General

The recent raft of layoffs in the U.S. technology sector has brought renewed attention to the federal WARN Act. Passed in 1998, the legislation required employers with more than 100 workers to provide those employees with at least 60 days’ notice when a business will be closed or mass layoffs are planned. The Worker Adjustment and Retraining Notification (WARN) Act is still regarded as the golden rule in Silicon Valley for such situations.

But there’s a significant caveat that comes with the legislation: The WARN Act doesn’t cover contractors. That’s a significant provision given the number of independent contractors working today – not just in Silicon Valley, but across the country. In light of the recent handling of layoffs at Twitter and certain other companies, California has proposed the Protect Laid-Off Workers Act – legislation that would not only build in new layers of worker protections but also extend to contractors. Here’s what it means to those involved:

How the Protect Laid-Off Workers Act Affects Contractors

Under California’s proposal, the Protect Laid-Off Workers Act includes several significant differences that essentially beef up the federal WARN Act:

• All employers laying off more than 50 workers at a time must give employees 90 days’ notice
• Employers would be prohibited from pressuring workers to sign waivers, nondisclosure agreements or non-disparagement agreements in exchange for severance pay
• Employers in violation of the Protect Laid-Off Workers Act would be liable for civil penalties in addition to back pay
• Contractors would be covered the same as permanent employees under California’s proposal

The Protect Laid-Off Workers Act is a well-intentioned reaction to recent events that will add safeguards that should be welcomed by anyone who values worker rights and, specifically, the contributions of the contractor community. The legislation attempts to correct a loophole in the WARN Act that couldn’t have been anticipated 25 years ago, before the flourishing of the contingent labor market. For contractors, the proposal would help reduce or prevent unexpected gaps between gigs while keeping employers from strong-arming cut employees into giving up their rights.

How the Protect Laid-Off Workers Act Affects Employers

As deserving as independent contractors are of the protections tied to California’s proposal, the legislation would dramatically alter the contingent labor economy – and in a way that could not only handcuff employers but also bring unintended harm to workers.

A company that employs dozens of contractors across multiple departments may be reluctant to spearhead new initiatives under the Protect Laid-Off Workers Act, which would add layers of complexity and risk to building timelines around the contract terms of contingent laborers. A notice requirement of 60-90 days under the new legislation would eliminate much of the flexibility from 3- and 6-month contracts, for instance. The effect could stifle innovation and even discourage the use of contractors, which no one wants.

Similar legislation doesn’t end at California’s borders. In New Jersey, the Millville Dallas Airmotive Plant Job Loss Notification Act (better known as the NJ WARN Act) takes effect in April, and other states may soon follow suit with their own versions. In the days ahead, state lawmakers will need to take special care to strike a balance that protects contractors while ensuring the continued health of the contingent labor market.

For more insights on the labor market, check out the PeopleCaddie blog.

Whether explicitly or unofficially, employers have always classified their workers based on those employees’ perceived utility to the company. To be clear, this classification doesn’t fall along the lines of permanent workers and contractors, full-timers and part-timers, or staff employees and temps. It’s about value. Even if organizations no longer publicly refer to workers using phrases such as “skilled” or “unskilled” labor, they still categorize their employees in other telling ways. When technology companies think about their contract workers, for instance, they tend to label them as “critical talent” or “support staff.”

Critical talent usually includes employees who write code or provide specialized, difficult-to-replace labor that is key to driving revenue. Support staff can encompass many types of employees, but they generally are viewed by the company as being less essential than their “critical” counterparts.

What may seem surprising about this dynamic – and what should be considered most important to contractors – is that an employee’s status can shift over time. A worker who may be deemed “critical” upon hiring may find themselves in a supporting role if, for instance, the innovation project they were brought aboard to complete is suddenly decommissioned by leadership. This may be doubly concerning to contractors, who are generally considered to be more expendable than permanent workers. So it begs the question: How does a contractor go about stepping up from support staff – or, if they’re already there – maintaining their status as a member of an organization’s critical talent?

How Employers Assess Contractor Value

Generally speaking, the process companies follow when evaluating their talent amounts to a two-dimensional analysis: reviewing a worker’s skillset and examining the total expense that employee represents on the company’s bottom line. But much of the evaluation hinges on that first component.

Consider a scenario: A tech contractor is hired to shore up a hot project for which the company has high aspirations. But within two years the initiative fails to pan out, so leadership decides to reduce or eliminate the company’s investment in that area. In the meantime, the worker’s skill set hasn’t changed – and, in fact, has probably been enhanced. But those skills no longer align with the organization’s strategic priorities. This is how a contractor with specialized expertise, a worker who may be highly valued by the general market, can suddenly find themselves with a target on their back.

