July 24th, 2018 | Sterling

Contingent Workers: The Gap Between Who to Hire and Who to Screen and the Associated Risk

The gig economy now has a strong influence on economies in the UK and around the world. An April 2017 report by the Royal Society of Arts showed that 1.1 million people work in gig economy positions. 59% provide professional, creative or administrative services, 33% provide skilled or personal services and 16% provide driving or delivery services. Today’s contingent workforce includes highly skilled specialists and consultants that can be found in nearly every industry. The temporary or contractor worker sector of the economy is growing at a rapid rate and will influence the economy and political system in the UK for many decades to come.

What are Contingent Workers?

Contingent workers are non-permanent employees, such as contractors, freelancers, agency workers and consultants. The meteoric rise of this group of workers is down to a few factors, such as changing economic and market conditions, skills shortages and a shift in general working patterns. Freelancers and contractors often enjoy higher job satisfaction as they have the flexibility and choice as to when, where and how they work; while employers can flex their workforce to meet immediate needs or demands, and tap into a rich pool of talent, skills and experience, without the burden of keeping them on the payroll.

Trends for Background Checks for Contingent Workers

Sterling surveyed over 300 UK-based employers in 33 industries about their use of background checks to gain key insights into emerging trends, technology and more for our Background Checks 2018: UK Trends & Best Practices Report. We surveyed businesses large (over 10,000 employees) and small (up to 49 employees) with the largest group of respondents representing companies with 100-299 employees.

The survey found that 89% of organisations screen their full-time employees, while 83% conduct background checks on their part-time staff. In contrast, only 60% of employers currently screen their contingent workers. The survey results also revealed that almost 70% of respondents don’t currently screen volunteers or unpaid workers, even though they may be just as much a part of the workforce and potentially just as much of a threat.

The Risks of Not Performing Background Screening on Contingent Workers

As seen in the survey results, 40% of companies currently do not perform background checks on their contingent workers, revealing a gap between the number of businesses that hire contingent workers and the number that screen them. As more contingent workers enter the labour market, it’s advisable for employers to not only screen their workers, but to have documented policies in place to support their background check programmes. Choosing to not screen contractors, temporary staff or volunteers can pose a significant risk for employers, such as employee fraud and theft or hiring migrant workers who have no legal right to work in the UK.

Freelancers and contractors often have the same access to company resources, sensitive information and customers as their full-time co-workers, so gaps in the screening process could pose risks to employers. It may only take one person to damage an organisation’s reputation or put existing staff at risk, which is why it is important to ensure that your extended workforce has the necessary checks performed on them. While there is no national standard for background checks in the gig economy, companies still have a vested interest in keeping community members safe.

 Background Checks for the Contingent Workforce

The contingent workforce as part of the gig economy is revolutionizing consumer behavior – whether customers want an on demand landscaper, doctor, stylist, masseuse or another type of service provider trust, safety and professionalism are essential. It is still early days about the emerging regulatory landscape in the sharing economy.  However, it is clear background checks are a key focal point for compliance in the sharing economy.

With ever-increasing numbers of contingent workers entering the labour market, it’s vital that effective, robust policies are in place to screen them. It is a good idea to carry out the same exact background checks on contingent workers as would be run on full-time employees. If there is any doubt about the screening process, then companies should consider using a third-party screening provider to ensure that all legal obligations are being met. By using the same screening provider and the same process for all workers, you can be sure that the hiring process is fair and equal for everyone and that you thoroughly understand an individual’s background before recruiting them.

Find out more of our survey results and background checks best practices by downloading a copy of “Background Checks 2018: UK Trends & Best Practices Report”.

This publication is for informational purposes only and nothing contained in it should be construed as legal advice. We expressly disclaim any warranty or responsibility for damages arising out this information. We encourage you to consult with legal counsel regarding your specific needs. We do not undertake any duty to update previously posted materials.