Many organizations use contractors and freelancers to get work done. According to the Freelancers Union, freelancers make up 35 percent of U.S. workers and earned close to $1 trillion dollars last year. It’s important for companies to properly manage a contingent workforce. Especially when they make a mistake. Today’s reader note shares a freelancer’s situation:
Earlier this month, I got a contracting gig with a respected organization. It’s a good assignment in the low $100’s. In my excitement, I sent a note to a friend, who also happens to work for the company. The language in the note was ‘locker room’. It was a stupid mistake.
I was called into HR last week, and now I’m wondering what’s happening. I owned up to it and was upfront about everything. I’ve also been letting the HR rep know about my efforts to attain additional work assignments. I don’t want the company to think I’m not doing anything but sitting around sending bad emails. I don’t know what’s going to happen, and have no idea as to the precedent.
Apart from being upfront about everything and working hard, what else can I possibly do? Thank you.
I asked our friends at Foley & Lardner LLP if they could help us understand more about managing contractors and freelancers. Larry Perlman is senior counsel with the firm. He advises clients on a wide array of personnel-related matters including employee discipline, wage and hour, and disability accommodation.
Also, please remember that Larry has a regular full-time job as a lawyer and he’s doing this to give back to the profession. His comments should not be construed as legal advice or as pertaining to any specific factual situations. If you have detailed questions, you should address them directly with your friendly neighborhood labor and employment attorney.
We don’t know what “locker room” means in this situation. But it might be logical to think it falls under the company’s code of conduct. What’s a “code of conduct” policy and why should organizations consider having one?
[Perlman] A code of conduct gives an employer an opportunity to lay out its expectations for employee behavior. For example, such policies may address issues like:
- Ethical and legal obligations,
- Treating each other with respect in the workplace, and similar concerns.
Having such policies in writing helps an employer set workforce expectations, and it’s always optimal to be able to point to a written policy when disciplining an employee for violation of a particular rule.
However, as with other workplace policies, it is not enough to just have a neat-looking written document. Organizations must be prepared to enforce their policies in a consistent, non-discriminatory manner.
Let’s talk about the contracting aspect of this situation. Are organizations obligated to hold freelancers/contractors/consultants to the same code of conduct standards as regular employees? Why or why not?
[Perlman] Employers must be careful when dealing with independent contractors. If an employer exercises too much control over the working conditions of a contractor (or a contractor’s employees) that contractor may end up being deemed an employee under wage and hour, tax, and other laws.
For that reason, when dealing with bona fide independent contractors, employers should be cautious in applying employee work rules to those individuals. However, that doesn’t mean that you can’t hold contractors to certain requirements. For example, you can (and should) ensure that your employees, clients and visitors are not subject to harassment by a contractor.
Does it make sense for contractors to have their own personal “codes of conduct”? And is this something they could possibly share with clients?
[Perlman] Absolutely. In fact, employers may require that contractors (and contractors’ employees) adhere to certain standards.
If an organization holds contingent workers to the same standard as regular employees, when should contractors find out about those rules and policies?
[Perlman] Organizations should be cautious in applying identical policies to their employees and contractors. Policies applying to contractors should be discussed at the time of contracting.
As a best practice, any particular conduct requirements should be referred to in the contractor’s written agreement. One of the mistakes I see companies make is handing an “employee handbook” to someone they’ve classified as an “independent contractor”. For what should be obvious reasons, that is not a good thing to do.
Hypothetical situation: A contractor violates the company’s code of conduct. Are they subject to the same consequences as a regular employee? Why or why not?
[Perlman] When dealing with independent contractors, companies shouldn’t “discipline” them the same way they would an employee. Instead, the remedy for an independent contractor not complying with company expectations is to terminate – or consider terminating – the contract.
In this scenario, the contractor has spoken to HR. If a contractor has questions about the status of their contract, who should they talk with – HR or the department that’s using their services?
[Perlman] Each organization’s division of responsibility differs, so it is difficult to make generalizations regarding ‘who’ to contact in a particular situation.
That said, as a rule of thumb, if a contractor has questions regarding the status and terms of their contract, they should raise those issues with the appropriate business people for whom they are providing services. If the contractor has questions or concerns regarding one of the organization’s employees, he/she may consider going to human resources.
My thanks to Larry for sharing his knowledge with us. If you want to stay on top of labor and employment law issues, be sure to sign up for Foley & Lardner’s electronic newsletter or follow one of their blogs.
As more organizations look to contractors and freelancers to help them accomplish their goals, it’s necessary to understand the legalities. Not just having a written agreement. Managing contractors is different and managers need to learn how to manage a freelancer.
Image captured by Sharlyn Lauby on the streets of Fort Lauderdale, FL22