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Creating a Contractor Value Proposition

Contingent sourcing is an increasingly popular way for companies to find the skilled talent they need without the costs and obligations of hiring full-time employees. 

The uncertain economic outlook and low unemployment rates have driven the increase and popularity of contract workers for organizations looking to adopt more agile hiring practices. In fact, recession fears in the U.S. have caused demand for contingent workers to surge by more than 25%.

Many employers have started to recognize the value that contractors bring to the table and have started to tailor their employee value propositions (EVPs) to attract them. These Contractor Value Propositions (CVP) work the same way as EVPs; they must highlight the benefits of working with the employer but take into account the difference between full-time and contingent workers.

In this blog, we’ll discuss some ways to improve contingent sourcing with a compelling Contractor Value Proposition.

What is an Employee Value Proposition & Contractor Value Proposition?

The Employee Value Proposition (EVP) is a set of benefits, rewards, and working conditions that an employer offers to its employees in exchange for their skills, knowledge, and contributions to the organization. The EVP typically includes elements such as salary and benefits, work-life balance, career development opportunities, and the company’s culture and values.

The goal of an EVP is to attract, engage, and retain employees, and it is usually focused on building long-term relationships with them. The Contractor Value Proposition (CVP) is a set of benefits and working conditions that an employer offers to contractors who are hired on a temporary or project basis. The Contractor Value Proposition typically includes elements such as pay rates, the nature of the work, the length of the contract, and access to resources and support.

The goal of a Contractor Value Proposition is to attract and retain skilled contractors for specific projects or short-term needs.

What is the difference between Employee Value Proposition and Contractor Value Proposition?

One of the key differences between the EVP and CVP is that the EVP is focused on building a long-term relationship with employees, while the Contractor Value Proposition is focused on meeting the immediate needs of the employer for temporary or project-based work.

Another difference is that the Contractor Value Proposition may place more emphasis on flexibility, as contractors may be looking for more control over their schedules and work arrangements.

Overall, while EVP and CVP share some similarities, they differ in their focus and the specific benefits and value propositions offered.

Who creates the Contractor Value Proposition?

Hiring employers have to clearly delineate between their employees and their contractors as offering them the same benefits may create co-employment risks, which refers to the possibility that the contract worker may be deemed an employee of both the employer and the contractor, usually the staffing agency that hired the talent. This can create a legal grey area and can expose the employer to potential legal liabilities, such as lawsuits or audits from government agencies.

Challenges employers face when offering similar benefits to contractors:

Legal risks: Providing benefits to contractors can create legal risks, as it can be difficult to determine whether the contractor is an independent contractor or an employee. If the contractor is deemed an employee, the employer may be held liable for employment-related issues, such as minimum wage, overtime pay, and tax withholding.

Compliance risks: Employers that offer benefits to contractors may need to comply with various federal, state, and local laws, such as the Affordable Care Act (ACA) and the Family and Medical Leave Act (FMLA). Failure to comply with these laws can result in legal penalties and fines.

Contractor relationships: Offering benefits to contractors can also impact the relationship between the employers and the contractor, as it may create a perception of employer-employee relationship, which can erode the contractor’s independence.

To mitigate these risks, employers can work with legal and compliance experts to determine the best approach to offering benefits to contractors. They can also use technology and other tools to streamline administrative processes and ensure compliance with relevant laws and regulations.

This is why the staffing agency must work with the employer to provide a clear CVP. Once created the CVP becomes a key tool and differentiating feature that their clients will appreciate. It will mitigate their risk.

Download the Essential Guide to Creating a Contractor Value Proposition

Would you like to know more about Contractor Value Propositions? We have prepared an information packed eBook, click here to download your complimentary copy now.

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