F ew industries face tougher contingent workforce compliance requirements than financial services. In the wake of the 2007-2008 financial crisis, governments around the world boosted consumer and shareholder protection and intensified corporate liability. In addition, more rigorous privacy and data protection laws exist today, further increasing the risks of not adequately vetting contingent workers.
In spite of these challenges, however, financial services companies need contingent workers more than ever. Not only can a non-employee workforce increase flexibility, it can also help to offset the increasing cost of compliance. More than ever, financial organizations need contingent workforce management solutions with the visibility and controls to meet fiscal, data protection and labor compliance objectives.
Contingent Workforce Risk
Financial organizations face a wide variety of strategic and industry-specific challenges when using contingent workers. The competitiveness of their industry requires the flexibility and cost-effectiveness of contingent labor, but the regulatory landscape can make it difficult to mitigate risks. The Consumer Financial Protection Bureau, FDIC and other U.S. and international regulatory bodies have strict compliance requirements for banks, investment firms and other financial businesses, including:
- Safeguarding customer privacy
- Protecting data from theft
- Ensuring the accuracy of accounting information
- Disclosing conflicts of interest
Additionally, organizations face a whole raft of labor regulations. Worker classification and term limit requirements are complex and continuously evolving. Furthermore, they vary across jurisdictions, posing substantial challenges to international financial services organizations.
Recent legal developments—such as the NLRB ruling stating that businesses and suppliers share responsibility for labor violations—have created greater regulatory pressure around co-employment and worker misclassification.
Inadequate security can be particularly risky to the financial industry. If a contingent worker isn’t properly vetted before a contract, or retains access to physical or IT resources after an assignment, they can compromise, steal or corrupt data. Consistent and thorough onboarding and offboarding controls are a must.
Solutions for Financial Industry Contingent Workforce Compliance
With a globalized labor force, end-to-end visibility and centralized contingent workforce management are key to ensuring compliance. Vendor management systems (VMSs) with automation and controls can help you meet your various compliance objectives throughout the talent lifecycle―from initial credentials and background checks to revocation of facilities access after contract completion. Additionally, they can automate contract compliance, covering everything from 1099 completion to SOX compliance.
These solutions can also mitigate co-employment and other worker misclassification risks. Potential capabilities include guiding users down the correct worker classification path, easily navigating the web of regional, national and international worker classification requirements while enforcing HR and procurement requirements. Tenure-limit enforcement controls and customer-defined fields for insurance regulation tracking add another layer of contingent workforce management compliance.
Smart Contingent Workforce Management
The rise of temporary labor in the financial industry makes thorough contingent workforce tracking and oversight more important than ever. Intelligent contingent workforce management gives organizations the power to become leaner and more competitive, while decreasing compliance risk.
With the right VMS solution, you’ll have better visibility, better insight and better controls, which means better decisions across your organization. Compliance risks aren’t scary when you have the right knowledge and technology on your side.