How to Track Your Independent Contractor Workforce: 4 Essential Metrics You Can't Ignore

When utilizing full-time (W-2) employees and independent contractors (1099-NEC), one key difference to consider is the metrics and data sets used to track each segment of your workforce. It's likely that your human capital management system provides a comprehensive view into full-time employees, including background checks, qualifications, and performance reviews.

However, achieving the same visibility into your independent contractors may not be as easy due to multiple variables, such as:

• Multiple stakeholders managing contractor relationships
• The remote nature of most contractor relationships
• Off-cycle work assignments
• Disparate systems and manual processes to track contractor qualifications, documents, etc.

With the rapid growth of the independent contractor workforce, it is imperative for businesses to manage contractors with the same level of rigor and attention as their W-2 employees. Having real-time visibility into your contractor workforce can help mitigate potential legal and financial risks while also improving productivity and efficiency.

Here are four types of data that organizations should consider tracking to successfully manage their independent contractors:

1. Talent Pool Assessments

Organizations utilizing a growing number of independent contractors need the ability to drill down into their workers' profiles. It's recommended to have a process in place to collect and store applicable information during onboarding.

In addition to a worker's data such as their full name and address, this information could include:

• Most recent background checks
• Most recent drug tests
• US tax IDs
• Licenses
• Certifications
• Location
• Skillsets

Having a centralized, searchable repository to track standardized worker information is crucial. The ability to filter your talent pools for these specific details can help an organization identify the right worker for the job faster. Running reports on specific metrics allows a business to get a baseline of their contractor workforce. For example, reporting on the distribution of workers across particular regions can help identify where to target future recruitment efforts.

2. Contractor Onboarding Statuses

If your organization is constantly recruiting new workers, real-time visibility into their onboarding status is essential. Before a worker can be deployed, you must ensure they meet your requirements.

Common onboarding milestones to track include:

• Tax IDs have been verified
• Bank accounts have been verified
• Signed contractor agreements or NDAs
• Fulfilled business requirements such as obtaining insurance coverage, proof of certifications and licenses, and passed skills assessment tests.

Real-time insight into the number of workers who have completed these onboarding tasks is essential for timely work assignments. Lack of visibility into workers' onboarding progress can delay project timelines and impact service level agreements (SLAs). Tracking and reporting on onboarding statuses can help ensure workers meet your requirements before starting work.

3. Work Assignment Statuses

Seeing the real-time status of work assignments is crucial for organizations working with contractors, especially if they represent you at a client site. Insights into work assignments help assess risk and maintain business oversight.

Examples include:

• Assignments without an assigned worker
• Assignments assigned to workers but not yet started
• Assignments in progress
• Assignments past their SLAs
• Assignments invoiced but not paid

4. Spend Analysis

To make strategic business decisions and forecast future needs, you need to analyze spend and pricing across assignments, clients, and contractors. Monitoring important efficiency metrics like average time to completion (by project, client, contractor) is also crucial.

Common spend reports include:

• Assignment price year-over-year (YoY) by client or project type
• Total spend year-over-year by client
• Talent spend and average price by contractor

This content is for educational purposes only, is not intended to provide specific legal advice, and should not be used as a substitute for the legal advice of a qualified attorney or other professional. The information may not reflect the most current legal developments, may be changed without notice, and is not guaranteed to be complete, correct, or up-to-date.