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What is Contractor Payrolling?

Posted on May 6th, 2016 Read time: 2 minutes

Sara Jensen – National Business Development Management

Payrolling contingent employees has been practiced as an overall strategic outsourcing plan for years.  With the use of an alternative workforce (temporary or leased employees, consultants, independent contractors, etc.) on the rise, Contractor Payrolling (also known as Employer of Record payrolling) is now considered an essential element of a company’s robust talent acquisition program.

Contractor Payrolling is when a company outsources the employment and payroll of pre-identified or self-sourced temporary or contract labor, whether it’s retirees, alumni, Subject Matter Experts or internal referrals.  Some other examples include:

  • Seasonal, Short-term or Special Projects
  • Interim or Probationary Hiring
  • On-Call Employees
  • Internal Head Count Restrictions
  • Misclassified Independent Contractors

Why should Contractor Payrolling be a “tool” in a company’s Talent Acquisition “toolbox”?   Quite simply, partnering with a reputable and experienced firm that specializes in Contractor Payrolling will save time, money and mitigate risk on behalf of their Client.  Benefits include:

  • Cost savings up to 40% compared to traditional temp staffing
  • Time savings and increased efficiency on the on and off-boarding of temporary employees
  • Compliance and risk mitigation with ever-changing local, state and federal employer mandates and expert knowledge on how these laws apply to the contingent workforce
  • Protection of increases to Client’s workers comp and unemployment experience
  • Expert guidance on Independent Contractor classification requirements

What should you look for in a Contractor Payrolling provider?  Well, that really depends on what matters most to you.  Like most industries, you can find providers that run the gamut from low-cost/low-service to high price/high service and everything in between.

If your company only cares about finding the lowest cost provider, then partnering with a firm that can provide bottom-market prices with all self-service automation might be the right fit for you.  If customer service and the employee experience is higher on your priority list, then finding a provider that acts more as a consultative partner with a mid-to-high market price might be a better choice.

No matter what, all reputable Contractor Payrolling providers should be experienced, accurate and compliant in the following:

  • Quick onboarding of new hires
  • Timekeeping
  • Processing payroll
  • Federal/State/Local tax withholdings and reporting
  • Compliance with Federal/State/Local labor laws
  • Workers Compensation and Unemployment Claims
  • Mitigation in Co-Employment Risk
  • Compliance with the Affordable Care Act

Doing your due diligence and research into finding the right Contractor Payrolling partner for your company is important and can provide value to your bottom line and to your Talent Acquisition program.  Innovative Employee Solutions, an Employer of Record company in San Diego has compiled a list of some of the best Contractor Payrolling companies in the industry today.  Click here to see a list of who might be a good fit for your company.

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