Using Automation to Ensure Global Worker Classification and Manage Compliance

Posted: 02/17/2021 - 22:45
Sourcing Automation

Organizations are putting a magnifying glass to their global workforce. Through continuous changes in local employment laws and additional scrutiny towards proper worker classification both domestically and globally, globalization and centralization of an organization’s talent is more important than ever.

Companies who had not centralized their global workforce are now having to consolidate and audit their once independently running teams. Many are finding that having a decentralized HR function is putting their organizations at risk.

While it may be seen as a tedious affair, understanding and ensuring that your organization is compliant on a global level is necessary for continued employment in specific areas as well as avoiding unnecessary and harsh back taxes. Misclassification of a worker can result in wage claim violations, class-action lawsuits, back-payments plus an irreparable tarnish to your organization’s name. Companies with a large or dispersed global workforce often find themselves lost or unsure of where to start when evaluating and restructuring the way they view and engage their workforce.

The use of automation tools and/or outsourcing partners enables organizations to maintain a much tighter grasp on the globalization of their workforce. Whether it’s to ensure your workforce is correctly classified, you are engaging them in a compliant and legal manner, or for accounting purposes, there are many ways to utilize AI and automation to streamline what now seems to be a robust project.

Worker Classification

The first step of any employee engagement is identifying the type of arrangement your organization has with the specific worker. You need to know if these individuals will work for your company full-time or be engaged specifically on a project basis with their own timeline and financial risks. When engaging a global workforce, the employment laws, payment terms, and classification of workers is different across the world and is changing on a consistent basis. The risk of misclassification could bring severe tax and operations penalties on both the company and contractor.

“More than one-third of midsize businesses have been fined or penalized for not complying with laws pertaining to how they manage their workforce,” says the ADP Research Institute.

The use of an automation platform when classifying a worker allows an organization to audit or engage talent compliantly across a global scale at a mass level. These tools ensure proper classification of independent, freelance, limited company and corp to corp contractors to reduce risk through adherence to local classification requirements via an online automated platform. These technologies also provide a set of screening and interview questions based on the geography of employment and evaluate a contractor’s right to work, insurances and background screenings.                 

Global Compliance and Labor Laws

Global compliance initiatives and employment labor laws are very different geographically. With new legislation continuously being passed regarding how organizations perceive and engage contingent or gig workers, such as AB5 in the U.S. and IR35 in the UK, organizations must take a proactive and continuous approach to how they engage talent globally. Using a true expert within each geography in an automated way allows for your organization to ensure it remains compliant when engaging workers through changing legislation.

Automation of Processes

With the variance in employment laws across the globe, using an automation tool enables organizations not only to correctly classify, but to ensure compliance through continuous legislative changes. Many of these tools operate on a full-service automation with the option to onboard and engage workers completely through the tool with additional features such as background checks.

After vetting a candidate, the proper employee agreement and onboarding documents are sent specific to their classification and engagement type. To have an individual begin work, other verification and right-to-work checks that vary by geography can now be done from end to end with the click of a button and basic-level information from your organization.

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About The Author

Konner Scherry's picture

Konner Scherry is a Global Solutions Manager for CXC, where he is focused on assisting organizations to achieve a competitive advantage through managing contingent workforce quality, efficiency and risk while reducing costs. Konner brings seven years of experience in staffing solutions and payroll services and is focused on North America sales.