Worker Misclassification Risk

Misclassifying contingent workers as independent contractors exposes organizations to significant financial, compliance, and reputational risk.

Global compliance requirements have become increasingly intricate, with companies facing over $30 million in fines in 2024 due to noncompliance with labor laws—a 50% increase from 2020, according to the U.S. Department of Labor.

Key Areas of Risk

Financial Exposure: Back taxes, unpaid benefits, and penalties. One notable case in 2019 saw a pharmaceutical company hit with over $7.5 million in costs after mistakenly classifying delivery drivers as independent contractors (Source: SIA).

• Compliance Violations: Breaches of labor and tax laws across jurisdictions.
• Operational Impact: Audit disruptions and strained vendor relationships.
• Reputational Damage: Loss of trust among regulators, employees, and investors

Common Root Causes

• Inconsistent or decentralized worker classification practices.
• Limited visibility into contingent workforce data and spend.
• Lack of standardized engagement and documentation processes.

How MSP & VMS Solutions Reduce Risk

• Governance: Consistent, compliant engagement processes across all worker types.
• Visibility: Centralized data and reporting for all contingent labor.
• Automation: Compliance checks, documentation, and audit readiness built into workflows.
• Risk Prevention: Early detection of misclassification through analytics and monitoring.
• Alignment: Connects HR, Procurement, and Legal under one controlled framework.

Strategic Outcome

A Managed Service Provider (MSP) and Vendor Management System (VMS) work together to create a transparent, compliant, and well-governed contingent workforce program, reducing misclassification risk, strengthening compliance, and supporting enterprise agility.

The OneBeacon Advantage

OneBeacon’s MSP solution provides the governance, visibility, and compliance infrastructure organizations need to manage worker classification risk proactively. Through integrated analytics, centralized oversight, and expert guidance, OneBeacon helps enterprises stay compliant, minimize exposure, and safeguard their brand reputation while enabling a more agile and transparent contingent workforce strategy.

Don't leave your workforce management to chance. Contact OneBeacon today at [email protected] to learn how our MSP services can help you navigate the complexities of contingent labor, protect your business, and position your company for long-term success.