One Way to Manage Risk When Contracting for it Service Workers

Service providers are increasingly using contingent workers, mostly independent contractors, to handle on-site IT service work. This strategy enables the fulfillment of work on demand and helps service companies lower costs. Use of independent contractors in this capacity has spurred development of “Variable La-bor Management Platforms.” A VLMP is a web or cloud-based service that lets companies access, procure and manage contingent labor.

VLMPs raise a concern among the three parties involved in service projects – the VLMP, the service companies and the independent contractors – regarding risks that come with engaging and managing independent workers. These include failure to deliver high-quality service, the potential for misclassification of the independent contractor as an employee, and the risk of loss for personal injury or property damage related to the service event.

The author examines various scenarios and contractual relationships, and maintains that what he terms a “general contractor VLMP” model solves the risk assumption problems, because it shifts many risks squarely to the VLMP rather than the service company. A general contractor VLMP offers broad protection for the service company by providing industry-standard insurance coverage for workers’ compensation, general liability and errors and omissions claims. It handles claims when property damage or personal injury matters arise and engages in efforts to resolve claims. It bears the responsibility for investigating losses and interacting with the insurance carrier and the independent technician. These benefits enable the service company to focus on running its business.