How to Play a ‘Critical’ Role

The same recommendations given to any worker with career ambitions or concerns about job security apply to contractors seeking to stay on the right side of the support/critical axis: take advantage of training opportunities, learn how other areas of the business interact with yours, make efforts to be a strong collaborator and team player. But returning to our theoretical tech contractor, there’s even more work that can be done.

For any specialized tech talent, it may seem to go without saying, but it is crucial to stay on the cutting edge of technology. The tech world moves quickly, and there is always new talent coming up that has more recent schooling or training on new innovations. Additionally, keeping your profile and resume updated to reflect your key skills – and any training or experience in new technologies – can be a differentiator

Equally as important, however, is periodically taking an objective look at your organization’s strategic priorities. If your own skills and experiences align with those priorities, you’re more likely to land in the company’s critical talent group. If, on the other hand, you seem to fit into your organization’s support staff, you’ll want to seek out specialized training or volunteer for opportunities in areas that are higher priorities (read: revenue drivers) to the company. Network to find mentors or advocates in departments that are more closely aligned with the company’s goals than your own department. Make your efforts transparent so that management and perhaps leadership are aware that you understand organizational objectives and are taking a proactive approach to making them your own.

Interested in learning more about PeopleCaddie’s talent cloud? Here is how talent clouds help improve a company’s HR strategy.

Many organizations today have talent needs for seasonal or project work, while others find that fluctuating business demands require a flexible, on-demand workforce. Independent contractors can be an excellent solution to both challenges. But the savviest businesses don’t simply hire contingent laborers as needed – they take measures to learn the value of those workers, identify how to best deploy them and then build a comprehensive contractor strategy that optimizes their skill sets and availability. Part of that process includes regular evaluation of a company’s strategy and looks to build contractor relationships.

The Importance of Evaluating Contractor Relationships

Most organizations that employ independent contractors already keenly understand what contingent labor brings to the table: virtually instant access to specialized, high-quality expertise. A contractor’s terms of engagement – as needed, and without the commitment and administrative overhead associated with permanent employees – help make for an affordable, flexible contingent workforce. But taking a plug-and-chug approach to contractor hiring, while possible, sells short the benefits this talent pool can deliver.

Any company that employs (or is considering employing) contingent laborers would do well to follow these basic steps toward making the most of that workforce:

• Conduct a full-scale assessment of short- and long-term production needs, workflow projections, and staffing estimations
• Create and curate an in-house network of trusted contractors with proprietary knowledge of your business
• Engage a third-party hiring agency or talent cloud, such as PeopleCaddie, to recruit additional experienced, high-quality contractors

From there, consider quarterly, annual and/or end-of-term relationship evaluations with all of your independent contractors – even those you plan not to use again or who are believed to be underperformers. Sometimes they can tell you more about your business – and specifically about pain points in the employer-contractor connection – than your best contractors can.

End-of-term relationship evaluations may be the most valuable of all. A worker who has fulfilled their contract with a company will still have fresh thoughts about their employer and potentially fewer inhibitions about full transparency in a post-employment interview. They likely also will have begun or just completed the process of finding their next contract, a period during which they’re thinking critically about what they want to get out of their contractor engagements.

Questions to Ask Contractors as Part of Evaluations

So you’ve scheduled meetings with each of your independent contractors to discuss their relationships with your company. What now? Is there a standard line of questioning for each? And what do you do with all that feedback once you’ve gathered it?

Simplify your approach to independent contractor relationship evaluations as much as possible. Codify certain questions about the company, separate departments and a contractor’s specific role. Spend a little time with each contractor’s supervisor to develop a few unique questions – these can lead to key insights. Be sure to ask every contractor at the end of the conversation if they would like to discuss anything they weren’t asked about or have anything further to add. The content of questions could cover (but need not be limited to) an employee’s performance, professional aspirations, morale and more.

Compare feedback from standard (and similar) questions and home in on common themes and details. Closely examine and discuss feedback from the individually customized questions. Gather leadership and supervisors to discuss broad findings, then discuss the disparate finer points of contractor feedback individually with supervisors.

There’s no single step-by-step approach to evaluating contractor relationships, but every company can benefit from developing their own best practices. Investing time and organizing resources to ensure a robust and regular evaluation process can lead to better decisions about the contractors you hire, stronger retention rates and more productivity over time.

PeopleCaddie can help your organization develop more relationships with contractors.