management, you should complete your typical inherent risk assessment and scope your due diligence requirements appropriately. The scope of your contract and insurance requirements should also be determined based on the risks identified.

I hope that is helpful. I would also love to hear from other members on this topic.

How does your company handle contract workers? So, not an employee hired through a temp agency, but a temporary employee (W9) brought on for a defined time period to do work for the company? What documents do you require - W9, contract, insurance? Do you require insurance coverage? 

Is the onboarding and maintenance of the records managed within a vendor management function or HR?