Background Checks of Growing Extended Workforce Will Be More in Demand by Employers in 2018

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Written By ESR News Blog Editor Thomas Ahearn

The 2015 Contingent Work Supplement (CWS) survey by the Bureau of Labor Statistics (BLS) estimated the “extended workforce” – workers with non-traditional employer-employee relationships – could be “more than a third of the total employed labor force.” The need for employers to properly screen the expanding extended workforce in America is trend number 5 of the “ESR Top Ten Background Check Trends” for 2018 selected by global background check firm Employment Screening Resources (ESR).

According to the BLS, the non-traditional extended workforce includes “multiple job holders, contingent and part-time workers, and people in alternative work arrangements” and “nearly four out of five employers, in establishments of all sizes and industries, use some form of nontraditional staffing.” Many in the extended workforce work in what is alternately called the “gig economy,” “sharing economy,” “peer to peer (P2P) economy,” or “1099 economy” after an Internal Revenue Service (IRS) form.

“Contingent workers” are typically described as members of an extended workforce who are not on the businesses payroll and who do not receive an IRS W-2 form to report wages paid to employees and the taxes withheld from them. A contingent worker in the extended workforce may be engaged for a particular project or for a specific time period and paid by a third-party agency, such as a staffing firm, a Professional Employer Organization (PEO), or firms that specialize in managing extended workforces.

The extended workforce is growing quickly. A study by Intuit found an estimated 7.6 million Americans will be regularly working as providers in the on-demand or “gig” economy by 2020, more than doubling the total of 3.2 million in 2015. The study found the rise of the on-demand economy is part of a broader long-term growth trend in the extended workforce that has grown from 17 percent of the U.S. workforce in 1990, to 36 percent in 2015, and is expected to reach 43 percent by 2020.

Employers in America – and worldwide – must realize the modern workforce is changing. Millions of workers no longer have standard work arrangements that include permanent jobs with a traditional employer-employee relationship. Instead, “extended workforce” members are hired on an “as needed” or “on-demand” basis and usually consist of freelancers, temporary workers, independent contractors, vendors, consultants, and other types of non-traditional talent who are not full-time employees.

However, many employers do not realize they potentially face the same exposure from the extended workforce as with their own employees. Employers can be sitting ducks for expensive litigation, negative publicity, and economic loss if they do not conduct proper background checks when hiring the extended workforce. Employers are still responsible for the behavior of their extended workforce who are not on their payroll but to some degree have access to premises, computers, clients, co-workers, and assets.

All of the rules of due diligence apply with equal force if a member of the extended workforce causes harm. Business can be liable if – in the exercise of reasonable care – they should have known that a member of the extended workforce was too dangerous, unqualified, or otherwise unfit for employment. Sadly, many employers – and many more unfortunate victims – have found out the hard way that using unscreened workers from the extended workforce can cause damage and, in some cases, even death.

A tragic example is the case of woman who contracted a department store to clean the air ducts in her home and one of the men sent on the service call was a twice-convicted sex offender on parole. Six months after the work was complete, he returned to the woman’s home to rape and murder her. Since a background check would have revealed his criminal past, the victim’s sister started the Sue Weaver CAUSE (Consumer Awareness of Unsafe Service Employment) to raise awareness about the case.

Employers do have challenges in ensuring they have exercised due diligence regarding the extended workforce. Fortunately, there are many cost-effective avenues available. For example, employers can insist on any contract for any service that any time a contingent worker comes on premises, that worker has been the subject of a background screening. If screening is needed to demonstrate due diligence, no extended worker supplied by a third party is allowed to work without a background check.

Employers should subject any workers from the extended workforce to the same screening as would be done with a regular employee.  A best practice is to have the same firm that performs the background checks on regular employees to also perform them on the extended workforce. Another best practice is to ensure any screening provider is a member of – and accredited by them like ESR – the National Association of Profession Background Screeners (NAPBS), a trade association representing the screening industry.

Employment Screening Resources (ESR) – a leading global background check firm headquartered in the San Francisco, California area – will release the 11th annual “ESR Top Ten Background Check Trends” of 2018 via the ESR News Blog during December of 2017. The complete list of emerging and influential trends in the background screening industry for the coming year as chosen by ESR will be available in January of 2018 on the ESR website at http://www.esrcheck.com/Tools-Resources/ESR-Top-Ten-Background-Check-Trends/.

ESR Webinar on Top Ten Background Check Trends for 2018

Employment Screening Resources (ESR) founder and CEO Attorney Lester Rosen will host a live webinar entitled “ESR Top Ten Background Check Trends for 2018” that will take place on Wednesday, January 17, 2018, from 11:00 AM to 12:00 PM Noon Pacific Time. To register for the complimentary webinar from ESR, which will acquaint employers and Human Resources (HR) professionals with emerging and influential trends in the background screening industry, please visit https://attendee.gotowebinar.com/register/6841084769383752449.

NOTE: Employment Screening Resources® (ESR) does not provide or offer legal services or legal advice of any kind or nature. Any information on this website is for educational purposes only.

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