This Harvard Business Review tip is adapted from “A More Ethical Approach to Employing Contractors,” by Catherine Bracy
Outsourcing labor to full-time, third-party contractors has become increasingly common. While some want the flexibility a contract role can provide, research shows that these workers—who are more likely to be Black, Indigenous, Latinx, women, and nonbinary—often do the same work as their directly employed peers while making less money, receiving fewer benefits, and experiencing significant job precarity.
As a leader, you can pursue the following strategies to reduce harm and mitigate company liability regarding contract work.
- Fair pay. To ensure your contract workers receive family-sustaining pay, be explicit about how much you expect staffing agencies to pay them. Make sure you’re paying them the same rates as full-time employees who do similar jobs.
- Workplace safety protocols and worker’s voice. Create clear channels for contract workers to report problems and include them in company-wide communication streams. This will boost morale and your organization’s accountability around how these workers are treated.
- Pathways to direct employment. Provide contract workers with development training and meaningful career pathways to full-time employment. This adds the benefit of building a pre-qualified, diverse talent pool for your company.
- Keep in mind that both the Department of Labor https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-defined and the Internal Revenue Service https://www.dol.gov/agencies/whd/flsa/misclassification have separate rules about contract labor.
- The DOL has a new proposed rule as well https://www.dol.gov/agencies/whd/flsa/misclassification/rulemaking
