Stop Living Like It’s 1999: New Paths To Co-Employment

Founder of Consciously Unbiased, an organization helping companies meet their diversity and inclusion goals.

Over the past twenty years, many temp workers, contingent labor and consultants have been rebranded as “gig workers.” In many cases, they went from being extra support to mission-critical in our businesses—and from being a minority in our organizations to, on many levels, an equal portion of the workforce. This, coupled with the growing emphasis on diversity, equity and inclusion (DEI), is demanding more of us as leaders.

Yet the laws and constraints of gig workers haven’t greatly evolved; it’s like we’re living in 1999. The current laws ask companies to systematically treat contingent workers as outsiders, which can lead to discrimination and create liabilities for employers. Companies may want to do the right thing, but public policy can prevent them with the fear of liability and litigation, known as co-employment risk.

The current administration’s plans to strengthen labor protections for gig workers have stalled in Congress and the courts. The fact remains that laws governing co-employment are ambiguous and often misinterpreted, blocking companies from building a more diverse and inclusive environment for their extended workforce. Existing policies meant to mitigate employment risks—such as tenure limits and excluding “non-employees” from company events such as holiday parties—can actually create discriminatory practices and harm companies’ DEI strategies by excluding up to half of the workforce.

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The best way to be irrelevant as an organization is to live in the past rather than evolve with the times. We need to change how we treat our extended workforce through policies that lay the groundwork for the future. Here is how.

1. Create a new definition for co-employment.

There is no clear definition for contingent workers. When it comes to mitigating co-employment risk, those managing contingent workforce programs—across human resources, procurement and legal departments—are left to their own devices to determine the policies to protect their company from being viewed as the employer.

Managing co-employment responsibly is in the best interest of businesses, employees and the extended workforce. The current definition focuses on workers being either 1099 employees, W2 workers, staffing suppliers or managed service providers (MSPs).

Some common strategies to help classify workers as contingent are to limit their tenure, exclude them from company events and ensure that they have different badges and email signatures to show their status as a non-employee. These spur a lack of belonging, which can lead to a loss of morale, productivity and brand reputation, and workers may be less likely to recommend the company as a great place to work.

Due to their non-employee status, there are also roadblocks to gathering contingent workers’ demographic data within a company’s employee HR system. If you don’t know the demographics of your contingent workforce, it prevents your company from having a holistic understanding of your workforce and makes it impossible to set and achieve DEI benchmarks for a large part of your workforce.

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I’d propose a clause in the definition for contingent workers that makes sure they are included in company culture and policies and in the collection of demographic data that’s needed to measure DEI at a holistic level.

2. Add greater protections for gig workers.

From the Great Resignation to quiet quitting, employee loyalty and engagement are dropping, which may further fuel a rise in independent contractors or gig workers. At the same time, we’re seeing a rise in employees unionizing at companies such as Starbucks, Amazon and Apple.

Offering gig workers greater workplace protections—such as sexual harassment protections, equal pay, performance-based bonuses, healthcare benefits and the ability to unionize is a DEI imperative. For example, equal pay for contingent workers impacts gender equality. The World Economic Forum’s Global Gender Gap Report 2022 finds the gender pay gap is wider for women who freelance than for full-time employees, with men making 48% more than women in some sectors of the gig economy. To level some of the inequities in the workforce, I believe we must include contingent workers in many of the benefits and policy protections we offer full-time employees.

3. Build ways to capture DEI data for contingent workers.

In order to get a holistic picture of our entire workforce, we need a solution to collect and report on DEI demographic data for the contingent workforce.

This is new ground, and the process is not yet defined, but it could include a managed service provider partnering with a database company to enter their employee data or an industry-wide solution that allows individual companies to pull data for their contingent workers. There is also room for innovation with vendor management systems (VMS), which have traditionally put the burden of managing talent information on staffing companies as part of the sourcing process.

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We’re starting to see some progress with extended workforce platforms allowing contingent workers to self-report their own demographic information into their VMS. This puts control of information and privacy in the talents’ hands and makes the information more reliable, all while relieving the privacy risk of collecting contingent worker demographic data for suppliers and MSPs.

There is power in collaboration, and we can’t create real change for all workers unless we work together. As a leader, I urge you to partner with other industry experts, including contingent program owners, HR professionals, corporate legal executives, MSPs and corporate public policy advisors. Together, we can create a new definition of co-employment for government lawmakers, roll out a new legal framework and establish DEI benchmarks.

People are a company’s greatest resource: All people should be included in, well, inclusion. These proposed policy and business culture changes can ensure that everyone in the workforce can feel like they belong.

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