Lean on your MSP provider to navigate the pending risk and cost increases associated with managing your contingent labor.
By Audrey Roth
The contingent workforce equation typically includes staffing firms, managed services programs (MSP), and technology, like vendor management systems. Adding to an already complex dynamic is the Affordable Care Act (ACA), which is causing worker classifications to change. Maintaining compliance and adhering to new regulations of the ACA is a focus of many organizations.
Providing help is the American Staffing Association (ASA). In their October report, Best Practices for Business and Contractual Relationships Between Staffing Firms, Managed Service Providers, Vendor Management System Providers, and Clients, the organization outlines the role each one plays. From the report: “Staffing firms, MSPs, and VMS providers are not insurers—they should not be expected to cover risks beyond those inherent in their respective businesses. For staffing firms, such risks include (i) those related to being an employer, such as payment of wages and benefits, payroll taxes, etc.; and (ii) liability for client loss or damage caused by the staffing firm’s failure to properly screen or otherwise qualify the assigned employee for the job. For MSPs/VMS providers, such risks include those arising from the management of the procurement process.”
The question then becomes: How is the relationship between MSPs and their clients going to change?
The needs of the companies will vary depending on their requirements, and how they fulfill them. “We expect to conduct these evaluations with our individual suppliers because the ACA will impact each of the suppliers differently, based on their mix of business, current state, and other factors,” says Janice Weiner, vice president of global MSP services at Staff Management, provider of workforce management solutions. “Some of our suppliers are very large global institutions, so we wouldn’t expect to get too involved with them. But, with some of the smaller suppliers we could see them coming to us, and helping them in an advisory way.”
And it’s in that advisor role that MSPs can guide their clients to stay compliant while keeping the eye on the prize: human capital planning. “I think our responsibilities really are with guiding [the clients], consulting with them to help them understand where the risk is, what are the right strategies, where should there be policy changes internally around workforce mix and kind of human capital planning and dynamics,” says David Lewis, senior vice president of MSP and workforce solution provider Agile 1.
Madeline Laurano, research director, talent acquisition services at Aberdeen Group, agrees that clients should lean on their MSP providers for guidance. “MSPs pretty much handle all of that complexity of the contingent workforce and managing it. To be able to think about the changes and … [the] ACA and even beyond that, I think that relationship is going to have to be a little bit more transformational.”
Ed Lenz, senior counsel at the ASA, points out that staffing firms are likely to bear the brunt of the risk. “Although ACA compliance is not specifically mentioned [in the ASA Best Practices], the risks associated with noncompliance would generally be borne by the staffing firm and not the MSP,” he says. This being said, it appears that MSPs are aware of a new responsibility possibly being added to their list.
Start the Conversation Now
An ACA-related conversation between MSP providers and their clients needs to happen soon—and in some cases it has already begun. Lewis reports that clients have been asking about MSP involvement for about a year now, sometimes on a daily basis. “They’re asking us to have a significant seat at the table around some of those workforce planning initiative discussions, and helping them to understand what is that right mix [of contingent and full-time staff],” he says.
Keeping cost competitive has always been a benefit of an MSP and it’s likely to become even more critical in engagements with the impact of ACA-related cost increases.
“One of our key responsibilities as an MSP provider has always been to ensure that our clients receive the best talent for the best cost. So it’s our role to understand the impact of the ACA on our clients and suppliers, to help them navigate the changes effectively,” says Weiner. “When we look ahead to 2015, it’ll be our responsibility as an MSP to ensure that our clients continue to maintain competitive rates within the marketplace and that any ACA-related cost increases are reasonably and responsibly implemented. As an MSP, we are responsible for helping our clients manage their staffing related costs. So, ultimately, the ACA-related costs will become one more cost for us to manage.”
The relationship between the different staffing players is going to unfold over the next few years.. “We have yet to see how it will all play out. I think it’s inevitable companies will change their staffing and change how they manage their workforce,” says Laurano.
What is clear is that each role within the staffing industry should be designated for a complementary relationship. As the ASA Best Practices states, “Clients should work closely with their MSP and VMS providers to consider, discuss, and implement the foregoing best practices—the end result will be well-balanced contracts that reflect the needs and concerns of all parties, including staffing firms that are critical to client satisfaction.”
The ACA mandates effect on the contingent workforce is a vital topic that cannot be ignored, as the date of legal responsibility is impending. Organizations need to take action, and leveraging the expertise of a MSP provider could alleviate tensions of negotiating changes and maintaining compliance.
The impact of the Affordable Care Act on managing contingent labor isn’t set in stone. But your MSP provider should be able to help you learn in the coming months:
The risks involved for your organization;
- If you need to make changes and update your policy;
- Impending ACA-related costs; and
- Workforce planning strategies to land the best talent at the best price.